The Public Accounts Committee (PAC) has warned that National Savings & Investments (NS&I) is exposing taxpayers to “unacceptable risk” through its delayed and reset digital modernisation programme, as MPs question whether the organisation can successfully deliver the overhaul.
In a report published on 13 February, the cross-party committee said it is “not confident” the government-backed savings bank can deliver its transformation programme, originally launched in 2020 to modernise operations and reduce running costs.
Total costs for the programme were estimated at around £3 billion by 2024, having risen significantly since its inception, while MPs cautioned that further taxpayer funding could be approved without assurance the programme will be delivered.
The PAC also raised concerns about the risk of disruption to NS&I’s wider business and customers if the programme fails, particularly given that the replacement of the organisation’s core banking engine – described as an extremely high-risk element affecting customer data – has yet to begin.
Transparency, skills gaps and weak oversight
The committee’s report found that NS&I has not demonstrated it fully understands what went wrong with the delayed scheme and criticised the organisation for limited digital transformation experience and heavy reliance on consultants to fill skills gaps.
MPs noted that £43 million has been spent on consultants, while governance and reporting arrangements have made it difficult to track overall programme costs and progress. NS&I was unable to tell the committee how much had been spent on the programme to date, which the PAC described as “deeply concerning”.
HM Treasury, which sponsors NS&I, acknowledged to the inquiry that it had found it challenging at times to understand costs and progress and should have intervened earlier as setbacks mounted.
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Sir Geoffrey Clifton-Brown, chair of the PAC, said: “NS&I’s original name for its troubled digital modernisation effort was Project Rainbow. It is perhaps unsurprising that this upbeat name for the scheme was retired, as aptly our report finds it has been a full-spectrum disaster.
“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.
“NS&I did not have the skills to run this project successfully to begin with, leaning on expensive consultants while overseeing a programme which still has yet to bring any meaningful benefits as costs continue to pile up and the taxpayer exposed to unacceptable risks along the way.”
The report further criticised the organisation for lacking an agreed integrated plan five years into the programme and for weaknesses in risk management and organisational learning, warning that governance structures still do not provide the information needed to properly hold the programme to account.
The transformation programme, originally intended to modernise systems and transition to a multi-supplier model after decades of outsourcing, has undergone a reset and remains late and over budget, with limited tangible transformation delivered so far.
The PAC has called on NS&I to produce a realistic, fully costed integrated plan and strengthen its risk management framework, while urging greater transparency on programme costs, progress and delivery timelines to ensure value for money for the public purse.
