Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the effect on savers of NS&I’s reduction in interest rates for savings.

NS&I must balance the interests of savers, taxpayers and the broader financial services sector. And decisions on interest rates will heavily depend on how NS&I is fairing against its Net Financing target for that financial year.

In July 2020, NS&I’s Net Financing target for 2020-21 was revised from £6 billion (+/- £3 billion) to £35 billion (+/- £5 billion) to reflect the Government’s funding requirements during the Covid-19 pandemic. In the first six months of 2020-21, NS&I had raised a total of £38.3 billion of Net Financing for the Government, so it was necessary to revise the interest rates offered on its products to reduce inflows.

It is important that HM Treasury takes into account taxpayer value considerations when making financing decisions. With gilt yields currently at low levels, government financing raised through NS&I is more expensive than that raised through gilt issuance.