The No Interest Loan Scheme stopped lending in August 2025 having funded 14,175 loans and put more than £10.7 million out the door. The average loan was £755, spread over 12 months, interest free. But that isn’t the interesting part. The interesting part is that 86% of those loans went to people in full-time employment (Fair4All Finance).
I’ve estimated the true cost of NILS was roughly £464 a loan to run — and that doesn’t take into account the effort put in by the credit unions themselves. That in its own right is alarming, but the real issue is that the programme was never designed to scale if the pilot succeeded.
The cost sat in the architecture around the lenders: programme management, grant administration, guarantee structuring, and a 42-month external evaluation contract budgeted at up to 8.2% of the total value lent. Despite significant investment in that wrapper, NILS was never destined to scale.
An evaluation is promised by the end of 2026 — more than a year after the last loan was written — and by then the pilot will have lost all momentum, with no entity constituted to run a permanent scheme, let alone take it national.
The UK needs to prioritise pilots, not experiments
An experiment asks whether something works, and it ends when you have the answer.
That’s fine when your objective is the pursuit of the unknown — but in financial inclusion, a lot is already known. Extensive research exists that quantifies both the size of the problem and the realisable benefit of addressing it.
So what would it take to fund pilots where scale is written in from the outset? I think the answer is build-operate-transfer — or, as they’re more commonly known, BOT models.
BOT models came out of infrastructure concessions, where the problem was structural and obvious: the party best placed to build something is rarely the party that should own it for the next thirty years. And here’s the thing — look beyond financial services and BOT models are working really, really well.
Take their use in UK energy. Under Ofgem’s Offshore Transmission Owner regime, the wind farm developer builds the transmission link, because they’re building the wind farm anyway and can do it fastest. They are then required to transfer it. Ofgem runs a competitive tender, the asset moves to an independent Offshore Transmission Owner on a long-term revenue licence, and a Generator Commissioning Clause gives an 18-month window to legally test the system before handover, so the buyer knows what they’re buying.
The result: Ofgem’s independent evaluation put consumer savings at £200m to £400m against £1.4bn of investment.
The optimal BOT design — six checks confirmed at the outset
If a financial inclusion pilot can’t answer all six before it spends a pound, it is an experiment, and it should be budgeted, described and expected to end like one.
1. The transferee is named and constituted before the build. Not a category — a legal entity with a board. Take the National Payments Corporation of India. It was incorporated in 2008, structured from day one as a not-for-profit owned by ten promoter banks, with the explicit intent that ownership would broaden. By 2016 shareholding had widened to 56 member banks across public sector, private, foreign, co-operative and regional rural institutions.
Ireland did the same. The Personal Micro Credit scheme launched in 2015 with 30 credit unions, spearheaded by the Department of Social Protection. National rollout followed in 2016, and by 2018 the scheme was live in around 272 credit union sites — roughly half the sector.
2. Transfer is a priced option agreed at signature. What does the transferee pay, on what valuation basis, and by when? Agreed at the start, when nobody knows whether they’ll be the one exercising it.
3. Transfer triggers on a performance gate, not a date. “The pilot runs for three years” is a schedule, not a trigger. Investors hate funding runway, so why do it here? Transfer triggers should be quantifiable: “transfer occurs when cost per loan falls below £X and 12-month default holds under Y%” is a decision rule that fires automatically.
4. Assets, IP, data and people are itemised from day one. A transfer schedule, maintained live: the platform, the underwriting model, the customer data, the licences, the named roles. If nobody can say what would physically move on transfer day, nothing will.
5. The operator’s fee is at risk on the transfer. Hold back a meaningful slice, payable on successful handover against the schedule. Operators respond to incentives like everyone else.
6. Fund outcomes, not organisations. This is where UK financial inclusion funding most consistently goes wrong — and with such rich data available, it simply shouldn’t be the case. Money should move against verified outcomes, evidenced in data.
So what should we be doing?
Stop commissioning experiments and calling them pilots. A pilot is stage one of a build, and stages two and three are specified before stage one starts.
That means naming the specific problems that are structurally holding financial inclusion back, and running each one as a properly designed BOT: a transferee constituted before a pound is spent, a performance gate that fires the transfer automatically, an operator whose fee depends on handing over, and money that moves only against verified outcomes. None of this is novel. Ofgem has been doing it for offshore transmission for over a decade, Ireland took a credit union pilot national within a year, and India built a payments utility on it.
So here is the ask. Before the next inclusion pilot is commissioned, publish three things on one page: the transferee, the trigger, and the asset. If those three things can’t be written down, the funding isn’t ready — go back to the drawing board and define them before the first pound moves. Otherwise we will be back here in 2028, reading another evaluation of another scheme that stopped lending, with nothing waiting to receive the answer.
Sources
- No Interest Loan Scheme pilot — Fair4All Finance
- Offshore transmission factsheet and OFTO regime savings — Ofgem
- Personal Micro Credit — OECD Observatory of Public Sector Innovation
- About NPCI — National Payments Corporation of India
Hero image: Andrés Dallimonti via Unsplash.