4.4bn pounds record for National Savings

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NATIONAL Savings contributed a record pounds 4.4bn to the Government's coffers during the latest financial year, writes Maria Scott.

The largest slice came from fixed- interest Savings Certificates, which produced a net pounds 1.3bn. Index-linked certificates contributed just over pounds 1bn.

First Option Bonds, launched last July and aimed at basic rate taxpayers, chipped in pounds 880m. The bonds attracted pounds 112m of savers' money in their first week on the market but had their interest rate reduced after mortgage lenders threatened to increase home loan rates.

The societies argued that the bonds were depleting funding levels and said they would have to raise deposit rates to retain retail funds.

The bonds were relaunched on 22 March, paying a guaranteed 6.34 per cent gross for 12 months, prompting further concern that they might cause difficulties for lenders.

However, figures released by National Savings yesterday showed that they attracted just pounds 34m in their first week of sales.

Premium Bonds contributed a net pounds 229m to government funding last year, more than double the previous year's pounds 104m. Sales of the the prize draw bonds of pounds 382m were the highest for any financial year since they were launched 35 years ago.