- NAO: Premium Bonds provider ‘lacks capacity’ to carry out digital overhaul
National Savings and Investments lacks the capacity to deliver a much-awaited revamp of its digital services which is running four years late and £1.3billion over budget, a damning report has found.
The Treasury-backed bank underestimated the challenge of digitally transforming NS&I, provider of the popular Premium Bonds, according to a report from public spending watchdog the National Audit Office.
This has lead to significant cost increases, delays and procurement issues, it said.
In 2020, NS&I launched a digital transformation programme to replace the single supplier outsourcing contract it had had with Atos, previously Siemens, since 1999.
The digital revamp aimed to reduce the cost of running NS&I by making it a ‘self-service digital business.’
As part of this it pledged extra support for vulnerable and elderly customers.
NS&I said this digital revamp would help it deliver services with greater speed, lower risk and with greater flexibility.
But NS&I now expects the scheme to be completed in March 2028 – four years behind schedule – after it was reset in 2024. Total costs have risen from £1.7billion in 2020 to £3billion, a 76 per cent rise.
Running late: NS&I’s digital transformation programme is four years behind schedule and total costs have risen from £1.7bn to £3bn
NS&I set itself an overly ambitious timetable, resulting in delays and cost increases, the NAO found.
The state-backed bank raises money for the Government by borrowing from savers. They pay money into products such as Premium Bonds, which give savers the chance win tax-free prizes, fixed-rate bonds and cash Isas.
N&I’s 24million customers have collectively invested over £240billion in NS&I.
NS&I must now develop a realistic plan to ensure its digital transformation programme can deliver the intended benefits for customers and the taxpayer, the NAO recommended.
It also said NS&I should improve its approach to contract management, as well as the system that monitors programme costs and risks.
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.
‘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.’
An NS&I spokesman said: ‘We welcome the NAO’s report and accept its recommendations. We are on track to raise £12billion this year to help support public services across the UK, while maintaining our operational performance and customer satisfaction for 24million 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 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.’
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