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RUTH SUNDERLAND: Give us the post-war spirit

RUTH SUNDERLAND: Give us the post-war spirit

Recently I made the case in this newspaper for Recovery Bonds – a modern version of War Bonds – to harness people's savings and help build a better po

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Recently I made the case in this newspaper for Recovery Bonds – a modern version of War Bonds – to harness people’s savings and help build a better post-Covid economy. 

These could be a very powerful weapon indeed. The idea has the support of influential figures including Nigel Wilson, the chief executive of Legal & General – an asset management business looking after around £1trillion of funds – and Baroness Altmann, one of our foremost pensions experts. 

British households have accumulated £150billion of excess savings during lockdowns that normally would have been spent on socialising, outings and clothes. By the end of March, this figure is likely to reach £200billion. Large sums are also sitting in pension funds, so despite our rising national debt, there is no shortage of money in the UK. 

Looking ahead: Covid-19 provides an opportunity to move to a more inclusive capitalism

Looking ahead: Covid-19 provides an opportunity to move to a more inclusive capitalism

Looking ahead: Covid-19 provides an opportunity to move to a more inclusive capitalism

The real issue is how we make best use of that treasure trove. Let’s assume vaccines are successful and lockdowns can be lifted. Many people will naturally wish to splash some of those savings. The danger, however, is that too much will go on consumption, including on imported goods, and not enough invested in productive UK assets. 

This is where Recovery Bonds could come in, particularly if they are introduced alongside a blueprint for economic recovery in a similar vein to the post-war Marshall Plan. 

The point is not to replicate historic schemes, but to harness their energy and psychology: to catch the spirit of the moment. Playing into this is the fact that Brexit gives us an opportunity to reconsider regulations that are hampering growth, and to change where needed. 

The public would be disillusioned if money from Recovery Bonds was used by the Government to refinance existing debt, or vanished into the Treasury ether. 

Instead, it ought to be channelled into infrastructure projects – not grandiose schemes such as HS2 but local rail links and station refurbishments and retrofitting housing stock to be more energy-efficient.

Other projects could include hydrogen, e-power networks for road, flood defences and rural broadband. 

Money could be deployed to improve local public transport, on green projects such as offshore wind and carbon capture, along with medical research. Ideally, a public information campaign would accompany Recovery Bonds so savers would know where their money was going, and see the benefits. The psychology of this investment could inspire them. Raising money this way could finance economic revival and a levelling up agenda without hiking taxes – or at least not so much. 

Rishi Sunak could achieve a form of wealth redistribution. It’s miserable to endure endless debates about which taxes should be increased and who should be hit hardest, when more imaginative thinking is needed. 

Our response to the pandemic, in the clap for carers and the sadness for the death of Captain Sir Tom Moore, has been a sign that we can achieve unity in a kingdom that often seems deeply divided.

Covid-19 provides an opportunity to move to a more inclusive capitalism, not the socially exclusive and rapacious brand that caused the financial crisis and still lingers. 

In 1945 the nation embarked on huge improvements in housing, education and health. In the same way, the pandemic and Brexit could provide a once-in-a-generation renewal, if we can seize the moment.

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This post first appeared on Dailymail.co.uk

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