Have you ever won on the premium bonds? If so, you may have ERNIE to thank! Archivist Helen explores one of the Post Office's innovations.

Premium Savings Bonds went on sale in post offices 65 years ago on 1 November 1956. The scheme was introduced in the Budget on 17 April 1956 as

‘something completely new for the saver in Great Britain; a Premium Bond.’


The operation of the scheme was split across several Government departments with the Treasury being responsible for the policy of these Bonds; the National Savings Committee dealing with the sales publicity; and the Post Office having responsibility for the mechanics of the issue, for filing them and for drawing them for prizes. Even with this division of labour the scheme created significant work for the Post Office and the archive includes numerous working party reports dealing with aspects such as staffing, counter procedures, draw procedures, and notifying winners.

Poster with several rectangles including different information. Text split across different rectangles reads ‘This leaflet answers all your questions about ERNIE Premium Savings Bonds’.

Poster advertising Premium Bonds, 1961 (POST 110/1430)

Challenges for the Post Office

This new work required counter staff to sell the bonds in post offices, and staff to administer the draw process. Staff requirements were calculated based on a possible sale of £50 million in the first quarter and an intake of 16 000 applications a day. 740 staff were employed at Lytham St Annes to administer the draw. Of these only 100 were originally Post Office staff, most others were bought in from other Government departments in the locality or were recruited locally.

The Post Office also had to consider ethical issues. Many churches and youth organisations objected to members being involved in the sale of Bonds which they considered a form of gambling. This led to a question in Parliament when Mr Black asked the Chancellor of the Exchequer whether ‘he will take steps to ensure that civil servants, who object on the grounds of conscience to Premium Bonds, shall not be required to undertake duties in connection with their issue and sale, and shall not be any way prejudiced thereby’. The Chancellor responded that it was ‘the duty of civil servants to perform the functions of Departments from time to time. In these matters, as in all others, good sense will of course be used’. In reality, few staff actually refused to handle the bonds and these were able to be accommodated on other duties.

There were also questions around whether staff should be allowed to purchase the bonds. Eventually the conclusion was reached that all staff should be allowed to purchase bonds. Excluding certain staff from participating in the Premium Bonds system was regarded as likely to cause poor morale. It was also thought that banning staff from buying bonds risked creating a public perception that the system was more vulnerable to manipulation it was.

Small envelope with a postmark slogan ‘tax free Premium Savings Bonds Prizes’ and a circular date stamp ‘Edinburgh 16 Nov 1971’.

Postmark slogan promoting Premium Savings Bonds, 1971 (POST 55/326)

A new innovation

Bonds were eligible for a prize draw six calendar months after purchase. Draws took place at Lytham St Annes using the Electronic Random Number Indicating Equipment (ERNIE). This equipment was developed by Post Office engineers, including Tommy Flowers who also developed Colossus – the Second World War code breaking machine. ERNIE produced 9 digit numbers (including alphabetical characters) plus a 5 digit draw serial number for each. It was expected that ERNIE would take 17 hours to produce numbers for the first draw. Sales of bonds in Nov 1956 (the only bonds eligible for inclusion in the first draw) totalled £48.7 million. This meant there were 96 prizes worth £1000 up for grabs, plus prizes for £500, £250, £100, £50, and £25. In the 1950s £1000 would be approximately 2 years wages for a skilled tradesperson.

Black and white photograph of a white man sat at a table with a machine on the table. There is a white woman standing on the other side of the table. Along the wall are tall filing cupboards.

Photograph of ERNIE taken at the Premium Savings Bonds office in Lytham St Anne’s, 1957 (POST 118/18151)

Premium bonds may have lost their place in the popular consciousness to Lotto in terms of the attraction a big win, and ISAs for saving, but they are still sold. Today the premium bond scheme is managed by NS & I. The top prize for premium bonds is £1 000 000.

– Helen Dafter, Archivist

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