Interest Rates

Baroness Smith of Newnham Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Baroness Penn (Con)]

In response to my noble friend’s question about whether the net financing target is due to be exceeded, I can tell him that in quarter 1 of the 2020-21 financial year, NS&I saw an inflow of £19.9 billion and delivered £14.5 billion of net financing. Demand for NS&I products has remained at similarly high levels during Q2. If the current trajectory continues, it will be on track vastly to exceed that net financing target.

[Baroness Smith of Newnham (LD) [V]]

My Lords, the Minister seems to have felt the need to disagree with almost all the noble Lords who have spoken. In particular, she disagreed with my noble friend Lady Kramer, who suggested that the impact of the NS&I cuts—[Interruption.] I am extremely sorry for that interruption; it was possibly from a website trying to sell me bonds because I have been looking up NS&I activities. My noble friend Lady Kramer suggested that the cuts in NS&I rates would have a knock-on effect. The Minister disagreed. However, as that website has just pointed out, other banks have followed suit with their products in trying to match the NS&I higher rates. The fact that they are now being cut is likely to have a knock-on effect. Surely the Government cannot claim that they want to have a savings culture any longer.

[Baroness Penn (Con)]

My Lords, I also expressed sympathy with those savers, including many noble Lords, who have been affected by the decision to change the interest rates. It is not an easy decision but I have tried to explain to noble Lords that the Government take several factors into account in this decision. One of them is the interests of savers. Premium bonds continue to offer a market-leading rate for those savers. However, that must be balanced against the need to protect the interests of taxpayers and the broader financial services sector.