The suggestion last week by Labour that they would create Recovery Bonds for individual investors is one of the most appealing ideas to result from the current pandemic.

The fact that it has caused little in the way of a response from the government is not surprising; it will be recycled as a Conservative strategy long before Labour gets the chance to introduce it.

The government response to date to stimulate the economy has been in the form of quantitative easing – essentially creating new money. Critics of bonds argue that the government does not need to borrow because it can always fund itself. But need and desirability are not the same.

The government may not need to borrow – which is true - but people need to deposit with it. That’s for security, or because they are overseas holders of sterling wanting a safe place to borrow funds, or because they are in finance and need the collateral value government bonds provide. The argument about not needing to borrow does not help explain why bonds actually exist.

There are also social reasons why bonds offer an attractive way to finance the recovery; by linking the saver with the project that the saving might deliver and by using the savings of the older generation to create assets that work for those who are younger, individuals and communities will feel that they are directly contributing to the recovery and their children’s futures.

Link these bonds to local projects or create an NHS bond and the benefits only increase.

The thinking behind Recovery Bonds has another purpose too. The money pumped into the economy in the past twelve months has created a huge build-up of excess savings (an unintended but nevertheless inevitable consequence of quantitative easing). Much of this is doing nothing more than sitting in bank accounts and could be put to much better use by giving savers the security that government bonds provide at a rate that smaller savers require.

This idea is just evolving in terms of its thinking about the ways in which the savings glut can finance the recovery; an Investment bond could be used to support small businesses that require additional capital and a Community bond directed towards local infrastructure projects such as the roll-out of broadband to rural businesses.

This should not be political. Recovery Bonds need the oxygen of publicity; we can all help by making sure our MPs and business organisations support the idea.

Over to you.

Noel Guilford