2 hours ago
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An attempt to modernise the state-owned savings bank NS&I has been a “full-spectrum disaster”, parliament’s spending watchdog has concluded in a damning report.
NS&I (National Savings & Investments), which runs a popular monthly cash-prize draw for premium bond holders, has been criticised by a committee of MPs for exposing the taxpayer to “unacceptable risk” owing to the spiralling costs of its £3bn modernisation programme.
The Treasury-backed bank, which also offers a range of savings accounts, launched a business transformation programme – originally called Project Rainbow – in 2020 that was designed to reduce its running costs and modernise its operations.
This included replacing Atos, a French company that had run NS&I’s banking services and IT infrastructure for 27 years, with multiple smaller contracts.
However, the costs involved in the modernisation programme have since risen dramatically, from £1.3bn to £3bn, with “little transformation” delivered to date, according to the public accounts committee (PAC).
NS&I now also believes it may need to extend its contract with Atos, which itself suffered financial distress in 2024, until 2031.
The report said the replacement of NS&I’s core banking engine was “extremely high risk” because of the customer data involved, but the main work had yet to start.
It added that NS&I bosses knew this process would need to be managed “in minute detail”, but had given no details of how they would do this.
NS&I is one of the largest savings organisations in the UK, holding more £240bn for about 25 million customers. First established in 1861, it uses the money raised from savers to fund public spending, but all deposits are 100% guaranteed by the government.
The PAC report said leaders at NS&I failed to understand how complex the bank’s modernisation programme would be and were overambitious in plans to finish it by March 2024.
The bank also relied too heavily on consultants – spending £43m on advice – and had no agreed and approved integrated plan, nor the right skills and expertise in place, the report added.
The Treasury announced last month it would be giving another £109m to the programme, pending parliamentary approval, despite NS&I being unable to say how much money had been spent to date.
Conservative MP Geoffrey Clifton-Brown, the chair of PAC, said: “It is deeply worrying to see a project in such an important organisation so off-track that neither this committee, or at times the Treasury itself, could gain an accurate sounding on costs and progress.”
He added: “Until NS&I lays out a realistic plan for its transformation, our committee is concerned that the taxpayer is at serious risk of throwing good money after bad in bringing this programme to land.”
NS&I said it welcomed the PAC report and its recommendations. It added: “Our business transformation programme is key to NS&I continuing to deliver cost-effective finance for government and the services customers want. We are working on options to improve programme delivery and will provide an update on this in due course.”
