Lord Winstanleyasked Her Majesty's Government:
Whether they will now increase Premium Bond prizes to bring them in line with current interest rates.
The Earl of GowrieThe number and value of tax-free prizes is determined by the rules set out in the prospectus. The rate of interest used to calculate the prize fund has therefore only an indirect effect. The Premium Bond Scheme was reviewed recently, and as a result in November 1984 the number of prizes paid out each month was substantially increased from approximately 100,000 to 150,000. As a separate measure, the interest rate was increased to 7¾ per cent. per annum, its highest level ever. This interest rate may be varied from time to time and is kept under review. But a rate that is variable on three months' notice must be less volatile than market rates offered to savers without such notice.