Interest Rates

Lord Trimble Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Baroness Penn (Con)]

I assure my noble friend that that is still government policy, but I disagree with him on the fact that the changes to NS&I’s interest rates take it below competitive rates in the market. As I have pointed out, on premium bonds, a 1% prize fund rate is extremely competitive while on a number of other tax-free instant access products, the rates remain in line with the rest of the market.

[Lord Trimble (Con)]

My Lords, I must start with a disclosure. Many years ago, I invested what to me was a substantial sum of money in NS&I. We are now seeing the rates go down to well below 1%—indeed, to a fraction of 1%. Is it going to stop there? Will the Government look at negative rates? If not, will they make a clear commitment to move away from them? How much of that target of £35 billion has been achieved? Is there likely to be more than just that target? If so, will there be any return to those people who are dependent on National Savings?

[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.