The 'squalid raffle' that has drawn 23 million investors
Harold Wilson called it a "squalid raffle". Dr Geoffrey Fisher, then the Archbishop of Canterbury, said it was "a cold, solitary, mechanical, uncompanionable, inhuman activity".
When the Lord Mayor of London bought the first Premium Bond, 50 years ago tomorrow, on 1 November 1956, it was in the face of criticism that continues to be levelled at the scheme today. Initially, the controversy focused on the fact that the Government was appearing to sanction gambling.
Announcing his plan for Premium Bonds in the April 1956 Budget, the then-Chancellor, Harold MacMillan, claimed the scheme would encourage saving and help control inflation.
But the Labour opposition under Mr Wilson, backed by church groups, attacked the morality of the monthly draws. Two Post Office workers even refused to sell Premium Bonds on religious grounds.
In more recent times, attacks on Premium Bonds have focused on the value for money that the scheme offers. A saver who holds the maximum £30,000 of bonds could, on average, today expect to win prizes worth the equivalent of an annual return of just 3.15 per cent.
Lisa Taylor, head of savings at independent analyst Moneyfacts, says this is uncompetitive. "The average return is much lower than the return you could earn from the best instant access savings accounts, which currently guarantee more than 5 per cent a year," she warns.
Premium Bond prizes are at least tax-free, which boosts the effective average return to about 5 per cent for higher-rate taxpayers. But Ms Taylor counters: "The return isn't certain and anyway, the average figure is slanted by the large prizes, which you're much less likely to win."
The immediate success of Premium Bonds followed a publicity campaign that caught the public imagination. By the time of the first draw in June 1957, 49 million bonds had been sold and more than 23,000 prizes were on offer - a 2,095-to-one chance of winning. Among the 96 winners of the £1,000 top prizes, five had bought just one £1 bond.
Ernie - electronic random number indicator equipment - the computer that processed the prize draw, was a particular success. The first machine was invented by a Second World War code breaker, Tom Flowers, and was the size of a small bus. It has subsequently been replaced three times and the latest incarnation is roughly the size of a DVD player.
The scheme expanded throughout the Sixties and Seventies, with the winning numbers announced on television each week by stars ranging from Bruce Forsyth to Bob Hope. The top prize was raised to £50,000 in 1971 and then to £250,000 in 1980.
By 1988, 2.2 billion Premium Bonds were in circulation, but sales began to slow. One problem was that the scheme was ultimately a way for the Treasury to supplement Government borrowing, for which the need rose and fell.
"Our remit is to raise funding for the Government at a cheaper rate than in the gilts market," says Dax Hawkins, senior savings strategist at National Savings & Investments, the organisation that now runs the Premium Bonds scheme.
"In the past, we've been something of a hostage to fortune - there were times when the Treasury didn't want us to raise money and our profile and prize money reflected that."
Another threat emerged in the early Nineties, with the announcement of the state-sanctioned National Lottery. In 1994, to counter the threat of the new draw, which captured the television slots vacated by Premium Bonds some 10 years earlier, National Savings revamped the scheme. It raised the minimum purchase to £100 and introduced a top prize of £1m.
Sales immediately doubled. "People thought the Lottery would have an adverse effect on us," says Mr Hawkins. "In fact, the impact has been positive, because people began to appreciate the fact that you never lose your stake with Premium Bonds."
A second overhaul of Premium Bonds in 2002 boosted sales further. A marketing drive saw National Savings offering sales online and by phone. More Premium Bonds have been sold in the past five years than in the previous 45.
Susan Hannums, head of savings at independent financial adviser AWD Chase de Vere, thinks the most recent success of the scheme reflects savers' investment fatigue. "Many savers now think there is a better chance of winning money than there is of making it from saving and investing," she says.
Yet the criticism continues. "Premium Bonds should be a bit of fun and no more than that," says Ms Hannums. "From any sensible point of view, this is not a decent investment."
Premium Bonds by numbers
* 3 hours Amount of time Ernie takes to process the monthly prize draw.
* £1m The top Premium Bond prize - two jackpots are awarded each month.
* 6 Number of extra £1m jackpots on offer in December and January, to mark the 50th anniversary of Premium Bonds.
* £1,000 Top prize in 1957, the price of a brand new Ford Zephyr.
* £25,000 The largest single prize that has still not been claimed.
* 15 Number of prizes the average Premium Bond holder should win each year if he or she has the maximum holding of £30,000.
* £17 Size of the smallest holding ever to win the £1m jackpot.
* 24,000 to 1 Odds of a single £1 Premium Bond winning a prize today.
* £145,000 Amount invested in Premium Bonds every minute.
* 12 per cent Premium Bonds' share of the instant access savings market.
* 10 million Number of savers who have held their Premium Bonds for more than 10 years.
Derek Pain: I'm cautious, but remain one of the few bulls in the market
Donald MacInnes: Who would want to be a Barbie girl in a non-Barbie world?
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
- 1 Stephen Fry explains what he would say if he was 'confronted by God'
- 2 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Ball pool for adults opens in London
- 5 Canadian woman suing police who locked her in van with sex offender who then raped her
Stephen Fry explains what he would say if he was 'confronted by God'
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
Hard line on immigration could cost Tories the election
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion