I concern time has come to ditch NS&I earlier than a charges avalanche, says SYLVIA MORRIS

The grinches at National Savings & Investments (NS&I) have been busy dishing out massive cuts in its rates and prize fund in a desperate bid to stem the wall of money coming its way.

And don’t rule out further cuts if money keeps pouring in. Even with rates as they are, I would seriously consider whether to stay with NS&I.

Yesterday NS&I announced hefty cuts in the fixed-rate Guaranteed Growth and Guaranteed Income Bonds. 

It comes hard on the heels of last week’s cut to the Premium Bond prize fund – the third this year – alongside further cuts to its popular easy-access Direct Saver and Income Bonds.

Huge sums have been going into Premium Bonds with a massive £1.2 billion in October. 

That sort of money puts NS&I in danger of overshooting the target £9 billion the government has asked it to hit in its current financial year, which runs until the end of March.

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Cuts: National Savings & Investments has announced hefty cuts in the fixed-rate Guaranteed Growth and Guaranteed Income Bonds

It has some leeway – it can be £4 billion above or below this target, a total of £13 billion tops.

The government-run savings provider bust last year’s £7.5 billion limit, which the then chairman Ed Anderson said was ‘disappointing’. It was asked to bring in a minimum £4.5 billion to a maximum £10.5 billion. It ended up with £11.3 billion.

If it brings in too much, it can cost taxpayers more than it should to raise the money and distort the rest of the savings market. 

NS&I has an advantage over its competitors as all money deposited there is guaranteed by the government.

At the half-way stage this year in September, NS&I says it attracted £3.3 billion from savers – on target to pull in £6.6 billion this year if things stayed the same. 

It hasn’t said how much came in during the third quarter of the year, but it appears to be swamped with money. 

However, the latest Bank of England figures show £2.1 billion went into NS&I in October, up from £65 million in September. 

If it continued taking in this inflated figure for the remainder of the year, it would bring in nearly £13 billion, the most it was aiming for.

It all started with a cut in the Premium Bond prize rate announced on October 22, down from 4.4 per cent to 4.15 per cent. It came after savers piled in £1.2 billion during that month.

We don’t know how much that put savers off, but obviously not enough because last week came another cut. The rate goes down to 4 per cent from the January draw.