Green bonds offering savers the chance to back the government’s environmental projects are going on sale – but experts think the “paltry” returns on offer will see demand wilt.
The bonds, described as the first ever green savings product issued by a country, go on sale online via the Treasury-backed National Savings & Investments (NS&I) today.
Projects such as zero-emission buses, offshore wind and innovative low-carbon technologies will be backed by the funds raised, the government said.
Image: The chancellor said savers could put their money to work in the fight against climate change
Chancellor Rishi Sunak said the bonds, launching ahead of the COP26 climate conference, give savers the chance “to put their money to work in the fight against climate change”.
But they pay an annual rate of just 0.65% over a three-year term even though experts said savers could earn a similar return on an easy access account without having to lock their money away.
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The Treasury has this month already issued £16bn of green sovereign bonds – which are parcels of government debt – to institutional investors, but the new product is the first of its kind to be available to ordinary savers.
They are being offered for a minimum investment of £100 and a maximum limit of £100,000 per person. The full amount will be held for three years and cannot be withdrawn during that time.
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Plans to issue the green savings bonds were first revealed in the chancellor’s March budget.
But experts said the 0.65% rate on offer was a disappointment, with significantly better deals available elsewhere.
Image: A Bank of England rates hike could make the bonds look even less attractive
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “With a rate of just 0.65%, early enthusiasm for the bonds is likely to wither.
“It’s such a disappointment for savers who were hoping for a competitive rate that meant they could do the right thing for the planet and their pocket at the same time.
“Instead NS&I are relying on savers who are willing to pay a price for going green with their savings.”
She said rates of up to 1.8% over three years were available elsewhere while a 0.65% rate could be had on an easy access account.
Laura Suter, head of personal finance at AJ Bell, said: “All that hype for such a paltry rate, is definitely what some savers will be thinking
“Why would savers lock their money away for three years for the same interest rate they can currently get in an easy-access savings account?
“This equation makes even less sense now the nation is looking down the barrel of an interest rate rise from the Bank of England, which will lead to a hike in savings rates.”
The Treasury said research showed appetite among most 25-44 year olds for the concept of such a savings product and that 42% of 18-34 year-olds would be prepared to accept a lower rate of return if they knew their money was being put towards green projects.
It said the government would report regularly so that investors could see which projects have been funded and the positive environmental impact that their investment was making.
The boss of Ryanair has told Sky News the president of the European Commission should “quit” if she can’t stop disruption caused by repeated French air traffic control strikes.
Michael O’Leary, the group chief executive of Europe’s largest airline by passenger numbers, said in an interview with Business Live that Ursula von der Leyen had failed to get to grips, at an EU level, with interruption to overflights following several recent disputes in France.
The latest action began on Thursday and is due to conclude later today, forcing thousands of flights to be delayed and cancelled through French airspace closures.
Mr O’Leary told presenter Darren McCaffrey that French domestic flights were given priority during ATC strikes and other nations, including Italy and Greece, had solved the problem through minimum service legislation.
He claimed that the vast majority of flights, cancelled over two days of action that began on Thursday, would have been able to operate under similar rules.
Mr O’Leary said of the EU’s role: “We continue to call on Ursula von der Leyen – why are you not protecting these overflights, why is the single market for air travel being disrupted by a tiny number of French air traffic controllers?
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Image: Ryanair has cancelled more than 400 flights over two days due to the action in France. File pic: PA
“All we get is a shrug of their shoulders and ‘there’s nothing we can do’. We point out, there is.”
He added: “We are calling on Ursula von der Leyen, who preaches about competitiveness and reforming Europe, if you’re not willing to protect or fix overflights then quit and let somebody more effective do the job.”
The strike is estimated, by the Airlines for Europe lobby group to have led to at least 1,500 cancelled flights, leaving 300,000 travellers unable to make their journeys.
Image: Michael O’Leary believes the EU can take action on competition grounds. Pic: PA
Ryanair itself had axed more than 400 flights so far, Mr O’Leary said. Rival easyJet said on Thursday that it had cancelled 274 services over the two days.
The beginning of July marks the start of the European summer holiday season.
The French civil aviation agency DGAC had already told airlines to cancel 40% of flights covering the three main Paris airports on Friday ahead of the walkout – a dispute over staffing levels and equipment quality.
Mr O’Leary described those safety issues as “nonsense” and said twhile the controllers had a right to strike, they did not have the right to close the sky.
DGAC has warned of delays and further severe disruption heading into the weekend.
Many planes and crews will be out of position.
Mr O’Leary is not alone in expressing his frustration.
The French transport minister Philippe Tabarot has denounced the action and the reasons for it.
“The idea is to disturb as many people as possible,” he said in an interview with CNews.
Passengers are being advised that if your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.
If you have booked a return flight and the outbound leg is cancelled, you can claim the full cost of the return ticket back from your airline.
The CBI has begun a search for a successor to Rupert Soames, its chairman, as it continues its recovery from the crisis which brought it to the brink of collapse in 2023.
Sky News has learnt that the business lobbying group’s nominations committee has engaged headhunters to assist with a hunt for its next corporate figurehead.
Mr Soames, the grandson of Sir Winston Churchill, was recruited by the CBI in late 2023 with the organisation lurching towards insolvency after an exodus of members.
The group’s handling of a sexual misconduct scandal saw it forced to secure emergency funding from a group of banks, even as it was frozen out of meetings with government ministers.
One prominent CBI member described Mr Soames on Thursday as the group’s “saviour”.
“Without his ability to bring members back, the organisation wouldn’t exist today,” they claimed.
Mr Soames and Rain Newton-Smith, the CBI chief executive, have partly restored its influence in Whitehall, although many doubt that it will ever be able to credibly reclaim its former status as ‘the voice of British business’.
Its next chair, who is also likely to be drawn from a leading listed company boardroom, will take over from Mr Soames early next year.
Egon Zehnder International is handling the search for the CBI.
“The CBI chair’s term typically runs for two years and Rupert Soames will end his term in early 2026,” a CBI spokesperson said.
“In line with good governance, we have begun the search for a successor to ensure continuity and a smooth transition.”
Ryanair and easyJet have cancelled hundreds of flights as a French air traffic controllers strike looms.
Ryanair, Europe’s largest airline by passenger numbers, said it had axed 170 services amid a plea by French authorities for airlines to reduce flights at Paris airports by 40% on Friday.
EasyJet said it was cancelling 274 flights during the action, which is due to begin later as part of a row over staffing numbers and ageing equipment.
The owner of British Airways, IAG, said it was planning to use larger aircraft to minimise disruption for its own passengers.
The industrial action is set to affect all flights using French airspace, leading to wider cancellations and delays across Europe and the wider world.
Ryanair said its cancellations, covering both days, would hit services to and from France, and also flights over the country to destinations such as the UK, Greece, Spain and Ireland.
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Group chief executive Michael O’Leary has campaigned for a European Union-led shake-up of air traffic control services in a bid to prevent such disruptive strikes, which have proved common in recent years.
He described the latest action as “recreational”.
Image: Michael O’Leary. Pic: Reuters
“Once again, European families are held to ransom by French air traffic controllers going on strike,” he said.
“It is not acceptable that overflights over French airspace en route to their destination are being cancelled/delayed as a result of yet another French ATC strike.
“It makes no sense and is abundantly unfair on EU passengers and families going on holidays.”
Ryanair is demanding the EU ensure that air traffic services are fully staffed for the first wave of daily departures, as well as to protect overflights during national strikes.
“These two splendid reforms would eliminate 90% of all ATC delays and cancellations, and protect EU passengers from these repeated and avoidable ATC disruptions due to yet another French ATC strike,” Mr O’Leary added.