GPs and hospitals have been told to look locally for IT help as the government finally spikes a £12.7bn nationwide NHS computer system.

The failed project intended to store everybody's records, institute a national email system for the NHS and make X-rays and prescriptions available electronically. It was touted as the world's biggest civil information technology programme.

But a report from the Cabinet Office's Major Projects Authority has brought the axe down on the mammoth IT project, which has been riddled by screw-ups since its launch in 2002.

It has cost more than double the £6.2bn that was originally set aside for it, and ministers now believe that it will never be able to deliver its goals.

The project foundered on its core principle of centralisation, said the Department of Health in a statement: "It is no longer appropriate for a centralised authority to make decisions on behalf of local organisations. We need to move on from a top down approach and instead provide information systems driven by local decision-making."

Not all of the techie achievements of the project have been lost: key features that are now in use include Spine – which stores patients' care records, the N3 Network – offering a broadband network to health workers; and NHSmail – a unified, secure email system for the whole service.

Other pieces of tech salvaged from the wreckage include: Choose and Book, an appointment booking service, Secondary Uses Service and Picture Archiving and Communications Service – which allows for the transfer of X-ray pictures.

Though the break-up of the old contracts has been expensive, it could open up opportunities for small British IT companies. The government has urged hospitals and GPs to find their own IT projects locally.

Head IT honcho at the NHS, Katie Davis, says she wants to achieve a "vibrant marketplace for healthcare IT".

To provide just such a thing, the NHS has partnered up with Intellect, The Technology Trade Association – a group representing 800 tech companies including small enterprises as well as multinationals.

Arguably smaller projects could result in better project management.

"We are looking at how the NHS can best understand what our industry has to offer them" the healthcare programme manager at Intellect, John Lindberg said to The Reg. He described the service they provide to the NHS as "almost like a catalogue."

Of the 800 companies Intellect represents, 260 specialise in IT for healthcare, and the bulk of them – 200 – are SMEs.

Lindberg described healthcare IT as good area for start-ups because it requires lots of specialist solutions. ®