France is doing something very interesting. Issuing a ‘super bond’.
Last month the French president announced plans for a superbond. This week he appointed two former prime ministers, Alain Juppé, a Gaullist, and Michel Rocard, a Socialist, to head a commission for four months to think about what to do with the money being raised.
Mr Sarkozy wants the two grandees to reflect on “priorities that justify an exceptional investment effort to prepare France’s future.” François Fillon, his prime minister, has written to all parties to ask for ideas. The bond will not be launched until 2010, and no amount has been specified. Mr Fillon says part will be open to individual investors: the French are among Europe’s thriftiest folk. The areas that could benefit from the money include research, innovation, renewable energy, education, health, biotechnology and infrastructure.
I really like this idea. Issuing a bond where the money is earmarked for a set purpose and where individuals can directly subscribe.
In some ways this is a natural extension of the Fabian argument about hypothecating taxes.
Reporting the results of original quantitative and qualitative research into public attitudes towards taxation, Paying for Progress argues that the public must be ‘reconnected’ to the taxes they pay and the public services which these finance. To do this it proposes the greater use of earmarked or ‘hypothecated’ taxes, including a new tax to fund the National Health Service.
If it works for taxes, why not for debt? Individuals looking considering where to hold their savings could make an active choice about the type of project they want to invest in.
I can envisage a ‘research and development bond’, ‘infrastructure bonds’ and ‘science bonds’.
The debate over the level of public debt is pretty depressing. The public seem convinced that all the money is simply being wasted. Bond issues such as these would be a good of demonstrating how the government is using the money.
This could even be extended to Local Government. The Local Government Officer noted yesterday that on solution to the shortage of social housing would be to:
Build more housing, both by allowing local authorities to do that (getting there!) where the funding from the private sector has dried up, but also by taking on the “pickle rural England” lobby and accept that many market towns and villages need to grow to become viable, but also by encouraging housebuilding companies to build houses that look like they belong in their context rather than uniformly bland housing estates which could be in any settlement in any part of Britain.
Why shouldn’t local authorities have the power to issue ‘Housing Bonds’?