Premium Bonds

Lord Lee of Trafford Excerpts

Thursday 23rd March 2017 Lords Chamber

Asked by

[Lord Lee of Trafford]

To ask Her Majesty’s Government what is their policy on encouraging further premium bond sales.

[Lord Lee of Trafford (LD)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I declare an interest as a bond holder—one among 21 million.

[The Commercial Secretary to the Treasury (Baroness Neville-Rolfe) (Con)]

My Lords, premium bonds are a popular savings product. They date back to 1956 and were introduced by Harold Macmillan, the Chancellor of the Exchequer of the day. They provide a way for government to raise debt financing through the retail savings market. Depending on the Government’s financing requirement, NS&I promotes sales through its website, through direct correspondence with customers, through media coverage and through advertising.

[Lord Lee of Trafford]

My Lords, is it not time, after 60 years, to look again at the rules and aims of premiums bonds? Specifically, why cannot clubs, societies and charities own premium bonds? Could not those who win, say, £25 but do not wish to receive that prize have it designated and directed to a national charity by ticking a box? More radically, could we not think about reconstructing and converting premium bonds into something perhaps rather more popular, such as national care bonds? I think that would generate much greater public support, particularly if the unclaimed prizes were hypothecated to the care sector.

[Baroness Neville-Rolfe]

My Lords, that is for a debate, not a Question. I am not a fan of hypothecation. The Government raise premium bonds to fund government expenditure, as I have explained, and obviously there is nothing to stop anybody giving their tax-free winnings to charity as they see fit. We do not have any plans to introduce a direct transfer to charities, which would require stakeholder consultation and a systems change. The product is a good part of the portfolio of savings products that we have and, as I said, it is very popular.