Autumn Statement 2014: Government to pay back First World War debt

The Treasury is going to refinance the debts with newly-issued bonds to take advantage of the record-low interest rates

The Chancellor has set out plans to pay back all of the nation’s First World War debt, almost a century after it was first issued.

The £1.9 billion repayment of the War Loan will take place on 9 March 2015. The bond was issued by then-chancellor Neville Chamberlain at 3.5 per cent in 1932, replacing a 5 per cent War Loan which had been issued in 1917 as part of the Government’s efforts to fundraise for the Great War.

The Treasury is going to refinance the debts with newly-issued bonds to take advantage of the record-low interest rates.

“This is a moment for Britain to be proud of. We can, at last, pay off the debts Britain incurred to fight the First World War,” Chancellor George Osborne claimed. “It is a sign of our fiscal credibility and it’s a good deal for this generation of taxpayers. It’s also another fitting way to remember that extraordinary sacrifice of the past.”

The Treasury said it was “taking advantage of the low-yield environment to consolidate the debt portfolio and deliver a long-term advantage of the tax payer.”

It’s also looking at repaying debt originally issued in the era of the South Sea bubble in the 18th century, as well as to fund the nationalisation of the Bank of England. It will pay back all six of Government’s remaining perpetual gilts — which never mature — “when we deem it value for money to do so”.