1.1 Before considering the deal itself, the strategic considerations which led National Savings to seek a partner to run its operational service need to be understood. In 1996, National Savings commissioned a strategic review to clarify its role and purpose, to identify how value to Government should be measured and to recommend how that value could be maximised.
1.2 The Treasury is responsible for financing the Central Government Net Cash Requirement through sales of gilt-edged securities (gilts) and National Savings' products in such a way as to minimise cost while ensuring consistency with the objectives of monetary policy. This responsibility is delivered through two executive agencies. The Debt Management Office manages the sales of gilts to participants in the wholesale capital markets and the sale of savings products to retail investors is handled by National Savings. The funding task for National Savings is set a year at a time in the form of a remit agreed with the Treasury.