Alistair Darling, speaking on BBC1's Andrew Marr Show on 6 December 2009, gave NHS IT as the one example of a cut he will announce on Wednesday 9 December in his pre-budget report.
"I'm not doing a spending review now, but I do think it is necessary for me on Wednesday to indicate areas where we are going to cut spending, or where we are not going to spend as much as we were," said the chancellor.
"For example, the NHS had a quite expensive IT system that, frankly, isn't essential to the frontline. It's something that I don't think we need to go ahead with just now," he said.
Cutting NHS computing was the only example of spending cuts he initially gave, although when asked about moving civil servants out of London he replied: "Yes, we need to get jobs to parts of the country that could with that additional investment."
The Department for Health said: "The chancellor and the secretary of state for health have examined options for savings on the NHS IT system and more details will be set out in due course."
By March 2009 the government had spent £4.5bn of the National Programme for IT's estimated total budget of £12.7bn. Some of its programmes, including the N3 broadband network, have been completed, but the core Care Records Service is only in use in handful of trusts.
The Conservative Party welcomed the announcement, which it called a U-turn. "After seven years, Labour have finally acknowledged what we've said for years – that the procurement for the NHS was costing billions and not delivering," said Andrew Lansley, the shadow health secretary. "This is another government IT procurement disaster."
The party said the government had spent £100bn on IT since 1997 and contracts worth another £70bn were due to be renewed or commissioned over the next two years, and that a Conservative government would put those projects on hold.
Matthew Swindells, chair of BCS Health and former NHS chief information officer, said: "We recognise that pressure on public finances mean that every pound spent by government must be subjected to even greater scrutiny than usual.
"However, we believe that information and information technology have a vital part to play in the productivity improvements that the NHS needs to deliver in the coming years if it is to achieve better quality and better value and we would counsel the government against taking short term actions that damage the NHS's ability to deliver the longer term transformation."
"This is yet another u-turn in government modernisation rhetoric," said Victor Almeida, Kable's senior health analyst. "The so called largest civil IT initiative in the world, Labour's technology Titanic, is now a superfluous frontline caprice.
"This is not to say that the programme will be slashed and there will be further contract terminations. The Fujitsu cancellation allegedly resulted in payment claims of up to £800m – an indication that this may not be the best strategy forward. And a large chunk of the NPfIT spend is currently accommodated at the local trust level, which is only partly affected by central cuts.
"Bravado and change of vocabulary do not necessarily represent change," he concluded.
