A parliamentary spending watchdog has condemned the modernisation of state-owned savings bank NS&I as a 'full-spectrum disaster', with costs spiralling from £1.3bn to £3bn and little transformation delivered.
The Public Accounts Committee (PAC) said the Treasury-backed bank exposed taxpayers to 'unacceptable risk' due to the escalating costs of its business transformation programme, launched in 2020 as Project Rainbow. The programme aimed to reduce running costs and modernise operations, including replacing French firm Atos, which had run NS&I's banking services for 27 years, with multiple smaller contracts.
However, NS&I now believes it may need to extend its contract with Atos until 2031, despite Atos suffering financial distress in 2024. The PAC report said leaders failed to understand the programme's complexity, were overambitious in plans to finish by March 2024, relied too heavily on consultants (spending £43m on advice), and lacked an agreed integrated plan and the right skills.
The replacement of NS&I's core banking engine was described as 'extremely high risk' due to the customer data involved, but the main work has yet to start. NS&I holds over £240bn for about 25 million customers and is one of the UK's largest savings organisations.
Conservative MP Geoffrey Clifton-Brown, PAC chair, said it was 'deeply worrying' that neither the committee nor the Treasury could gain accurate cost and progress information. He warned taxpayers risked 'throwing good money after bad' unless NS&I lays out a realistic plan. The Treasury recently announced an additional £109m for the programme, despite NS&I being unable to say how much had been spent to date.
NS&I welcomed the report and said it was working on options to improve programme delivery, providing an update in due course.
