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History of Premium Bonds

In his Budget of 17 April 1956, Harold Macmillan announced that Premium Bonds were to be launched to reduce inflation and to encourage thrift among those who were attracted not by earning interest but by winning prizes.

The first was bought on 1 November 1956 by Alderman Sir Cuthbert Ackroyd, who later became Lord Mayor of London.  By the end of the first day, £5 million were sold.

A prize draw number generator, ERNIE which stands for Electronic Random Number Indicator Equipment, was designed to produce numbers which would win prizes.  By the time the first draw took place at the Bond headquarters in Lytham St Anne’s, Lancashire, on Saturday 1 June 1957, £82 million had been invested.  By the end of August 1957, the amount invested had reached £100 million. The top prize in the first draw was £1,000.

In the early years Premium Bonds were the lottery of the day; celebrities including Bruce Forsyth, Bob Hope and Dame Judi Dench announced the top prizes and they were popular as presents, as well as for saving.

However, since the 1990s, Premium Bonds have undergone a substantial renaissance, with the amount invested rising from £4 billion in 1994 to £25 billion in 2004. In 2003/04, £7.5 billion Premium Bonds were bought.

11-digit Premium Bonds

Premium Bonds have become so popular that NS&I has had to introduce 11-digit Premium Bond numbers to cope with the demand.  Premium Bonds with eight, nine and 10 digits are still eligible for every draw.

There are now more than 27 billion Bond numbers in each monthly draw, compared to just 4 billion 10 years ago.

ERNIE 4, the machine that randomly draws the winning Premium Bond numbers every month, was introduced in April 2004 in anticipation of needing to generate 11-digit Bond numbers in the near future.  ERNIE 4 was tested and received full accreditation that he generates all Bond numbers at random regardless of their length. Therefore every Bond number, no matter whether it has eight, nine 10 or 11 digits and when it was purchased, has a separate and equal chance of winning a prize.

Every month NS&I gives away more than 1 million tax-free Premium Bond prizes, including the two £1 million jackpots. 

• For more information or to purchase Premium Bonds click here.