Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 6 July 2020 to Question 66988 on Personal Savings: Interest Rates, what recent assessment informed his decision to change NS&I interest rate policy.

NS&I must balance the interests of savers, taxpayers and the broader financial services sector.

After around 6 months of offering often market-leading rates, NS&I has announced interest rate reductions that will realign it with the rest of the retail savings market.

NS&I’s Net Financing target for 2020-21 was revised from £6 billion to £35 billion to reflect the Government’s funding requirements during the Covid-19 pandemic. NS&I raised c. £38.3bn in Net Financing in the first two quarters of 2020/21, making rate reductions necessary.

With gilt yields currently at very low levels, government financing raised through NS&I is much more expensive that that raised through gilt issuance. It is important that HM Treasury takes into account taxpayer value considerations when making financing decisions. As such, the announced rate reductions will deliver better value for the taxpayer by improving the cost-effectiveness of the financing that NS&I raises for the Government.