𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The Government-backed NS&I is facing a bill of £3 billion and a four-year delay for its major digital revamp, having “underestimated” the scale of the challenge, the pubic spending watchdog has said.

The savings giant does not have a realistic plan in place and lacks the capability to deliver on its programme, according to the National Audit Office (NAO).

NS&I, which has more than 24 million customers and is backed by the Treasury, kickstarted a digital transformation programme in 2020.

It was hoping to reduce its running costs and modernise its IT systems as part of the plans.

The programme aims to replace its outsourcing arrangement with external supplier Atos, which it has had since 1999.

The arrangement covers most of its operations, including engagement with customers and processing payments.

NS&I said it expects the programme to end when the Atos contract expires in March 2028 – four years later than its original schedule of 2024, the NAO found in its report.

It is also set to go over budget with total costs expected to be £3 billion – up from the £1.7 billion estimated budget in 2020.

Gareth Davies, 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.”

The NAO said NS&I reset its programme in 2024 and 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,” Mr Davies concluded.

NS&I is backed by the Treasury, so money held with it has 100% security.

It raises funds for government by borrowing from individual savers, who invest in products such as premium bonds and ISAs.

A spokesman for NS&I said: “We welcome the NAO’s report and accept its recommendations.

“We are on track to raise £12 billion this year to help support public services across the UK, while maintaining our operational performance and customer satisfaction for 24 million customers.

“Our business transformation programme is key to continuing to deliver cost-effective finance for government, and the services customers want.”