Not much of a Premium

National Savings and Investments (NS&I) has announced that the number of prizes awarded to holders of premium bonds will be cut from the 1st of August. The effective interest rate is being cut from an already miserable 1.5% to 1.3%.
This is very disappointing and more bad news for those people who are still attempting to save and is counter to what government related financial agencies could and should be doing. The excuse offered by NS&I was that it set the prize fund in a way that ‘balanced’ the interests of savers, taxpayers and the ‘broader financial services sector’.
My goodness, who would want to see the financial services sector experience any challenge or discomfort? How do those bankers manage to exist on their incomes anyway?
Taxpayers? Sounds reasonable at first but of course savers are usually taxpayers and so of course are many borrowers. But borrowers have gained hugely from the protracted artificial suppression of interest rates – except of course those in the grip of financial sector firms such as Wonga and its appalling ilk – but then this class of borrowers hardly registers with government.
If any sector of the economy needed shaking up and presenting with a serious challenge it is the banks, pseudo banks (which is what most ‘building societies’ seem to have become judging by the way they behave) and the multifarious money lenders and financial gamblers that riddle what’s left of our economy.
It is no use waiting for such a challenge to come from within the private sector – it will never happen when extracting profit from hapless punters is the driving motive. This financial fracking has got to be stopped. The only way this will come about is if the public sector takes distinctive action and stops running with the private sector wolves.
NS&I should do its own thing and give savers a break. If there’s an inrush of money this would nudge up private sector savings rates too. But even better of course would be a genuine public sector bank - or several of them in the form of the municipal banks for which I have campaigned on this blog and elsewhere.
I hope that the Church of England initiative against payday lenders gets into gear once they have disentangled themselves from their embarrassing indirect investments. Why are they not more careful about this sort of thing?
But while they get most of the headlines it is not just hard-pressed borrowers that need protection and support it is the equally hard-pressed savers. Maybe it will happen, but it is a bit like waiting for Godot for either Westminster or Whitehall to get their heads out of the clouds and put the interests of ordinary people, savers included, first.