-
NS&I, which has over 24 million
customers in the UK, has faced significant challenges with
implementing its digital transformation programme including
costs increases, procurement issues and an estimated 4-year
delay.
- Despite a reset of the programme in 2024, NS&I still does
not have a realistic integrated plan in place and lacks capacity
and capability to deliver the programme.
- The NAO sets out several recommendations for the programme,
including developing a plan and reviewing the governance
structure.
The UK's state-owned savings bank has
underestimated the scale of the challenge it has faced in
digitally transforming the business – leading to significant cost
increases, delays and procurement issues – and must now develop a
realistic plan to ensure its transformation programme can deliver
the intended benefits for customers and the
taxpayer, a new report from the
National Audit Office (NAO) has found.1
National Savings and Investments
(NS&I) raises funds for
government by borrowing from individual savers, who invest in
products such as Premium Bonds, which give savers the chance win
tax-free prizes, and tax-free cash ISAs. Customers have
collectively invested over £240 billion in
NS&I.
Through its digital transformation
programme, which formally launched in 2020, NS&I aims to
measurably reduce running costs; support vulnerable and excluded
people as a self-service digital business; and deliver its
services with greater speed, lower risk and with greater
flexibility.2
NS&I set itself an overly
ambitious timetable, resulting in delays and cost
increases.3
NS&I now expects the programme to
be completed in March 2028 – four years behind schedule – and
total costs have risen from
£1.7 billion (in 2020) to £3 billion.4
A weak understanding of the complexity
and interdependencies of the system led to problems with
procurement of new contracts, delivery and delayed
timescales,5
leading to NS&I changing its
programme rating from ‘Amber' to ‘Red' (indicating that delivery
appeared unachievable) and a full programme
reset.6
Since the reset, NS&I has worked
to develop an integrated plan for the programme. Although this is
not yet complete, NS&I has made efforts to improve
relationships with suppliers, identify key risks and finalise a
resource management strategy.
The NAO recommends that
NS&I:
-
develops a realistic delivery plan
for the programme, including detailed end-to-end design and
aims;
-
improves its approach to contract
management, linking this to how it manages risks and ensuring
there are sufficient resource for procuring new suppliers;
and
-
reviews the governance structure
required for implementation as well as the system that monitors
programme costs and risks.
The NAO also recommends that HM
Treasury clearly lays out expectations of the role of NS&I's
board, as well as its own role in future
delivery.
, head of the NAO,
said:
“NS&I faced complex, long-term
technology challenges and saw the ending of the contract with its
external supplier as an opportunity to resolve these and
transform its business.
“But it underestimated the scale of
this challenge and overestimated its ability to deliver its
digital transformation programme, which led to significant cost
and time increases.
“Since resetting the programme in
2024, NS&I has made progress by identifying the key issues to
address. It must now develop a realistic integrated plan to
deliver its new operating model and achieve intended benefits for
the business, customers and the
taxpayer.”
Notes to editors
- The Programme formally began in 2020, and aimed to replace
the single supplier outsourcing arrangement that NS&I has had
with Atos (previously Siemens) since 1999. The arrangement covers
most of NS&I's operations such as communicating with
customers and processing payments. NS&I sought to replace its
original contract with Atos by running competitions for five
separate contracts, all to be awarded and with most services
transitioned by the end of Atos's contract in March
2024.
- NS&I did not allow time for understanding the technical
infrastructure, testing or as contingency. See Figure 5 in the
report for a timeline between 1999-2025.
- National Savings & Investments' (NS&I's) estimate,
from 2024 data, of the total cost from 2020-21 to 2030-31, of the
Business Transformation Programme (the Programme), including its
contract with Atos, and other running costs.
- The business transformation programme aimed to award five new
contracts to new suppliers, moving away from single supplier
contract model as costs were expected to become unsustainable.
- The programme was rated red by the Infrastructure and
Projects Authority (IPA), which reports to HMT, for several
years. IPA rated the programme red in its annual reports for
2022-23 and 2023-24, and following this NS&I changed its own
rating from amber to red in March 2024. This then triggered an
NS&I reset of the programme in July 2024.
