National Savings and Investments is running four years behind schedule with its digital transformation programme and lacks both a “realistic integrated plan” for the project and the capacity and capability to deliver it, the National Audit Office has found.
A report from the public spending watchdog, published last week, said the projected cost of NS&I’s transformation programme has now risen from the originally-planned £1.7bn to £3bn.
The NAO said the state-owned bank had set itself an “overly ambitious” timetable for the project, which launched in 2020, and “underestimated the scale of the challenge” it faced in digitally transforming the business.
The report said a “weak understanding of the complexity and interdependencies of the system” had led to problems with procurement of new contracts, delivery and delayed timescales.
The programme aimed to replace NS&I’s single-supplier outsourcing arrangement with Atos, which covers operations such as communicating with customers and processing payments, by running competitions for five separate contracts. Suppliers for two of those contracts have still not been appointed and Atos has had its contract extended to March 2028 to cover those contracts at a cost estimated at £530m.
The NAO acknowledged that since the programme was reset last year, NS&I had worked to develop an integrated plan for the programme, but it said the plan is not yet complete.
Among its recommendations, the watchdog said NS&I must develop a realistic delivery plan, including detailed end-to-end design and aims.
The NAO said the organisation should also improve its approach to contract management and ensure it has sufficient resource for procuring new suppliers.
In addition to calling on NS&I to review its governance structure for implementation and systems for monitoring programme costs and risks, the NAO said HM Treasury should lay out clear expectations of the role of NS&I’s board, as well as its own role in future delivery.
NAO head Gareth Davies said NS&I had “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,” he said.
“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.”
NS&I said the watchdog’s report had raised important issues that the organisation had already begun to address. It also said it recognised that separating and rebuilding 25 years of complex IT infrastructure had been more difficult than originally envisaged.
An NS&I spokesperson said: “We welcome the NAO’s report and accept its recommendations. We are on track to raise £12bn 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. We welcome the additional support of [Office for Value for Money chair] David Goldstone – who has been asked by the economic secretary and chair of NS&I’s board to help address the issues this report highlights.”