Savers could be offered tax breaks to transfer money held in bank accounts, building societies and investment funds into new Government “growth bonds” which would be invested in infrastructure projects.
According to The Independent, Chancellor George Osborne has asked Treasury officials to draw up the plans which could offer similar tax breaks to Isas.
The report suggests ministers are also looking at how the Government could underwrite the risk to small investors. They are considering proposals for the Government to underwrite a given percentage of any potential losses by the projects. This would mean that the Government took the first risk with the schemes, losing its money before any investors.
The report quotes a senior Government source as saying: “While a lot of families are struggling and have no disposable income, there are others who are quite cash rich but have nowhere secure to put their money where they can be guaranteed a decent return. Because interest rates are as low as they are, there is the potential to tap into this money and get it invested in infrastructure which will have a dramatic effect on Britain’s long-term growth.”
It comes after the Government has been repeatedly criticised by Labour for having no plan to boost economic growth and more than a year after the Chancellor delivered his “Budget for Growth” last March.
The Treasury was unavailable for comment.