REPAYMENT OF £2.6 BILLION HISTORICAL DEBT TO BE COMPLETED BY GOVERNMENT

The Chancellor of the Exchequer has announced that the government will redeem the last four undated bonds in the government’s portfolio, completing the repayment of £2.6 billion of historical debt.

Following the passage of the Finance Act 2015, the remaining four undated gilts - 2.75% Annuities, 2.5% Annuities, 2.5% Consolidated Stock and 2.5% Treasury Stock – will all be redeemed in their entirety at par on 5 July 2015.

This announcement concludes the redemption of all undated bonds issued by the government – a process first initiated by the Chancellor in October 2014 by announcing the first repayment of undated gilts by any Chancellor in almost 70 years.

The final four undated bonds to be redeemed in July 2015 can be traced back three centuries and include gilts issued in 1853, when the then Chancellor Gladstone consolidated a number of the capital stocks of the South Sea Company taken on as government liabilities following the Company’s collapse in the infamous South Sea Bubble financial crisis of 1720. Today’s announcement also includes debts first issued in 1752 and subsequently used to finance the Napoleonic and Crimean Wars, the Slavery Abolition Act (1835) and the Irish Distress Loan (1847) and subsequently converted by Chancellor Goschen in 1888.

From the redemption of the final four undated gilts announced today, the Treasury will pay off in full £382 million of outstanding debt, though none of these gilts are traded regularly. This will take the total repayment of historical debt from undated bonds to £2.6 billion.

The government is only able to make this announcement due to the current low interest rate environment, thanks in part to confidence in the long term economic plan that the government has put in place to cut borrowing and create a resilient economy. The redemption of the undated gilts in the portfolio will take advantage of the low yield environment to consolidate the debt portfolio and deliver a long-term benefit to the tax payer.

Chancellor of the Exchequer, George Osborne, said:

"This is an historic moment and I am delighted to announce we will complete the repayment of £2.6 billion of debt dating back as far as the 18th century. We are only able to take this action thanks to the difficult decisions that this government has taken to get a grip on the public finances. This is a sign of the fiscal credibility that our long term economic plan has delivered and the redemption of the undated debt represents great value for money for the taxpayer."