§ Lord Fanshawe of Richmondasked Her Majesty's Government:
Whether they will take further measures to change National Savings products in order to encourage the savings habit.
The Paymaster General (The Earl of Caithness)The Government announced in the Budget increases of 1 per cent. in the interest rate on the National Savings Investment Account and Income Bonds. Changes to the terms of some other key National Savings products which encourage long-term savings are being made over the next three to four weeks, as follows:
- —a new fixed interest savings certificate, offering a tax-free guaranteed return of 9-5 per cent. a year if held for five years;
- —a similar improvement in the associated regular monthly savings scheme, the Yearly Plan;
- —a new index-linked savings certificate revalued monthly by reference to the RPI, and offering tax-free guaranteed extra interest of 4-5 per cent. a year, if held for five years;
- —a new series Capital Bond offering a guaranteed return of 13 per cent. a year (taxable, but credited without prior deduction of income tax), if held for five years.
These measures show the determination of the Government to encourage more people to save, and people to save more. They maintain the momentum of the Savers' Budget and demonstrate that National Savings will play a significant part in continuing to stimulate the savings habit.