Savers withdrew £13bn from NS&I in the first quarter – twice as much as last year – after rates and prizes were cut
- The £13bn withdrawn is more than double the £6.1bn taken out last year
- With inflows of £12.2bn, NS&I was left with a £200m fall in net finance
- The decline compares with a £14.6bn net finance in the same period last year
- Net finance indicates the difference between money going in and cash taken out
National Savings and Investments saw £200million drained from its coffers at the start of the year as savers continued to move their money elsewhere after its cuts to prizes and interest rates paid.
In its quarterly figures published today, the Treasury-backed bank and issuer of Premium Bonds said some £13billion had been withdrawn by customers between April and June – more than double the £6.1billion taken out last year – as households spent more in the reopened economy.
That outflow was significantly higher than the £12.2billion coming in, but there was also £600million in receipts from capitalised and accrued interest and prizes earned. That means NS&I was left with a £200million decline in net financing – or the difference between money going in, and cash withdrawn.
NS&I said outflows of £13billion were higher than the £12.2billion in inflows
The decline in the April-June quarter compares with a £14.6billion net finance in the same period last year, when customers poured a staggering £20billion into its savings products in the wake of the pandemic.
But in October last year, NS&I delivered a crushing blow to savers as it announced deep cuts to a number of accounts, which were then introduced at the end of November.
Some savers went from earning a market-leading rate of 1.15 per cent interest each month to just 0.01 per cent, which resulted in many customers moving their cash elsehwere.
‘The impact of the interest rate reductions made by NS&I towards the end of 2020 has continued to be reflected in the volume of outflows NS&I experienced in Q1 2021-22, while the opening up of the economy has also had an effect on savers’ behaviour,’ the bank said today.
Many NS&I customers have moved their cash elsewhere after the bank slashed its rates
In the last financial year to the end of March, NS&I raised a record £23.8billion, but it fell well short of its heavily revised target.
The bank had upped the 2020-21 goal from £6billion to a monster £30billion and £40billion as savers turned to it in their droves.
At the time, it said the move had been made to ‘reflect government finance requirements arising from Covid-19’. But at this year’s Budget, the target for the current year was set again at £6billion.
Today, NS&I said it had delivered £38million of savings to the taxpayer in the quarter, according to its ‘value indicator’.
That compares the total cost servicing existing customers’ deposits with how much it would cost the Government to raise funds through the wholesale market via equivalent gilts.
The savings giant, which backed down on its drive to axe Premium Bond prize cheques after a Money Mail campaign in June, now holds a total of £202.8billion of savers money.
Premium Bonds Winners
|Prize||Area||Value of bond|
|£100,000||Hampshire and Isle of Wight||£10,000|
More August 2021 winners
View list of August 2021 winners