\n<\/p>\n
Liberal Democrat leader Sir Ed Davey has said the government should start selling war bonds as there is a need to “move far faster” on UK defence spending. <\/p>\n
Under his party’s plan, members of the public could loan the government money in the form of a bond which would run over a two-to-three year period and pay out the same interest as standard government bonds. <\/p>\n
Davey said the bonds, which the party says could raise up to \u00a320bn for the military, would give the public a chance to “support patriotically our defence”. <\/p>\n
A government spokesperson said “new debt instruments” were kept under review but that they had to represent “value for money” and “be consistent with wider fiscal objectives”. <\/p>\n<\/div>\n
Calls to increase defence 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 frequently criticised Nato countries for failing to spend enough on their military. <\/p>\n
Speaking on the BBC’s Sunday with Laura Kuenssberg, Davey said a move to sell war bonds was needed as “we’re in almost a Cold War type scenario”, citing the Russian use of drones, submarines and shadow fleets<\/a>. <\/p>\n He continued: “This is a serious threat, and we need to move far faster than what the government has been doing.<\/p>\n “We need to go rapidly.”<\/p>\n The Labour government has pledged to raise overall defence spending from 2.3% to 2.5% of national income by 2027, at an estimated cost of an additional \u00a36bn a year.<\/p>\n It has also promised to raise levels to 3.5% by 2035, in line with a pledge by Nato members last year. <\/p>\n However, there have been reports in the Times<\/a> and the Sun<\/a> that plans to make Britain’s armed forces “war ready” will require \u00a328bn more than has so far been allocated.<\/a><\/p>\n<\/div>\n The government had been due to publish its defence investment plan last autumn but there are suggestions it has been delayed due to concerns about cost.<\/p>\n Earlier this month, the head of the Armed Forces, Sir Richard Knighton, said the UK was “not as ready as we need to be for the kind of full-scale conflict we might face”.<\/p>\n<\/div>\n On Sunday, Davey said: “Everyone can see that since the last election things have changed dramatically. The way that Putin is prosecuting that [Ukraine] war, but as significantly, the attitude of Donald Trump to supporting European defence.”<\/p>\n He expressed concern about the Nato alliance given the approach of the US president. <\/p>\n “I deeply regret to say, because of Donald Trump, there has to be a question about whether we can rely on the Untied States. With him in the White House they’re no longer a reliable ally. We have to step up and fast,” he told the BBC.<\/p>\n The Liberal Democrats said the money raised from issuing bonds would be ring-fenced for defence and the investment would help deliver “growth, jobs and higher revenues” for the government “which would partially offset the cost of additional debt servicing”.<\/p>\n The party added the scheme would need to be accompanied by an overhaul of the Ministry of Defence procurement process, which has previously been criticised as wasteful. <\/p>\n Their proposal, the party says, would be similar to the bonds scheme used during World War One and World War Two. <\/p>\n Individual citizens could lend the government money, which would be paid back in six to 10 years with interest. By the end of 1945, the scheme had raised \u00a31.754m.<\/p>\n Posters encouraging members of the public to buy bonds – or national savings certificates – used slogans including “lend to defend” and “feed the guns with war bonds”. <\/p>\n Dan Coatsworth, head of markets at investors AJ Bell, said: “War bonds are a proven way of raising money to fund national defence spending, but they can burden a government with long-term debt. <\/p>\n “In theory, the public might demand a better rate of interest than they could get on cash in the bank to take up the bonds. <\/p>\n “While some people might think it is their duty to support the country, there will be others who treat such a bond in the same way as any type of investment.” <\/p>\n<\/div>\n