Parliamentary Committees and Public Enquiries
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NS&I exposes taxpayer to unacceptable risk with troubled digital modernisation scheme
The Public Accounts Committee (PAC) is not confident that government-backed bank National Savings & Investments (NS&I) is able to successfully deliver its Transformation Programme.
In a new report, the PAC finds that NS&I has not demonstrated that it understands and accepts what went wrong with this reset and delayed scheme.
Total costs of the programme, which was designed to modernise NS&I’s operations and measurably reduce its running costs, hit an estimated £3bn in 2024. But the PAC’s report warns that there is a risk that more taxpayer funding will be provided without assurance that the programme will be delivered. In January, government confirmed £109m in additional funding in support of the programme, pending parliamentary approval.
There are further risks to NS&I’s whole business and especially its customers if the programme is unsuccessful, and disruption from the programme could impact NS&I’s operations.
The report highlights as an example the forthcoming replacement of NS&I’s core banking engine, on which main work is yet to start - an extremely high-risk element of the programme which affects customer data. The PAC is seeking confirmation on how NS&I will strengthen and fully embed a risk management framework in its operations.
Deeply concerningly, NS&I were unable to tell the PAC how much had been spent on the programme to date. HM Treasury itself has said that at times it found it challenging to understand the costs and progress being made.
The bank told the PAC’s inquiry that it did have “the right data,” but was finding it challenging to take this data from its system and to “present” it. While NS&I’s metrics, including the important one of how much finance it raises for government, are being met per the bank’s annual report and accounts, these metrics do not cover progress with the programme. NS&I needs to show greater transparency in this area.
NS&I is over-confident about its ability to deliver the programme with little evidence to support this confidence. It has no workable plan for it after five years, and no idea of its eventual cost.
The inquiry finds that the bank has a ‘good news’ culture which can result in decisions not being made and disagreements not resolved, meaning it has not learned lessons as the programme has progressed.
Further, it has relied on consultants to fill skills gaps, with limited organisational experience of digital transformation when starting the programme. NS&I has spent a substantial £43m on consultants, but is vague on how it holds them to account.
HM Treasury acknowledged to the PAC that it should intervened much earlier in the programme, which suffered several serious setbacks before it gave the matter the attention it deserved.
Government has been vague on how requests for more funding would be assessed, and the PAC’s report raises concerns at the idea of further funding being approved without real assurance that NS&I can demonstrate it has a realistic plan.
Chair comment
Sir Geoffrey Clifton-Brown, Chair of the Public Accounts Committee, 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 whole-life cost of this scheme was estimated at £3bn in 2024. As a comparator, the Bank of England’s early settlement scheme was renewed in a similar timeframe, on time and on budget, at a cost of £431m.
“NS&I has been bullishly confident in response to our scrutiny that it will successfully deliver a modernised service for its customers through this programme, but our report finds that this confidence itself is very much part of the problem.
"When asked whether a ‘good news’ culture had been allowed to persist, NS&I’s leadership told us of a ‘can do’ attitude promoted in the organisation. The results so far would very much demonstrate that the reality is closer to ‘can’t do.’ 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.”
Original article link: https://committees.parliament.uk/committee/127/public-accounts-committee/news/211846/nsi-exposes-taxpayer-to-unacceptable-risk-with-troubled-digital-modernisation-scheme/
