§ The Economic Secretary to the Treasury (Mr. Anthony Nelson)
I have received a number of representations concerning the purchase of premium bonds.
§ Ms. Quin
Do the Government accepted that the sale of premium bonds has plummeted since they changed the rules so that £100 became the minimum amount that one could purchase? Does that not penalise many people who would like to buy bonds in small amounts for themselves or as presents? Are the Government trying to kill off the premium bond scheme altogether?
§ Mr. Nelson
I acknowledge the need to encourage the savings ethic, but it is also important to ensure that the taxpayer's interests are protected. The cost of administration is considerable and that change, associated with the other changes to National Savings bank accounts, will save the taxpayer about £5 million a year.
§ Mr. John Greenway
Does my hon. Friend agree that if we want to encourage the savings ethic among young children, it is important that they learn what is a realistic return on the investments made on their behalf? A return 980 based on a computer deciding whether they have won a cash prize seems totally artificial and unrealistic. Would it not make more sense if young children invested in National Savings certificates?
§ Mr. Nelson
I am bound to agree with my hon. Friend. Rather than rely on the luck of the draw, it is better for a young saver to build up savings that have an assured rate of return. After March, the odds of winning will be 15,000:1, but the rate of interest applying to savings certificates will be about 5 per cent.