Recommendation 6

To deliver its remit, NS&I must balance the interests of savers by offering a fair return, and the interests of the taxpayer by minimising finance costs. At the same time, it must also maintain an appropriate competitive position in the retail savings market. When questioned on how it minimises the cost of meeting its financing needs, NS&I told us it had several metrics to measure its performance, including its “efficiency ratio” which is the cost of NS&I managing the savings it holds. It told us that this was currently under “7p per £100 of investment”.9 NS&I explained that it also used a “Value Indicator” which compared the cost of borrowing through NS&I with the cost of selling gilts. NS&I told us that it measured, monitored and used the Value Indicator in all its decision making, but that the Treasury no longer held it accountable against this metric as the price of gilts is outside of NS&I’s control. The Treasury and NS&I have considered other metrics to replace the Value Indicator but have not yet identified a suitable alternative.10