Let public by war bonds to raise £20bn for defence, say Lib Dems
The Liberal Democrats are calling on the government to start issuing “war bonds”, which the party says could raise up to £20bn to support the military.
Under the plan, the public would be able to lend money to the government in the form of bonds that would be valid for a period of two to three years and pay the same interest as standard government bonds.
Liberal Democrat leader Sir Ed Davey said the bonds would “give ordinary people the opportunity to contribute to Britain’s security”.
A government spokesman said “new debt instruments” were being kept under review but they needed to represent “value for money” and be “consistent with wider fiscal objectives”.
Calls to increase defense spending have intensified in recent years following Russia’s full-scale invasion of Ukraine in 2022 and the election of US President Donald Trump, who has criticized NATO countries for not spending enough on their militaries.
The Labor government has pledged to increase total defense spending from 2.3% to 2.5% of national income by 2027, at an estimated additional cost of £6 billion per year.
It also pledged to raise levels to 3.5% by 2035, in line with a commitment made by NATO members last year.
However, there are reports Times And Sun Plans to make Britain’s armed forces “battle ready” It will require £28bn more than has been allocated so far.
The government was due to publish its defense investment plan last autumn but there are suggestions that the plan has been delayed due to cost concerns.
Earlier this month, Chief of the Armed Forces Sir Richard Knighton said Britain was “not adequately prepared for the large-scale conflict we may face”.
Announcing his party’s proposal, Sir Ed said: “Now is the time to be mindful of the threats facing Britain, with Vladimir Putin waging war in Europe and Donald Trump tearing up the rules and alliances that keep us safe.”
He said Britain and its allies “must rapidly strengthen our defenses to deter the likes of Putin… it is far better to invest in deterrence than to go to war now”.
The Liberal Democrats said money from the bond issue would be preserved for defense purposes and that the investment would help deliver “growth, jobs and higher income” for the government, which would “partly offset the cost of additional debt service”.
The party added that the plan needed to be overhauled in the Ministry of Defence’s procurement process, which has previously been criticized as wasteful.
The party says its proposals would be similar to the bond plan used during World War I and World War II.
Individual citizens could loan money to the government, which would be repaid with interest within six to 10 years. By the end of 1945 the program had raised £1.754 million.
Posters encouraging people to buy bonds or national savings certificates used slogans such as “lend for defense” and “feed the guns with war bonds.”
Dan Coatsworth, head of markets at investors AJ Bell, said: “War bonds are a proven way to raise money to fund national defense spending, but they can burden a government with long-term debt.
“The public could, in theory, demand a better interest rate to buy the bonds than they could get with cash in the bank.
“While some people may think it is their duty to support the country, there will be others who treat a bond like this the same as any investment.”
