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Last Updated: Tuesday, 17 August, 2004, 08:37 GMT 09:37 UK
New Ernie machine makes its debut
Harold Macmillan launched premium bonds in 1956
Harold Macmillan launched premium bonds in 1956
The new version of Ernie - the number cruncher which selects premium bond prizes - has been unveiled.

The computer is being introduced to cope with a six-fold increase in bond sales over the last 10 years.

It will also help process an increase in prizes on offer, from 865,000 to one million from September.

The first machine was unveiled in 1957, when the bonds were launched by Harold Macmillan to encourage thrift. About 23 million people now hold bonds.

How the UK's money-making machine has changed

Sales of the bonds, which have long been popular presents for children, have boomed in recent years as stock markets have collapsed and interest rates have fallen to historic lows.

The value of bonds has increased from 4bn in 1994 to 25bn in 2004.

Ernie generates numbers randomly. These are then matched against bond numbers
Statistical calculations allocate numbers to prizes
The first bond number that matches the first number produced by Ernie wins the 1m jackpot
Ernie is not linked to a network so it cannot be hacked
The numbers are checked by the Government Actuary's Department

From September, the odds of winning prizes will shorten from 27,000 to 1 to 24,000 to 1.

One prize of 1m is awarded each month but 90% of prizes are either 50 or 100.

Ernie 4 produces one million winning numbers an hour, three times faster than Ernie 3, 15 times faster than Ernie 2 and 500 times faster than Ernie 1.

National Savings and Investments, which issues the bonds on behalf of the Treasury, says the random behaviour of its oscillator chip means that each single bond has an equal chance of winning a prize.

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