NS&I's £3bn Modernisation Programme Branded a 'Full-Spectrum Disaster'
All 26 million customers of National Savings and Investments (NS&I) have been issued a stark warning after a parliamentary committee described the organisation's modernisation efforts as a "full-spectrum disaster" that exposes taxpayers to "unacceptable risk". The Treasury-backed bank, best known for operating Premium Bonds, has faced severe criticism for its spiralling transformation costs and lack of progress.
Spiralling Costs and Minimal Transformation
The public accounts committee (PAC) revealed that NS&I's business transformation programme, originally launched in 2020 as Project Rainbow during the COVID-19 pandemic, has seen costs balloon from £1.3 billion to £3 billion. Despite this enormous expenditure, the committee reported that "little transformation" has been delivered to date, raising serious concerns about financial management and accountability.
Unacceptable Risk to Taxpayer Funds
The PAC's report highlighted that the replacement of NS&I's core banking engine represents an "extremely high risk" undertaking due to the sensitive customer data involved. Alarmingly, the main work on this critical component has yet to commence, despite NS&I bosses acknowledging that the process would need to be managed "in minute detail."
Conservative MP Geoffrey Clifton-Brown, chair of the committee, expressed deep concern about the project's trajectory. "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 stated.
NS&I's Response and Customer Impact
NS&I, which manages over £100 billion in investments for more than 26 million customers, issued a statement following the PAC's blistering report released on February 13. The organisation emphasised that its business transformation programme remains crucial for delivering cost-effective government finance and improved customer services.
"We are working on options to improve programme delivery and will provide an update on this in due course," the NS&I statement confirmed. The bank also reiterated that all its products, including Premium Bonds, Direct Saver, and Children's Bonds, offer 100% security through HM Treasury backing.
Parliamentary Concerns About Future Spending
MP Clifton-Brown added a further warning about the potential for continued financial mismanagement. "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," he cautioned.
The situation presents significant challenges for one of the UK's largest savings organisations, which plays a vital role in government financing while serving millions of British savers through its various investment products.
