March Budget ‘21 Premium Bond Limit increase

Twitcher6

There must be hundreds of billions of pounds sitting in savings accounts get almost zero interest. If the Chancellor wants to raise a few hundred billion quickly he could raise the Premium Bond ceiling to £250,000 in the budget. That would raise a huge sum and also shake up the banks who are giving savers virtually nothing in return for the money they are lending. OK, the return to savers is still going to be small (1%) - but doing this might help to raise some much needed state funds.

eskbanker

Based on the NS&I net financing targets, the state doesn't need significant additional funding via this route, and is presumably happy with its more cost-effective sources....

MX5huggy

The government does not raise money when money is invested in PB, it borrows money paying 1% for the privilege, they can borrow money much cheaper than this currently elsewhere. If money poured into PB’s then the government would loose the tax revenue of where that money currently is. 

ranciduk

Surely the government doesn’t want to do anything to encourage people to save

they want everyone to spend spend spend spend!!

dunroving

Twitcher6 said:

There must be hundreds of billions of pounds sitting in savings accounts get almost zero interest. If the Chancellor wants to raise a few hundred billion quickly he could raise the Premium Bond ceiling to £250,000 in the budget. That would raise a huge sum and also shake up the banks who are giving savers virtually nothing in return for the money they are lending. OK, the return to savers is still going to be small (1%) - but doing this might help to raise some much needed state funds.

Thanks for getting my hopes up with your misleading thread title. <<sigh>>

coastline

At best I can see a savings bond in some form. Maybe a 10 year index linked or a fixed rate bond which could be invested in an ISA. ? The rate wouldn't be much in a fixed rate as just this week the government issued long term Gilts around 0.5/0.8%
Hopefully taxes don't rise too much in the budget despite the huge efforts needed to boost the economy since covid. Stick it all on the national debt and forget it. Why take even more cash out of the economy. ? You couldn't repay hundreds of billions really it's not possible. Repaying a few billion here and there wouldn't dent a national debt of £2 trn ?
How could Sir Keir Starmer's British Recovery Bonds work? | This is Money

happybagger

ranciduk said:

Surely the government doesn’t want to do anything to encourage people to save

they want everyone to spend spend spend spend!!

Closing most of the country down is not compatible with the above.

ranciduk

It is when you can buy pretty much everything these days from your arm chair

Aretnap

The government currently has no trouble at all raising as much money as it wants by issuing gilts at negative interest rates (negative rates for short to medium term gilts at least). Why would they want to pay higher rates to raise relatively small amounts from retail savers?

I suppose you might think that the government has a moral duty to pay above market interest rates to savers, but in that case you should probably say so rather than pretending that it should do it to raise some desperately needed cash. The idea that the government should effectively be giving cash bungs to savers doesn't really fit with the idea of a government which is desperately short of money.

Or you might be arguing that the government should pay the same rate on premium binds as it does in gilts, but that would mean premium bond holders having to cross their fingers and hope their numbers don't come up - and every now and then some poor unlucky sod would be hit with a bill for a million quid. 

cricidmuslibale

Aretnap said:

The government currently has no trouble at all raising as much money as it wants by issuing gilts at negative interest rates (negative rates for short to medium term gilts at least). Why would they want to pay higher rates to raise relatively small amounts from retail savers?

I suppose you might think that the government has a moral duty to pay above market interest rates to savers, but in that case you should probably say so rather than pretending that it should do it to raise some desperately needed cash. The idea that the government should effectively be giving cash bungs to savers doesn't really fit with the idea of a government which is desperately short of money.

Or you might be arguing that the government should pay the same rate on premium binds as it does in gilts, but that would mean premium bond holders having to cross their fingers and hope their numbers don't come up - and every now and then some poor unlucky sod would be hit with a bill for a million quid. 

I can't see many premium bond holders doing anything else other than withdrawing all their money from premium bonds if that were ever to be the case!

talexuser

Next time give a thread a sensible title of what it really is, so we can ignore it as an idea that will never happen in this budget, and has nothing to do it.