NS&I Annual Results for year ending 31 March 2006

• Record £73.37bn funds invested, up 7% from £68.52bn the previous year
• £11.2bn sales, up 7% on 2004-05
• NS&I grew by £4.84bn, up from £1.97bn in 2004-05
• NS&I saved the taxpayer £267.51m by reducing the cost of Government borrowing
• 620,000 new customers 2006-07
• Q1 figures also published (Appendix 1)

Sales for the year reached £11.2bn, due to major developments in NS&I’s internet and telephone sales channels. Online sales almost trebled from £450m in 2004-05 to £1.24bn last year when Premium Bonds online sales were launched, and telephone sales were up by nearly £300m from £1.40bn to £1.68bn. NS&I also won the Digital Media Award at the DBA Design Effectiveness Awards for its user-friendly website.

All figures in £ billion

The growth in sales can also be attributed to:

• The introduction of a second £1m Premium Bonds jackpot in July 2005
• NS&I’s return to TV advertising for the first time in six years between June 2005 and January 2006, promotion featuring Sir Alan Sugar
• Joint advertising with the Post Office 
• Increased profile through sponsorship of a garden at the Chelsea Flower Show, the Classic FM morning show and, for the third year, the Classical BRIT Awards.

During the year, NS&I made improvements to a number of products and services, making them more attractive for customers, including:

• Complete removal of the 90-day notice period on Income Bonds
• NS&I also opened a third call centre, in Glasgow, to cope with increasing customer demand and, at the Call Centre Association Excellence Awards, NS&I and Siemens jointly picked up the Best in Sector – Financial Services award
• NS&I signed a partnership with Tesco Personal Finance to provide wider choice and access for customers
• In June 2006 the 30-day notice period on the Investment Account was also abolished.

The higher profile and various improvements for customers means the total amount now invested in NS&I has risen from £68.52bn in 2004-05 to a record £73.37bn in the last financial year. NS&I is one of the UK’s largest savings and investments providers, with 26 million customers, offering retail savings and investments that are 100% secure, backed by HM Treasury. Its total balance of funds now represents 16.1% of the national debt.

Highlights of the year

Financial 

• NS&I grew by £4.84bn (net financing – see notes) against an initial target of £3.5bn, which was later revised to £4.2 bn, with an upper limit of £4.8 bn
• NS&I has a target to grow net financing by £15bn from £63bn in April 2003 to £78bn in March 2008. It has grown by £10.2bn in the first three years and is on track to achieve the five year target
• NS&I saved the taxpayer £267.51m by reducing the cost of government borrowing (Value Added – see notes) Sales were £11.2bn
• NS&I gained 620,000 new customers
• Retention levels have remained high at 86% of matured funds

Channels

• NS&I expanded its call centres from 80 fully trained and dedicated staff in 2001 to 300 in Blackpool, Durham and Glasgow, handling 3.5 million calls per year
• Telephone sales grew from £1.40bn to £1.68bn
• Sales through Post Office Counters and Post Office lead generation were £6.9bn, up from £6.7bn in 2004-05
• Online sales applications increased from 12,186 per month in 2004-05 to 33,705 in 2005-06 and monthly sales value increased from £37.5m to £104m
• Signed partnership deal with Tesco Personal Finance making Premium Bonds and Inflation-Beating Savings brochures available in 700 stores

Products

• £7.82bn was invested in Premium Bonds, bringing the total amount invested to £31.1bn
• Issue 10 of the Guaranteed Equity Bond sold more than £80m, bringing the total invested in NS&I’s first 10 GEBs to £930m (GEB 11 on sale between 12 April and 6 June 2006, bringing total invested to almost £1bn)
• 90-day notice period on Income Bonds removed to improve customer access
• Direct ISA (available online and by phone only) launched on 6 April offering an interest rate of 5.05% p.a. and guaranteed to stay a minimum of 0.55% above the Bank of England base rate until at least 5 April 2008. To date, £435m has been invested.

Trevor Bayley, NS&I’s acting chief executive, said:

“We’ve had a remarkable year at NS&I, with significant developments for customers, many making it easier for them to save and invest with us. As part of our ongoing and extensive modernisation programme we’re on target to deliver £15 billion growth by the end of 2007-08, having reached the £10.2 billion mark as of 31 March 2006. By working hard to develop new sales channels and publicise our products, we enjoyed our best year so far in our five-year strategy Direction 2007, both in terms of net financing and Value Added.

“The combined efforts of NS&I, Siemens and the Post Office have helped make this a successful year, and we aim to build on this success in the coming years by continually improving products and services for customers, making NS&I an even better place to work, galvanising our existing partnerships and developing quality relationships with new partners.”

Notes to Editors

1. National Savings and Investments Annual Report and Accounts 2005-06 was presented to the House of Commons pursuant to section 7 of the Government Resources and Accounts Act 2000 on 11 July 2006.
2. NS&I was formed in 1861 and is a government department and an executive agency of the Chancellor of the Exchequer, reporting to Ed Balls MP, Economic Secretary to the Treasury. It offers 100% security on all its products as they backed by HM Treasury.
3. NS&I’s performance is measured by net financing, which is the balance of sales, repayments and costs and is the amount of money it gives to the government to help it manage the national debt once interest, Premium Bonds prizes, matured investments and other repayments are made to customers. The government raises money in two main ways: through the sale of gilts and Treasury bills and through NS&I.
4. Value Added is the way NS&I measures how cost-effective it is at raising finance for the government and the difference between the cost of running NS&I and the cost of raising finance through the sale of gilts and Treasury bills. The Value Added figure is important because it represents cost savings to the UK taxpayer.
5. 50 years of Premium Bonds – during 2006 and 2007, NS&I will be celebrating 50 years since Premium Bonds first went on sale in November 1956 and the first draw took place in June 1957. For more information, contact the NS&I media team.