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…