A £12billion NHS computer scheme started by Labour will today be axed by the Coalition government.

The 'one size fits all' IT project aimed at modernising the health service will be urgently dismantled following its failure to work properly. A total of £12.7billion has already been spent on the project, which industry insiders say could have paid the salaries of more than 60,000 nurses for a decade.

Labour's National Programme for IT comprised a number of innovations, including the 'electronic care record' that would have allowed hospitals and surgeries to share patients' medical information. But this particular scheme had attracted criticism from the British Medical Association for the perceived risk to patient privacy.

The Coalition's Major Projects Authority, set up to review Labour's biggest financial commitments and whether they provide value for money, said that the IT scheme is not fit to provide services to the NHS.

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A report by the authority concluded: "There can be no confidence that the programme has delivered or can be delivered as originally conceived."

It is reported that a new national watchdog will be set up to ensure that such vast sums can never again be directed towards uncosted IT projects.

Hospitals will now be able to choose their own computer systems.

Health secretary Andrew Lansley is expected to say in a speech: "Labour's IT programme let down the NHS and wasted taxpayers' money by imposing a top-down IT system on the local NHS, which didn't fit their needs.

"We will be moving to an innovative new system driven by local decision-making."