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Green savings bonds 'flop' with just £288mn invested

Green savings bonds 'flop' with just £288mn invested

The government’s Green Savings Bonds have been branded a "flop" after receiving low levels of investment.

Just £288mn was invested into the products, according to the latest NS&I savings figures.

The bonds, first launched last October, were criticised for their low rates, paying 0.65 per cent over three years.

At the time of the launch, an expert said investors would have to be willing to make a ‘sacrifice on returns’ if they wanted to invest in them, with another predicting they will go down like a “lead balloon” with savers.

Earlier this year the government then doubled the interest rate on the bonds, following the “lacklustre” launch.

Laura Suter, head of personal finance at AJ Bell, said: “The Green Savings Bond has been a flop, with the paltry rate on offer at launch seriously hampering its appeal among investors.”

She said there were rumours before the launch that chancellor Rishi Sunak wanted to raise £15bn from the bonds, so the low amount raised is likely to lead to a review of what went wrong

“Those that have handed their money over to help fund government green projects might also be slightly dismayed to learn that the government has two years in which to invest the funds, meaning that for two-thirds of the bond’s term the money could be sitting in an account doing no good,” Suter added.

The entire investment is protected and guaranteed by the Treasury and allows savers aged 16 plus to back the government’s green projects, including zero-emissions buses, offshore wind and low-carbon technologies, along with programmes to help the country adapt to a changing climate like flood defences.

Projects to boost living and natural resources such as planting trees, protecting biodiversity and environmentally sustainable agriculture will also be eligible.

sally.hickey@ft.com