National Savings surge pounds 202m

TAKINGS at National Savings rose to a net pounds 202m in September, helped by the second-best month for Premium bond sales, writes Maria Scott.

Gross sales of pounds 656m, and repayments of pounds 454m gave a net figure pounds 76m higher than August, but well down on the net pounds 481m sold in July, when the First Option bond was launched, draining money away from building societies and bringing the threat of higher mortgage rates.

The contribution to government funding reached pounds 314m after pounds 112m of accrued interest was taken into account. Fixed-interest savings certificates were the largest net contributor, at pounds 132m.

National Savings' total contribution to government funding so far in the current financial year reached pounds 2.7bn in September, and the total amount invested stood at pounds 42.5bn by the end of the month.

The nation's taste for a flutter was tapped by the new Premium bonds advertising campaign, featuring Gary Larson's off-the-wall cartoons.

Gross sales of pounds 36m were the highest since November 1956 when pounds 48m were sold at the bonds' launch.

Money allocated to pay Premium bond prizes - the effective interest rate on the bonds - is 6.5 per cent, which looks increasingly attractive against falling returns elsewhere. The prizes range from pounds 50 to pounds 250,000.