I fear the time has come to ditch NS&I before an avalanche of tariffs, says SYLVIA MORRIS

The grunts at National Savings & Investments (NS&I) have been busy delivering massive cuts to their rates and prize fund in a desperate bid to stop the looming wall of money.

And don’t rule out further cuts if the money keeps coming. Even with rates as they are, I would seriously consider sticking with NS&I.

Yesterday NS&I announced steep cuts to fixed rate guaranteed growth and guaranteed income bonds.

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

Huge sums have been allocated to premium bonds, with a huge £1.2 billion in October.

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

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It has some room for manoeuvre: it can be £4 billion above or below this target, a total of £13 billion at most.

The government-run savings provider breached last year’s £7.5bn cap, which then-chairman Ed Anderson called “disappointing”. It was asked to contribute a minimum of £4.5bn and a maximum of £10.5bn. It ended up with £11.3 billion.

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

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

Halfway through September this year, NS&I says it attracted £3.3bn from savers, aiming to raise £6.6bn this year if things stay the same.

He hasn’t said how much he took in during the third quarter of the year, but he appears to be awash in money.

However, the latest figures from the Bank of England show that £2.1bn went to NS&I in October, up from £65m in September.

If he continued to accept this inflated figure for the rest of the year, he would raise almost £13 billion, the maximum he was aiming for.

It all started with a cut in the premium bond premium rate announced on October 22, from 4.4 percent to 4.15 percent. It came after savers stockpiled £1.2bn during that month.

We don’t know to what extent this discouraged savers, but obviously not enough because another cut occurred last week. The rate drops to 4 percent starting with the January drawing.