NS&I, the government-backed savings provider, has promised better service after being overwhelmed by a surge in business in the second half of 2020 before it slashed its rates.

Poor service led to complaints from some customers that they could not get answers to their questions.

In November NS&I made sweeping cuts to most of its savings products and reduced the Premium Bond prize-fund rates  from the December draw. Prior to the cuts its rates were market-leading.

The cuts meant the rate on the Direct Saver account fell from 1% gross to 0.15% gross and the rate on Income Bonds was cut from 1.15% to 0.01%. The rate paid on 3 year Guaranteed Income Bonds was cut from 1.25% gross to 0.36%.

NS&I said at the time it was reducing rates to reflect market conditions and align rates with competitors.

Before the cuts NS&I saw a surge in business but staff hit by the pandemic struggled to cope.

NS&I’s chief executive, Ian Ackerley, said the organisation was determined to get better on service.

He said: “NS&I is determined to restore normal levels of customer service following the operational challenges we have faced.

“Due to changed government funding requirements, in the first six months of 2020-21, NS&I raised more net financing than in the whole of the previous three years, despite reduced staffing levels due to the impact of the Covid-19 pandemic.”

The drop in rates meant that in the third quarter (October-December 2020) NS&I Net Financing for the Treasury was down by £9.5 billion giving a year-to-date total of £28.8 billion.

The government revised NS&I’s Net Financing target (the money it raises for the Treasury spending) in July 2020 from £6 billion to £35 billion. NS&I is now expected to deliver a lower level of Net Financing.

NS&I has 25 million customers.