Premium Bonds owner NS&I slammed after spending £3bn of taxpayer money on ‘full-spectrum disaster’

The Treasury-backed savings bank National Savings and Investments (NS&I) has been criticised over failing to control costs and have a viable plan in place to complete a business transformation project which is already two years late and has spent over £3bn in taxpayer money.

NS&I has around 25 million customers which it serves through the Premium Bonds prize draw and fixed term savings bonds, representing more than an estimated £240bn.

However, the transformation project has been condemned by a Public Accounts Committee (PAC) which says it has not yet managed to deliver “any meaningful benefits” for taxpayers.

The project was due to be completed in 2024, having been launched in 2020, and has seen costs overrun by well over £1bn even though work on the main banking engine overhaul has yet to start. A new deadline is set for March 2028.

Not only do NS&I - nor the Treasury - know how much has been spent so far, there was still no clarity on the eventual cost for completion, noted the PAC, while Sir Geoffrey Clifton-Brown, chair of the committee, also said NS&I were “blinded” to the reality of delivering such a project.

“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, nor at times the Treasury itself, could gain an accurate sounding on costs and progress,” he said.

“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.”

The report shows £43m was spent on consultants while “being vague on how it holds them to account”, while a further £109m was allocated towards the project in January by the government, pending approval.

NS&I has the target of raising at least £13bn for the Treasury in the 2025-2026 tax year, through its savings activities.

“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,” added Sir Geoffrey Clifton-Brown.

“Until NS&I lays out a realistic plan for its transformation, our committee is concerned that the taxpayer is at serious risk of throwing good money after bad in bringing this programme to land.”

NS&I said it welcomed the PAC report and remained working to deliver benefits to customers. “We recognise that separating and rebuilding 25 years of complex IT infrastructure has been more difficult than we originally envisaged, and that we underestimated the scale and complexity of the challenge.

“Our business transformation programme is key to NS&I continuing to deliver cost-effective finance for government and the services customers want. We are working on options to improve programme delivery and will provide an update on this in due course,” a spokesperson said.

All customer money held by NS&I is guaranteed by the Treasury, which did not comment on the report.