It is costing the taxpayer almost as much as the autumn bank bailout. But the huge amounts being spent by the Government on information technology — £16 billion this financial year — are barely noticed.

With no central regulation by one ministry, civil servants enter into contracts worth billions with a few select companies. The details are protected by confidentiality agreements and periodic progress reviews in Whitehall are kept private, despite calls by MPs and anti-privacy campaigners for their disclosure.

The cost of most large projects balloons. The Government admits that only about 30 per cent are completed on time and on budget.

An investigation by The Times and Computer Weekly shows that the overrun of the largest IT projects totals £18.6 billion. Those include a controversial plan to computerise all NHS patients’ records, originally estimated to cost £2.3 billion over three years but the cost of which has grown to £12.7 billion.

Two companies have dropped out of the project, which is already four years behind schedule. Hospitals left with obsolete equipment have had to up-grade on their own.

Yesterday Whitehall sources told The Times that the NHS programme, which aims to link more than 30,000 GPs to nearly 300 hospitals, would be reviewed. Non-foundation-trust hospitals would be allowed to opt out and buy from smaller providers.

Nigel Edwards, director of policy at the NHS Confederation, which represents 90 per cent of NHS organisations and which welcomed the review, said: “You can’t do modern healthcare without a computer system. But the Care Records system at the heart of the programme isn’t working. The software isn’t functioning. There is a growing pessimism among the people I represent that it can actually deliver.”

The Government will spend more than £100 billion on IT over the next five years, according to Kable, a public sector research company. Since most projects overrun, the actual amount spent could be much higher.

The main suppliers, EDS, BT, Capgemini and Fujitsu, reap hundreds of millions in profit. Accenture, one of the smaller suppliers, earned a profit margin of at least 30 per cent on a recent contract with HM Revenue & Customs to record national insurance numbers, the National Audit Office found. The average return in private industry is less than 15 per cent.

But public sector work holds pitfalls for suppliers, who often find government departments difficult customers.

Fujitsu pulled out of the NHS programme for IT in May after receiving 650 requests to change its product. Peter Hutchinson, the group director of Fujitsu, told the Public Accounts Committee this summer: “There were a lot of delays in getting paid for things, which was quite frustrating, and there is no question that local trusts withheld agreement to payment in order to force us to make further changes to the system and keep us under pressure.”

The Japanese company, which is now in mediation with the Department of Health, refused to comment on reports that it is seeking £600 million in compensation.

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