The state-owned savings bank NS&I's modernization attempt has been a ‘full-spectrum disaster’, according to a damning report by parliament's spending watchdog. NS&I, which runs a popular monthly cash-prize draw for premium bond holders, has been criticized for exposing the taxpayer to "unacceptable risk" due to the spiraling costs of its £3 billion modernization program. The Treasury-backed bank, which also offers a range of savings accounts, launched a business transformation program in 2020, but the costs involved have since risen dramatically, from £1.3 billion to £3 billion, with "little transformation" delivered to date. NS&I now believes it may need to extend its contract with Atos, which suffered financial distress in 2024, until 2031. The report highlights the replacement of NS&I's core banking engine as "extremely high risk" due to the customer data involved, but the main work has yet to start. NS&I leaders failed to understand the complexity of the program and were overambitious in their plans to finish it by March 2024. The bank also relied too heavily on consultants and had no agreed and approved integrated plan, nor the right skills and expertise in place. Conservative MP Geoffrey Clifton-Brown, the chair of the public accounts committee (PAC), expressed deep concern over the project's off-track status, stating that the taxpayer is at serious risk of throwing good money after bad. NS&I has acknowledged the PAC report and its recommendations, stating that its business transformation program is key to delivering cost-effective finance for the government and the services customers want. However, the controversy lies in the fact that the Treasury announced an additional £109 million for the program last month, pending parliamentary approval, despite NS&I's inability to disclose the total amount spent to date. This raises questions about the transparency and effectiveness of the modernization attempt, and invites discussion on the potential risks and benefits for the taxpayer.
