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Premium Bonds

Volume 974: debated on Monday 19 November 1979

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asked the Chancellor of the Exchequer what has been the saving to public funds over the past five years of paying premium bond prizes at the reduced interest rate rather than at current money market rates.

[pursuant to his reply, 15 November 1979]: Taking into account the relatively high administrative costs of the scheme and the tax-free nature of the prizes, premium savings bonds have not on average proved to be significantly cheaper than other forms of Government borrowing. The premium savings bond prize fund rate is not moved in line with market rates in order to avoid abrupt downward changes in the rate which might jeopardise the long-term viability of the scheme. Instead, the policy is one of continuous marginal improvements as and when possible.