The government should scrap three of its largest IT projects and save billions of pounds a year, according to the Institute of Directors and the Taxpayers Alliance.

The organisations, which represent business leaders and taxpayers respectively, said the private sector was cutting costs in a range of areas and urged the government to take similar actions.

Cutting down on IT projects, alongside other areas of government expenditure including departmental budgets and certain welfare, would save £50 billion, they said.

The key was reducing “unproductive items of government expenditure that don’t work, or are not essential”, they said.

Bringing to a halt the troubled NHS National Programme for IT would save £1.18 billion per year, the ‘How to save £50 billion’ report stated. Even though it expected cancellation charges from suppliers, it said it did not expect these to exceed a third of annual value of the contracts.

The report launched a scathing attack on the programme, saying it was “never wanted” by doctors, behind schedule, raised serious privacy concerns, and was “far too expensive”.

Abolishing identity cards would save a further £55 million, it said, adding that the programme “has always been a serious concern on civil liberties and privacy grounds”. And scrapping the controversial ContactPoint children’s database, which it called a security “accident waiting to happen”, would save £44 million.

The rationale “behind enormous centralised databases may seem superficially legitimate” it said, but “as has been extensively documented by the Joseph Rowntree Reform Trust and others, the implications for data security and personal liberty continue to outweigh any ‘efficiency’ considerations”. It criticised the government’s procurement, maintenance and use of such systems.

The expenditure on consultants should be halved to £1.4 billion, it said. The government’s largest expenditure on consultants is on the NHS IT programme, at nearly £600 million each year.

The report also called for the abolishing of Becta, the government agency that oversees procurement of technology by schools, in order to save £11 million. It said Becta had had “negative consequences for many schools, precluding them from organising IT facilities and programmes” and that it “hinders an open and competitive market”, calling for schools to be allocated the money directly.

Miles Templeman, director general at the Institute of Directors, said: "Businesses are right now making savings and cutting back on costs to get through the recession, and there is no reason why the public sector should not have to do the same.” He said large sums could be saved “without hurting vital services”.

Alternatively, the reduced budgets within the public sector is an opportunity for CIOs and IT to step forward and reduce costs, read the views of CIO UK editor Mark Chillingworth here.