National Savings (Hansard, 22 July 1970)

I am pleased to propose the following changes.

National Savings Certificates

A new issue of National Savings Certificates, called the Decimal Issue, will be on sale from 5th October, 1970. This will be in units of £1 and will have a value of £1.25 at the end of four years. This is equivalent to a compound rate of interest of approximately 5¾ per cent. per annum, tax-free. The maximum holding will be 500 units.

Extension terms for four years are also being announced for the £1, 8th, 10th and 12th issues of National Savings Certifi 150W cates. The terms will be equivalent to a compound yield of 4¾ per cent. per annum, tax-free.

Savings Banks

The rate of interest on ordinary accounts in the National Savings Bank (formerly the Post Office Savings Bank), in the Ordinary Department of the Trustee Savings Banks and in the No. 2 Department of the Birmingham Municipal Bank, will be increased to 3½ per cent. per annum, from the present level of 2½ per cent., with effect from 1st January, 1971 in the case of the National Savings Bank, from 21st November, 1970 in the case of the Trustee Savings Banks and from 1st December, 1970 in the case of the Birmingham Municipal Bank. The necessary Order will be laid shortly. Provision will be included in next year's Finance Bill to increase the amount of interest on these accounts which is exempt from income tax from £15 to £21.

These improvements are being announced immediately in order to maintain the flow of national savings in particular. As a part of the continuous process of review in this broad field, I shall, of course, be pressing ahead with my examination of many other ideas for stimulating all forms of personal savings. And in consultation with the representatives of the saving bodies I shall be considering what more can be done to strengthen the organisation and structure of small savings arrangements in the public sector so that progress continues along sound lines.