Opinion: ‘Recovery bond’ suggestion deserves further consideration
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Getting side-tracked is one of the most rewarding aspects of constructing a family tree. Our relatives’ back stories invariably offer a more tangible sense of history than biographies of kings or queens and once you get your teeth into a family-related story, it’s difficult to know where to stop.
I first submitted an almost branchless tree to paper around 18 months ago, expecting to be rubbing shoulders with Tudor ancestors by now: a disgraced Earl, courageous Knight or womanising Duke, perhaps. However, the tree remains four centuries short of the reign of Elizabeth I.
One particular branch of the tree has not progressed much beyond my father’s father, Edward, a merchant seaman killed when his ship was torpedoed in the North Atlantic by a German U-Boat in 1942. He was 39. My Dad was eight; his brother, my uncle Rick, was twelve. How tough that must have been for my Gran, and millions like her, having to bring up two young boys on her own.
Another branch of the tree is more mysterious. Though a dozen letters exist, possibly written by a great uncle, another merchant seaman, during the period he spent in Australia between 1920-23, no-one in the family can identify for certain who he was. The letters describe in detail how difficult, economically-speaking, things were Down Under at the time. Few of us associate Australia with such hardships.
What makes this character more fascinating is the fact that he almost certainly sailed on The Californian, the ship that alerted The Titanic of icebergs when the two vessels were less than 20 miles apart. Later that night, The Titanic was fatally struck by the iceberg that sank her.
Recently, my research took me to the National Archives’ website, a wonderful and invaluable resource. Having checked a particular series of facts, almost inevitably I meandered off into the ether where I happened upon details of National War Bonds, first introduced in 1917. Interestingly, it was only in 2015 that the Government repaid the outstanding £1.9 billion from a 3.5% war loan which dated back to the First World War.
Prior to launching the bonds, the Government introduced more modest schemes including War Savings Certificates and Exchequer Bonds, but it was National War Bonds that captured the public’s imagination. These were promoted as short-term, government-backed bonds offering both a modest return on investment plus the chance to support Britain’s war effort.
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They proved enormously popular. Indeed, such was the prevailing sense of patriotism and national duty that they were supplemented by ‘informal lending’ from members of the public who submitted cash and even jewellery to the Treasury in touchingly personal attempts to boost the war effort.
Over the past 12 months, a number of commentators have likened the pandemic to war; it’s nothing like war – no-one is trying to blow us to smithereens – but economic recovery from the virus’s damaging impact will require a post-warlike effort. Which is why Sir Keir Starmer’s proposals for a ‘British Recovery Bond’ deserve consideration.
There are hundreds of billions of pounds currently swilling around in saving accounts which could be used to revitalise the economy. The Labour leader recently suggested that government-backed British Recovery Bonds could raise huge sums of money which “could help build the infrastructure of the future; investing in science, in skills, in technology for British manufacturing.”
Few could argue with such ambition, but there are a few details to resolve.
First, Britain enjoys unparalleled status as an international creditor because we’ve never defaulted on a debt. It means that we can offer government bonds to other governments and global organisations at negative rates of interest which are snapped up. The Treasury recently sold a £3.25 billion bond maturing in 2024 yielding minus 0.03%.
Here, then, is the problem.
If Britain can borrow at such ridiculously cheap levels, it doesn’t need to offer generous rates of interest to attract prospective British Recovery Bond holders. Nevertheless, there is an appetite for such a product.
The public would love to get a decent return on their savings, up to a maximum of say, £50,000, while contributing to economic growth, but could the Treasury justify paying bond holders competitive rates of return and withstand ‘unfair advantage’ complaints from banks and building societies?
It’s a question that could lead to some serious side-tracking, although as Sir Keir Starmer’s bond-related proposals are inherently sensible, they may only require some fine-tuning to make them as popular as the 1917 War Bonds.
THE WEEK IN NUMBERS
- 89% - According to data experts Kantar, sales of Vitamin D have risen by 89% over the past 12 months as consumers take preventative measures to boost their immune systems.
- £ 9.2 billion - Confirmation that entertainment is a big part of being stuck at home came this week when it was revealed that Britons spent a colossal £9.2 billion on music, videos and games last year. The 18% increase makes last year’s spending an all-time record.
- 36p - Virgin Wines, which delivered more than one million cases of wine to customers during 2020, was floated on the Alternative Investment Market on Tuesday. At one stage, the company’s shares rose 36p (18%) before dropping back to end up 14% on the day. Drinks all round, we assume.
Chancellor gives another boost to house prices
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