Meanwhile, note the complete change in the tenor of the debate since 1975.
At that time, when inflation was roaring (24.2% for that year), it was accepted that there was a moral obligation to protect savers. The limiting factor, as Joel Barnett made clear, was not to starve building societies of funds; that is hardly an objection today, when lending is in decline and the real problem is the shrinking value of collateral.
Now, it is pretended that the role of National Savings (& Investments, as it is known these days) is to help the government with its own funding. That popular management word "target" raises its ugly head. "Social justice" and "certain social obligations" have no place in the modern debate - they think.
Hansard record of House of Commons debate, 10 July 1975:
Does the Minister accept that the opportunity to invest in inflation-proof schemes is an act of belated social justice to millions of people who have seen their savings irreversibly damaged during the recent rapid rise in the rate of inflation? Will he make recompense to many of them by easing up on his vindictive attacks on the principle of savings embodied in the capital transfer tax and the wealth tax?
Hansard record of House of Lords debate, 4 November 1975:
The hon. Gentleman has put his supplementary question at the wrong time, because National Savings are rising very well at present. I am sure he will be delighted to hear that. As to what he called "belated social justice", I am sure he will pay due attention to the fact that the scheme was introduced by a Labour Government and not by a Conservative Government.Is the Chief Secretary confident that a further extension of index-linked schemes—which are welcome to savers—will not cause a diversion of funds away from deposits with building societies, leading to a rise in the mortgage interest rate?
Lord LEE of NEWTON
My Lords, does my noble friend agree that while the index-linked schemes are extremely good value for money, it would be a good idea—as inflation has been rather rampant—to increase the maximum amount that can be invested in them?
INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.
§Lord JACQUESDaily Telegraph, 2 August 2012:My Lords, the Government have two conflicting obligations. One is an obligation to the taxpayer to buy goods and services as economically as possible, and secondly there are certain social obligations. The Government believe that by the action they have taken they have got the right balance.
The Net Financing Target for 2012/13, released today, stands at £0, in a range of -£2bn to £2bn, and as such is too low for the NS&I to reinstate the popular Inflation Linked Savings Certificates.Gill Stephens from NS&I said: “Over the Spending Review period (April 2011 to March 2015) our objective is to broadly balance inflows and outflows, subject to agreement with HM Treasury on each individual year’s target.”Given the Target of £0, she admitted that the NS&I does “not anticipate reintroducing Index-linked Savings Certificates during this financial year.”
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