NS&I, the state-owned bank, has revealed that Green Savings Bonds – launched last October to great fanfare as part of the Government’s drive to raise funds for initiatives to tackle climate change, had raised a mere £288 million from retail savers as at 31 March.
Jason Hollands, Managing Director of Bestinvest, the online investment platform and coaching service, comments:
"In its Annual Report published this week, NS&I, the state-owned bank, revealed that Green Savings Bonds – launched last October to great fanfare as part of the Government’s drive to raise funds for initiatives to tackle climate change, had raised a mere £288 million from retail savers as at 31 March.
"In our view the dismal take up of Green Saving Bonds savers isn’t surprising given the very low yields on offer, albeit these rose from 0.65% on the first tranche last autumn – fixed for three years – to 1.3% in February, reflecting the wider pattern of rising rates and yields.
"Bear in mind the 1.3% rate currently available is only fractionally above the Bank of England’s official bank rate of 1.25% - which is set to rise materially over the coming months. It is also deeply negative after inflation is factored in and way below the 3-year fixed term bonds available from commercial banks where the more competitive deals offer rates between 2.5% - 3.0%.
"When savers are utilising more of their cash to meet the higher cost of living, it is hard to see the attraction of locking in to such low returns.
"In reality this flop with private investors is irrelevant for the UK Government, who have been easily able to raise significant amounts of money for its green projects at low rates from institutional investors via green gilt issues. Green gilt issues have so far raised over £16 billion and have been heavily oversubscribed as institutions such as insurance funds and pension schemes leapt at the chance to ‘green’ their portfolios."
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