Section 124: Redemption of Undated Government Stocks
Summary
1.This section enables the government to redeem three undated government stocks, first issued in the late nineteenth century. The majority of provisions come into force on and after the date of Royal Assent to Finance Act 2015.
Details of the Section
2.Subsections (1) to (4) enable HM Treasury to redeem three undated stocks commonly known as 2¾% Annuities, 2½% Annuities and 2½% Consolidated Stock. HM Treasury must give at least three months’ notice in the London Gazette of their intention to redeem (subsection (2)) and the sums necessary for the redemption will come from the National Loans Fund (subsection (3)). There are existing legislative provisions about the redemption of these stocks, not all of which are now useable. Subsection (4) disapplies these provisions if redemption occurs under the section.
3.Subsection (5) provides for the consequential repeal of existing provisions in primary legislation which relate to these government stocks.
4.Subsections (6) and (7) concern the commencement of the section. The repeals in subsection (5) come into force on such days as HM Treasury appoints by order. Otherwise, the section comes into force on and after the date of Royal Assent to Finance Act 2015.
Background Note
5.This section will provide for the government to redeem 2¾% Annuities, 2½% Annuities and 2½% Consolidated Stock with at least three months’ notice in the London Gazette. The terms and conditions of the stocks do not enable their redemption. However, provision for their redemption by Parliament was made in legislation dating from the nineteenth century. For two of the stocks, conditions in that legislation can no longer be met and consequently new provision is being made for the redemption of all three stocks in the Finance Act 2015. The government announced at Budget 2015 that it will redeem these three bonds once this Finance Act legislation has been enacted.
6.At Autumn Statement 2014, the government announced that it was adopting a strategy to remove the remaining undated government bonds from the debt portfolio, where it is deemed to provide value for money. Since 31 October 2014, the government has announced the redemption of five undated bonds: 4% Consolidated Loan, 3½% War Loan, 3½% Conversion Loan, 3% Treasury Stock and 2½% Treasury Stock.
