Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the financial impact on savers with a National Savings and Investments (NS&I) account after the reduction of the premium bond prize fund rate from 1.4 per cent to 1 per cent in December 2020.

In setting interest rates for its products, NS&I must balance the interests of savers, taxpayers and the broader financial services sector.

With unprecedented Government funding requirements in 2020 due to Covid-19 pandemic measures and amid significant uncertainty and volatility in the retail savings market, NS&I experienced unprecedented upside pressures on its Net Financing. In the first six months of 2020-21, NS&I raised a total of £38.3 billion of Net Financing for the Government, so a decision was taken to reduce the Premium Bond rates to mitigate the risk of NS&I exceeding its £35 billion (+/- £5 billion) Net Financing target.

More broadly, it is important that Government takes into account taxpayer value considerations when making financing decisions. With gilt yields at low levels for the majority of the past year, the Government financing raised through NS&I has been more expensive than that raised through gilt issuance.