BBC News - Sir Keir Starmer: Savings scheme would boost UK’s recovery post-Covid
What’s everyone’s opinion on Labour wanting a British recovery bond.
Do we think its a good idea?
Would you guys be interested in investing in this (if it does happen)?
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It’s ridiculous to even call it an ‘idea’.
The government already raises money through issuing bonds to the public through NS&I.
How is this any different? It isn’t.
The only way it would be different is if they offered higher savings rates (which would be a crazy waste of money when they can raise for less on the normal bond market).
Maybe he could be really innovative and have a big monthly prize draw for holders!? 
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Think the difference is how the Tories/Labour sell the idea.
Yeah this has been done already but only the Tory’s chums/those who know about finance (no they’re not the same thing 
) actually know about it and are willing to do it.
Starmer announcing it like this makes it something that your average Joe might start talking about - we need leaders who will encourage positive saving/investing.
Currently it feels like all hush hush don’t tell anyone about investing from the Tory government…
If you hadn’t guessed - I’m very keen that people are educated on investing - as a secondary school teacher it pains me to see such a lack of this education!
Starmer seems to be moving this in the right direction IMO - but this is only a glimpse… need to see more from big government!
Educate the masses on investing!!
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I think this is savings rather than investment and I think the suggestion is the rate will be competitive so presumably it will be a max 1% savings account just with some slightly new branding. All seems rather pointless
100% agree! If this is the best idea that Labour can come up with, the country will have a Conservative government for a very long time.
Sadly, this is the sort of thing that passes for creativity and innovation in politics these days. The government can already raise as much money as it wants through gilts and QE, and NS&I already exists, but wrap a minor variation of something we already have in union flags and call it a new idea…
Someone should tell Starmer about a variation on this, which also already exists, but is at least more distinctive: bonds issued by councils to pay for local projects. In the USA, these are called municipal bonds and have been quite successful, partly because they offer significant tax advantages. The UK versions are called, I believe, Community Municipal Investments. Right now, there are very few such bonds available at retail, and they can’t even be held within ISAs, but if the government made them easier to issue, and made them tax-free, I expect they might be popular due to their local connections – more popular than a national savings bond, I expect! But it would mean more power and independence to local councils, which I suppose central government has not really been keen on…
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Even if it was a good idea Party A would not implement a concept that Party B proposed and vice versa.
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The only problem with a local savings bond is would it be big enough to work? If it’s treated as a savings account (I don’t think more traditional bonds would be very popular with the British public) then it could run into liquidity issues if it’s only on a small local scale.
Not necessarily, they might rebrand it and pretend it was their idea all along but I think they’d be happy to steal each other’s ideas if they think they’re good.
True - so expect the Boris Bond
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What’s being missed here, is this Green Recovery Bond is being targeted at those who have savings but aren’t investing.
The article even says this. There’s 125 billion worth of savings that people aren’t touching, and only 5% is expected to be ‘spent’ in the recovery period, hence this recovery bond to try and tap into that money.
It’s also something they’re trying to reframe as ‘we’ll take your savings, build public services and reward you with interest’, something they’re doing because the more conservative media and the Tories have a stranglehold on the message that ‘taxes are bad’, ‘spending causes debt, control the deficit’ nonsense that pushed the public into supporting austerity.
Whether this idea actually works remains to be seen, but it is a decent start and for sure, people are more likely to shift money into a competitive savings than investing, so it’s a good idea to try and tap into that.
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I guess what’s not very clear to me is what is the benefit of targeting these savings over more traditional forms of borrowing? Gilt yields are very low and basically underwritten by the Bank of England so it’s not like they’re struggling to find the money. They’d essentially be paying the same interest if not more for less reliable borrowing (the amount the public put into a savings bond could vary quite a bit over time). And from the savers point of view is an instant access bank account with probably 0.5-1% interest suddenly going to be really appealing because of some faux-socialist branding?
The two existing examples I know of are indeed very small: £1m each, 1.2% return, 5-year fixed-term bonds but with a non-guaranteed possibility of cashing out early (they’re managed by a peer-to-peer lending company, one of the good ones in my opinion). But I don’t see why they couldn’t be much larger. Yeah, people might prefer a guarantee of early withdrawal, though.
One big weakness of local savings bonds, though, from Labour’s point of view, is that wealthy regions would be able to raise more funds than poor regions. So the rich get richer.