Shine A Light

What on earth are they doing to Britain's national savings bank?

A citizen journalist interrogates the privatisation of National Savings & Investments (NS&I), where Atos have taken over the contract and services have, perhaps predictably, contracted.

Mel Kelly
25 February 2013

In 1861, the Palmerston government set up the Post Office Savings Bank – a simple savings scheme aiming to encourage ordinary wage earners to “provide for themselves against adversity and ill health”. In 1969 it was split from the Post Office, becoming “National Savings”. Control passed to the Treasury. NS&I (National Savings & Investments) now has around 26 million customers with £100 billion which the government borrows to help finance public spending at an affordable rate for the nation. It is a bank for the public good.

What has been happening at the National Savings & Investment Bank in recent times?

In 1998 Labour Treasury minister Patricia Hewitt announced that the Government had outsourced the day-to-day running of the bank to Siemens IT Solutions and Services for 10 years, effective from 1 April 1999. In 2004 the contract length was “extended” by 50 per cent, without any competitive tendering, handing Siemens control until 2014.

Under the eye of the new coalition government, in December 2010 the French multinational Atos Origin (now known as Atos) acquired Siemens IT Solutions & Services for £720million. (Siemens kept a 15 per cent stake in the new company for five years.)

So Atos took control of the NS&I contract — along with Siemens’s contracts with the Vehicle & Operator Services Agency, the UK Border Agency, the Office of National Statistics and the Welsh Assembly Government. (See Computer Weekly article). Atos already had medical advice contracts with the Department for Work and Pensions and information technology contracts with the Ministry of Justice and the Home Office. 

At the time Atos acquired Siemens the NS&I contract was due for renewal: Atos would have to compete to retain it.

In June 2011 the government's Prior Information Notice — designed to make reductions in timescales for competition possible by indicating the possible value of a contract and what is required —valued the new NS&I 8 year contract at between £700 million and £1.5 billion

By November 2011 the contract value had grown to between £1.25 billion and £2 billion, with a three-year extension option. What’s more, the contract notice reveals that the Government wants the contractor to supply the services provided under the contract to private sector entities as well! A nice piece of business.

And as if this is not enough, after the contract was valued the bank’s management and Atos made huge changes to NS&I which transferred much of the burden of processing and cost to customers — the British public.

In a shock announcement in November 2011 NS&I sounded the death toll on its 150-year relationship with the Post Office. Account holders, who had always been able to make deposits and withdrawals at their local Post Office, would no longer be able to do that. Instead, they’d have to run their accounts by post or by electronic transfer. In other words, they could no longer bank with NS&I alone.

The NS&I also closed its Easy Access Savings Account (with more than a quarter of a million customers) as part of its plan to “encourage customers to save with us directly”.

Customers were offered instead the Direct Saver account, managed over the internet via an ATOS preferred partner site in India, or by telephone. Before people could switch, NS&I slashed the Direct Saver interest rate.

So, a simple savings scheme that helped ordinary wage earners to “provide for themselves against adversity and ill health” has become a lot more complicated, and the idea of the public good has got lost along the way.

As for the Post Office's own financial products, customers might be surprised to learn that Post Office Financial Services is just a front for the aptly named Midasgrange Limited, a joint venture between the Post Office and Bank of Ireland launched in 2004. Last August the crisis-hit Bank of Ireland bought the Post Office's 50 per cent stake for a mere £3 million (PDF), boasting that Midasgrange was one of its best performing businesses.

All this despite the Coalition’s 2010 promise to expand accessible and affordable personal financial services available through the Post Office.

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