Fujitsu, the leading contractor behind the planned £12bn NHS linked computer project, has terminated its contract following a disagreement over payment.

The massive project, to link all NHS IT systems and create a single repository of all patients in the UK, has been fought with problems since its inception. Not only is the project several years behind schedule, there have also been fears over the confidentiality of patient records.

It is understood that the Japanese firm was unable to agree with Connecting for Health how requirements changes should be reflected in its payment terms.

This hasn't been helped by organisational changes at the NHS. 28 Strategic Health Authorities were created in 2002, only to be merged into 10 four years later.

Fujitsu, one of 3 major contractors in control of the project, is not the first company to withdraw from the project. Accenture controversially parted company with the project in 2006 at some cost.

It is believed that it could cost Fujitsu £340m to back out of its £896m ten year contract - the company clearly believes that this is a price worth paying compared to the long term costs of completing the contract at the original price.

This latest news drags up the old question of why large public sector contracts go wrong, so often. It also suggests that while some quarters may believe a national ID card system will be the saviour of our nation, the chances of creating a system to administer such a massive scheme, are virtually nil.