State bank secures HM Treasury support for £109m in extra funding to cover the cost of its modernisation drive but is still looking at options for the programme’s next reset
The chief executive of National Savings and Investments has confirmed to MPs that the state-owned bank will miss a March 2028 deadline for the completion of its business-transformation programme, which is already running four years late.
Dax Harkins told members of parliament’s Public Accounts Committee that NS&I is currently looking at options for a further reset of the digital programme, which originally launched in 2020 with the expectation that it would run for four years.
In November last year, public-spending watchdog the National Audit Office warned that NS&I lacked both a “realistic integrated plan” for the project and the capacity and capability to deliver the “BTP”.
In a recent letter to MPs, NS&I chief exec Harkins confirmed that the BTP is “currently forecast to complete outside the March 2028 target date and outside the agreed budget” and that work is ongoing on a further programme reset, in addition to one implemented in 2024.
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Harkins said that as part of the latest reset, NS&I is working with systems integrator partner Capgemini and other suppliers to develop a full integrated plan for delivery of all releases to the end of the programme.
“We recognise the challenge this presents and are working on options to improve the cost and time of programme delivery, including what would be required to live within our Spending Review budget,” he said.
Harkins said that the “options analysis” work is expected to be complete by the end of March this year and would include producing a draft business case for the preferred option. Ministers would make the final decision on the delivery plan.
Harkins said options for the latest reset include “reducing the need to connect our older legacy systems with our new services and new banking systems, and areas where we could reprioritise work”.
He added: “Work is under way now to assess the potential risks, impacts and benefits of each option to inform our decision.”
In its November report, the NAO said the projected cost of NS&I’s transformation programme had risen to £3bn, compared with an initial estimate of £1.7bn.
It said the bank had set itself an “overly ambitious” timetable for the project and “underestimated the scale of the challenge” it faced in digitally transforming the business.
On 12 January, economic secretary to the Treasury Lucy Rigby confirmed that the department had agreed that NS&I could have additional resource spending of £40m and capital spending of £69m for the BTP from the government’s Contingencies Fund, subject to parliamentary approval.
In a letter to members of the Public Accounts Committee the following day, Treasury permanent secretary James Bowler said that in order for NS&I to access the funding at the start of the 2026-27 financial year, the chair of the bank’s BTP Committee will need to endorse the organisation’s plans for the programme.
Bowler added that the chair will also need to “provide assurance that the most pressing risks facing the programme have been provisioned”.
In its report on the transformation programme last year, the NAO said “weak understanding of the complexity and interdependencies of the system” had led to problems with procurement of new contracts, delivery and delayed timescales.
The programme aimed to replace NS&I’s single-supplier outsourcing arrangement with Atos – which covers operations such as communicating with customers and processing payments – by running competitions for five separate contracts.
Suppliers for two of those contracts had still not been appointed at the time the report was published. In order to cover procurement of all the necessary replacement agreements, Atos has had its contract extended to March 2028 at a cost estimated at £530m.
