The Libra system, which is being supplied by Fujitsu (formerly ICL), had originally been described by ministers as central to their plans to speed up the criminal justice system. In 1999, Geoffrey Hoon, then a minister at the Lord Chancellor's Department, said Libra would have "significant benefits for other services and agencies" in the criminal justice system.
The National Audit Office has found that court cases are delayed because of errors in paperwork. Delays can increase the number of prisoners held on remand, and increase the risk of criminals re-offending before cases are heard.
But in a memo to staff in magistrates courts, the Lord Chancellor's Department said, "Despite the best efforts of all those involved we have been unable to reach an agreement with Fujitsu on a proposition for Libra which represents value for money and which we can afford." It added that discussions with Fujitsu are continuing but, "We are also discussing a fallback position."
This would involve abandoning the common case-working system linking all magistrates courts in England and Wales and instead establishing "commercial arrangements for delivering a robust, standard national system based on the best of the legacy systems".
If the core caseworking project is abandoned, Fujitsu is still expected to receive more than half of the contract's value because it is being paid to deliver new PCs and Microsoft Office to support the new system. The cost of the PFI deal has risen from £183m to £319m.
If a new national system is not delivered, magistrates courts may have to make do with the three existing types of caseworking system, which are incompatible. Some of these date back to the 1970s.
It would also leave some court workers with two terminals on their desks where they had one before - a new PC delivered in advance of the core software and a terminal to access legacy systems.
Rosie Eagleson, general secretary of the Association of Magisterial Officers, said, "If the core service is not delivered, we are right back to square one, except that enormous sums of public money will have been expended to deliver the sort of hardware and software that is available off the shelf at PC World."
A decision on whether to abandon the core caseworking system is due this month, according to the memo.