Hi, Im new here so bare with me if I waffle a bit ! ! ! Not really giving in depth advice more common sense that many people overlook.
Whatever your mother is going to do, it really depends on what her needs are, followed by her objectives (sounds very obvious but many people just see deposit figures and go with the best ones). From what you said above she simply wants returns on her investment with an acceptable level of access of some of it. Decide from the start what exactly your mother wants out of her investment and ask yourself some questions -
Can she put some of it away long term?
What are the tax implications of differant options chosen?
Does she want a salary from her investment?
Does she have any small loans/mortgage that she can clear?
Would she like to invest a small percentage in a middle risk fund ?
If she is looking for a consistant level return with little risk? If so then Deposit rates are your only man. Life Assurance companies have investment products but the minimum terms are generally 3 years 11 months, most of them have 5 year penalty clauses (ie 5% - 1% percentage penalties). Your mother could always consider putting money into a guaranteed Bond (ie investment policy) with the intention of trying to beat inflation and or Interest rates. (Guaranteed bond means you will get back at least what you put into a policy). If you were to consider such a product you would be better off picking an acceptable amount of the fund to lock away for 5 years +.
Some investment products allow you to take an ongoing salary (say 6% per annum of the investment) which means that your mother could take advantage of gains (of course the value will decrease if she took more then the gains made annually) of her investment. Since she is getting 30k per annum already there would potentially be tax pitfalls but you do not say if she is satisfied with her 30k per annum so its just another way of looking at your 165k.
Like clubman said, there is in essence no guaranteed, risk free investments (even government bonds) but to counter act this you should definantly diversify the money (ie not keep it in one bank and take advantage of the interest rates on offer).
One thing I would say is to keep an eye on the rates a bank offers. If a bank offers you 8% over 18 months be mindful that it doesnt guarantee any top rates thereafter (ie if you dont ask you wont be put on whatever the best rate is after the 18 months). Also be mindful that 8% over 18 months is in fact 5.3% per annum Gross (before any potential taxes deducted). I was talking to clients recently on these rates, its very clever advertisement on the banks part but misleading to some people which is slightly unfair.
Another thing to note is that you can negotiate a rate with some banks (not always but worth a try, if you dont ask you wont get offered). Always look for a better rate, have stats (other bank rates ) when you meet the manager (particularly handy when your mother really wants to stay in her existing bank). And remember, if your mother goes into her local bank the only advice they will give is for their own products, so theres no harm in her going into other local banks who would only be too glad to take her savings and possibly give her a better deal.
You appear to be educated on the deposit end of investments so I would also advise you that if your mother is going into her local bank that she doesnt get signed up to anything there and then. Dont know what your mother is like, but mine would generally go with their local banks recomendation if I didnt sit down with them and go through their options first.