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The UK is taking steps to repay the £2bn debt it originally borrowed to finance the First World War.
The debt had not previously been paid off because the Government has to pay relatively little interest on it, having paid a total of £1.26bn since 1917.
This amounts to roughly £13m a year, a relatively small item on the Government’s balance sheet in today’s terms.
The Treasury is planning to cut the annual cost of the debt even further, however, by re-borrowing money at today’s rates.
The Government can currently borrow money at record low interest rates, so it makes financial sense to replace old debt borrowed at higher interest rates.
Current rates are particularly low because investors who buy bonds want relatively safe investments, like government debt, and are willing to compromise by accepting lower returns.
First World War in images: Hidden and extraordinary - a brand new galleryShow all 71 1 /71First World War in images: Hidden and extraordinary - a brand new gallery First World War in images: Hidden and extraordinary - a brand new gallery Dogs wearing gas masks Two German soldiers lie in anticipation of Allied forces with their dogs. In a trench inside of North Germany, German forces are prepared for a dangerous poison gas attack. Both soldiers and dogs don state-of-the-art gas masks in this image.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Soldiers removing lice In the well-constructed German trenches, a small group of soldiers attempt to remove the lice from their uniforms. Lice were a very common problem in the dank conditions present in the trenches during WW1.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery An aerial dogfight An aerial dogfight between at least 5 planes can be observed here. Dogfighting was the main method of attack between aircraft because the developments in aerial technology made it increasingly difficult to drop projectiles onto another plane. This dogfight took place over the Western Front, most likely near to France or Britain.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery The winged surveyor A pigeon armed with a camera for aerial surveillance over France, about 1915
© adoc-photos/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Bayonet practice A British Sergeant Major displays how to effectively utilise a bayonet in a training demonstration. This fighting instruction was necessary for most soldiers-to-be since this would have been their first experience of conflict.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Washed-up submarines A pair of German U-boats, both which had been sunk during the war, washed up within mere feet of each other on the Cornish coastline, near to Falmouth.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Dog has his paw bandaged by soldier A dog working for the Red Cross charity hospital service has his injured paw bandaged by an Allied soldier. The Red Cross organisation provided health care for thousands of soldiers, helping to reduce the monumental WW1 death toll.
© Harriet Chalmers Adams/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Austrian aircraft dives A view from below of an early Austrian aircraft. This fighter plane heavily resembles a bird, indicating the immediate progression of aircraft and displaying how new and revolutionary they were at the time.
© Brown &Amp Dawson/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Soldier holds owl in a trench A French member of the 92nd Infantry Regiment holds an Eagle Owl in a trench. The use of animals during the First World War was still evident as all involved nations struggled to immediately adapt to the more modern type of warfare. Horses were still used in cavalry charges, despite being mercilessly mowed down by machine guns as old methods met new technology.
© adoc-photos/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Plane attacks tank Although aircraft were not initially believed to be an effective offensive strategy in the theatre of war, this plane shoots at an operational tank, causing it to burst into smoke and flames.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Soldiers being given flowers Women dressed all in white giving soldiers flowers. These soldiers are marching through London on a final parade before they head to war.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Half-submerged tank Despite being created for the traversal of boggy, war-torn farmlands typical of the First World War, this tank is returned to nature as it is submerged into the earth.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Escape from a submarine A group of navy men abandon ship; escaping miraculously from a sinking submarine using one of the ship's boats. A further man is pictured to be clambering down a suspended rope to make his exit.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Italian soldiers climb with skis A troop of Italian soldiers clamber up a snow-covered slope, shouldering skis and other snow-proof equipment. This scenario presents an alternative viewpoint of the First World War, showing that the theatre of war consisted of more than just boggy grassland.
© Comando Supremo, Italian Army/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Naval fitness training Young navy recruits undergo fitness training. This was a rigorous procedure to select the fittest recruits, and also to make all other recruits fitter; ready for naval service.
© United States Navy Department/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Poison gas and Fire A bird's eye view of Flanders, Belgium shows the devastation wrought by a combined poison gas and flame attack on the German trench. This offensive was orchestrated by the French forces.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery US navy convoy sails Atlantic A convoy of US ships patrols the Atlantic Ocean. Their risk - and the danger they posed in turn - is in contrast to the serene beauty of sunlight rays piercing the cloud.
© Burnell Poole/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Soldiers venture into ruined town A small company of soldiers travel into the occupied town of Cambrai, which lies in ruins. Rubble and debris line the streets, whilst glass no longer fills the windows. Smoke and dust from the destruction and ongoing fighting creates a dense camouflage preventing the soldiers from seeing very far, or being seen.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Italian bomber plane in New York An early Italian bomber plane flies by the Woolworth building in New York. The image here has been damaged and has aged significantly, as can be observed by the quality of the paper on which the photograph is printed.
© Edwin Levick/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery A crowd of German POWs In mid 1918, towards the climax of the so-called 'Great War', a large crowd containing many German Prisoners Of War (POWs) , captured by the British forces throughout the 4-year period, is photographed. It is reported that many thousands of German soldiers were captured during the conflict.
© Underwood & Underwood/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Tanks fail to cross the trenches Multiple tanks, these being made by Renault, have been defeated by the trenches. The two tanks most prominent in the image are tilted onto their noses, after failing to successfully cross a trench line and therefore upending into the trenches, only to be abandoned.
© adoc-photos/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery USS New Hampshire fires The navy ship USS New Hampshire fires a large weapon at an opposing vessel. These navy ships were heavily equipped with well-developed weaponry capable of easily sinking faraway vessels.
© Underwood &Amp Underwood/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Navy cooking training Young recruits from the United States Navy are trained to cook and create dishes in preparation for life on deck. Long lasting and resilient foods are prepared in order to save time, space and resources on long voyages.
© United States Navy Department/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Biplane dropping bomb by hand A German biplane drops a light bomb by hand. In the early years of the First World War, technology was not developed enough to implement automatic bomb delivery systems.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery US enlist recruitment poster This American recruitment poster implores US citizens to sign up for the US armed forces to fight against the 'Mad Brute' of Germany. Powerful propaganda was not uncommon during the First World War period; it was rather used to influence, shape and measure public opinion.
© Heritage Images/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery German forces escape poison gas A German storm trooper unit emerges from a large, dense cloud of poison gas. This particular gas cloud was set down by the German army to provide cover for their own forces.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Sailors battle a fire on deck A fire on an operational vessel is being fought by the sailors on board. This damage caused by a torpedo missile or another ship in battle has caused the ship to rock, or tilt to one side as depicted by the excess wake on the boat's starboard (right) side.
© Underwood And Underwood/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Shot down French aircraft A French plane shot down by a German biplane during the Battle of Verdun. A long trail of smoke indicates the combustibility of the materials that early planes were fashioned from; such as taut leather. The often jagged and irregular lines on the ground below are the trench lines; scars on the earth of which some still remain today.
© adoc-photos/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery An aerial camera in use The co-pilot of a plane with an Aeroplane Graflex camera during the First World War
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery HMS Cornwallis in action A member of the British Navy; HMS Cornwallis was engaged in the Gallipoli offensive and can be seen to be firing onto the shore in this image.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery War and technology A pre-WW1 invention, a mono-plane flies overhead as a steam train travels below. This combination of differing transport mediums provides an indication of the early technological developments as WW1 began.
© O.S. Nock; Milepost 92 ½/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery French-Canadian army recruitment poster An army recruitment poster. The text roughly translates to; 'sign up for the victory loan'. It appeals to those living in Canada to sign up to help fight with the Allied forces.
© Swim Ink 2, LLC/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery USS New York on duty The battleship class vessel; USS New York is bathed in salt water on duty. Battleships were one of the highest class of naval vessel, and renowned for their size and destructive ability.
© James B. Gilmer/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Soldiers taking shelter on a slope A combination of British and French troops came together during the offensive on the Gallipoli Peninsula to defeat Turkish forces protecting the area. They are making the most of the mountainous terrain to shield their position.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Women working in a shell factory A look inside one small part of a munitions factory. The two women shown working here are engaged in crafting operational shells to drop on the German trench line in an attempt to break the stalemate.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery US navy sailors practice shooting A team of US Navy sailors practice operating a large gun attached to a boat in New York harbour. Due to the motion of vessels in tidal waters, practice was necessary to ensure accuracy on the ocean.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery British forces await artillery British forces, known as 'Tommies' to most other forces, await the arrival of a heavy artillery unit. When fully operational, this would likely be used to suppress German attack and to thin the numbers to prepare for a British offense.
© adoc-photos/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Naval airship before duty This particular Airship was used for naval observations during the aerial shelling of the Dardanelles region in Turkey. Many like it were used during the disastrous Gallipoli campaign in Turkey.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery A sea patrol with multiple vehicles A collective patrol including a number of planes and vessels navigate the seas, as well as maintaining a vigilant watch to protect their convoy and to weaken opposition forces.
© Jane Watts Fisher/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery A British machine gun unit Two British machine gunners operate a machine gun whilst taking cover in a trench. They are wearing gas masks to protect against potential poison gas attack. Machine guns were responsible for many thousands of casualties throughout the war and often devastated counter attacks.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Making shells in a munitions plant Workers in a munitions plant manufacture steel shells which will later be dropped in their thousands on German trench lines. Surprisingly, a large proportion of the shells offloaded during the First World War didn't explode; and some are still dangerous today.
© Press Illustrating Service/National Geographic Society/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery German plane crashes A German biplane crash lands near to a French airport during the war. This close-up shot of a WW1 plane shows how flimsy they were, usually built from leather and taut fabrics rather than metal alloys.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery American navy recruitment poster A further US recruitment poster; this time focusing on the Naval forces in an attempt to fill out the navy to aid the fight against the German U-boats.
© K.J. Historical/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery A line of willing army recruits At one of many British recruiting offices, a large queue of British men line up with the correct documents to pledge their allegiance and services to the British army to fight against the German, Austro-Hungarian and Turkish Empires.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Mortar cannon firing In the infamous Somme region of France, a French 270 millimetre mortar cannon bombards the German trenches, inspiring terror, destruction and lowering enemy morale. A crane needs to be used to transport the large ammunition rounds to feed this beast.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Munitions advertisement poster A poster to encourage enrolment for the position of munitions workers to craft shells and other weapons. Women in particular were relied on due to the apparent shortage of men because of the later introduced conscription into the army.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Takeoff from a ship In an impressive feat of piloting prowess, a British biplane takes off using a makeshift runway, supported by two large guns of an aircraft carrier. This aircraft was most likely a scouting plane, as can be deduced from the apparent lack of visible weaponry.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery The Gallipoli landing A variety of troops from all different Allied forces were involved in the Gallipoli landing pictured. Orchestrated by future wartime PM Winston Churchill, this operation was a complete failure, particularly for the British. The harsh terrain shown was very different to that of the flat plains of France.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Tank travels over a trench A British tank, typical of the latter years of WW1, maneuvers its way over a trench system during the Battle of Cambrai. Also known as 'Landships', these armoured vehicles were designed to traverse the boggy terrain of the French war-torn countryside.
© Underwood & Underwood/Underwood & Underwood/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Aircraft mechanic recruitment poster A Canadian recruitment poster, pining for 'skilled mechanics' to repair damaged aircraft or to manufacture new planes. The need for aircraft mechanics became increasingly apparent as the role of aircraft in the war grew exponentially.
© David Pollack/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery 031_rocketmortar.jpg A French soldier uses a mortar cannon to launch a torpedo rocket. Just one of the many forms of artillery, these mortar cannons were often accompanied by barrages of highly explosive shells.
© Hulton-Deutsch Collection/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Tank tangled in barbed wire A First World War tank becomes entangled within a mangled heap of barbed wire on the battlefield. Barbed wire was utilised very heavily throughout WW1, and was designed to become increasingly more difficult to get through when shelled or affected by explosives of any sort.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Torpedoed boat sinking The Covington is sunk after being torpedoed. This US troop transport vessel was hit during June, 1918.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Camouflaged soldiers American forces hide out in a trench, behind a line of crude yet effective camouflage fashioned out of branches, twigs and leaves. This trench line may be considered to be more poorly built than other trenches, since this is a front-line trench, which would have been built in less time, under pressure from the opposition.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery An eloquent German trench A number of German soldiers occupy an elaborately constructed German trench system on the Western Front. Unlike some other, more hastily built trench systems, this has structurally sound and aesthetically pleasing walls and floors, which also improve the levels of sanitation and morale for those living and fighting in these trenches.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Aftermath of the war Aftermath: This street corner in Poelcapelle, Belgium is left with little more than a heavily damaged tank, and scorched, dead remnants of trees. Unfortunately this image is representative of much of the French and Belgian landscape after the First World War.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Troops go 'over the top' A company of Allied Canadian soldiers go 'over the top', leaving the comparative safety of their trenches to advance into the perilous wasteland of 'No-Man's-Land' in an attempt to oust enemy forces to reclaim lost ground.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Recruitment poster for manufacturing positions A First World War recruitment poster advertises the need for more aircraft, and therefore more workers in the manufacturing industries. Women are targeted specifically here due the general shortage in men because of the conscription causing the majority of men to be forced to join the army.
© Heritage Images/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery British tank in action Somewhere in war-stricken France, 1916, a British tank advances into enemy territory, heading an offensive to gain vital ground in this War of Attrition.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery British lookout A British soldier finds himself close to enemy lines. Hiding in the trenches and keeping his head low to avoid attracting unwanted attention, he cautiously scouts No-Man's-Land for any indication of enemy activity.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery American submarine on operation An American submarine undergoing operations in the open sea. Submarine vessels were used primarily to counter the effect of Germany's powerful navy, which was nearly equal in size to that of the world-renowned British naval force by the eve of WW1. Submarines sank battleship class vessels using torpedo missiles.
© Lebrecht/Lebrecht Music & Arts/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Upturned German plane A German biplane is brought down just behind American lines, where it crashes and stands on its central propeller. Instead of bursting into flames when it crashed, this biplane remains fairly intact.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Navy recruitment poster A poster recruits men to join the naval forces; specifically in the signals branch, using coding techniques and Morse code to transfer information.
© Heritage Images/Corbis
First World War in images: Hidden and extraordinary - a brand new gallery Abandoned tank Nothing left in the tank: This armoured vehicle was abandoned by its operators after it ran out of fuel. This presents yet another problem with these machines.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Field Cannon use A French "37" Field cannon is mounted on a parapet ready for use against advancing forces in a second-line trench. This weapon is able to boast a range of over a mile, as well as an impressive accuracy rating of greater than that of the typical WW1 rifle.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery A submarine surfaces A German U-boat submarine surfaces, emerging from the rough ocean waters in the open sea.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Inside view of a tank A rare look inside of a US tank with its hatches open. Both the gunner and skipper of this so-called 'Whippet tank' are present to indicate the less than spacious conditions inside.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Recreational activities A group of officers play cards on the balcony of a Red Cross hospital in London. This unexpected portrayal of a war-time scene displays the home front, which is often omitted from war-time representations.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Intact British tank A British tank from the First World War is pictured fully intact before entering the scene of battle. When initially introduced, these machines struck fear into the hearts of their opposition.
© Bettmann/CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery The two-man tank A front-on view of aptly named two-man tank designed by Ford Motor Company. When operational, this may have been what terrified German soldiers would have seen.
© CORBIS
First World War in images: Hidden and extraordinary - a brand new gallery Liquid fire offensive A view from behind the French trench position shows an effective use of liquid fire; a technique intended to wipe out, or at least scare off opposition forces aiming to launch an offensive against the front-line trench.
© CORBIS
The Treasury said it would be able to cut the interest rate of 4 per cent it is currently paying on the money to a lower figure.
It also said: "Around £2bn of First World War debt remains, which is one graphic illustration of the legacy of this war on our nation and the long-term effects of high debt. The Government is looking into the practicalities and value for money of repaying this outstanding debt in full."
There are eight undated government bonds outstanding, including one issued by the prime minister William Gladstone to consolidate the capital stock of the South Sea Company. The company collapsed in the South Sea Bubble financial crisis of 1720.
In 1888, then chancellor George Goschen converted bonds first issued in 1752 and used them to finance the Napoleonic and Crimean wars.
The First World War bonds, known as 4% Consols, were issued by Winston Churchill when he was Chancellor in 1927 to refinance the National War Bonds from WWI.
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