Interest Rates

Baroness Altmann Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Baroness Penn (Con)]

My Lords, I disagree with the noble Baroness that the decision on NS&I interest rates will have an impact on interest rates in the wider market. It is partly because NS&I rates were so out of line with the wider market that this decision was taken. I should also point out that the interest rate decision was taken in light of the Government’s net financing target, which was increased from £6 billion to £35 billion in response to the pandemic.

[Baroness Altmann (Con)]

My Lords, I congratulate my noble friend for tabling this Question. After 12 years of miserly returns, surely, we need to encourage savers rather than punish them. Banks do not need savers’ money. In the current environment, might the Government consider “corona bonds” to help finance the current emergency spending and demonstrate that they believe in a savings culture?

[Baroness Penn (Con)]

In effect, customers’ deposits with NS&I are a form of government borrowing and could be interpreted in that way. The increase in the financing remit for NS&I has allowed it to offer those products to many more people without exceeding that remit. However, we have reached a difficult moment whereby it is on track to grossly exceed that remit if action is not taken. However, the Government want to encourage savings and that is why, over recent years, we have taken the vast majority of savers out of paying tax on their savings. We will of course continue to look at what more we can do.