Ahead of Wednesday's pre-Budget report, the chancellor told the BBC that the £12.7 billion (US$20.9 billion) programme was "something that I think we don't need to go ahead with just now".
The comments created a public relations frenzy in Whitehall, as government officials scrambled to tell the press that the chancellor "mis-spoke", and that what he meant was that ministers were considering curtailing some elements of the programme. Cuts would be aimed at saving up to £600 million over the next few years from the NHS budget, the Financial Times reported.
A spokesperson at the Department of 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."
Liberal Democrat MPs immediately called for the programme to be "abandoned in its entirety", and the Conservatives labelled it a "disaster".
The National Programme has a number of elements, including the rollout of hospital patient administration systems, electronic care records, digital X-rays, electronic prescriptions and hospital-wide broadband. The first two are far from complete, but it is not clear which, if either, will be curtailed.
Tola Sargeant, research director at analyst house TechMarketView, that electronic patient records were the "most likely part of the programme to face the axe", because of their late running and problematic early rollouts. Procurement by trusts in the south, which is to begin next year, could also face cancellation, she said.
The programme faces trouble on other fronts. Fujitsu, which lost its contract with the government to supply part of the NPfIT, is in talks over its claim for £700 million compensation. Of its remaining suppliers, CSC and BT, the latter has been able to , leading analysts to say it had the NHS "over a barrel".
The amount that could be saved by scrapping significant parts of the NPfIT is not clear. The taxpayer has so far paid only a fraction of the estimated £12.7 billion project costs, because suppliers are tied up in strict contracts that only allow payment on delivery. With electronic patient records and administration systems slated to be at least four years late, the suppliers have spent billions of pounds on work but earned only a small portion of what they had expected.
In the coming weeks the Department of Health is assessing whether the latest patient system deployments by the suppliers meets its standards. If BT or CSC are judged to have failed, the government has made it clear the programme will be .
If either supplier loses its contract or sees its scope change, the government will likely face further challenging legal battles.