Keir Starmer yesterday called on the government to give people in the UK “a stake in the national recovery” with new proposals aimed at supporting savers.

The Labour leader called for the introduction of a “British Recovery Bond” ahead of the Budget on 3 March.

He also proposed creating 100,000 small businesses across the country over the next five years by boosting funding for start-up loans.

Labour has suggested the British Recovery Bond, which would offer people a savings account with the government at a “competitive” interest rate, could raise billions of pounds for the National Infrastructure Bank, “growing business and the jobs of the future”.

Starmer also suggested the move would give financial security to millions of people who may have saved for the first time during the coronavirus pandemic.

In response, Aegon pensions director, Steven Cameron, suggested the concept behind Starmer’s proposed Bond is “sound”, but “not completely new”.

“The proposed Bond would be a government-run savings account rather than an investment, offering security and likely paying an interest rate a little above what’s available currently in commercial cash savings vehicles,” Cameron commented.

“But with interest rates at an all-time low, and with the prospect of them going negative, the returns savers would receive would also be limited. For savers looking for a low-risk, government backed initiative the Recovery Bond may be attractive, particularly given the ‘patriotic dividend’ savers may feel from investing in the future of the country.

“There’s every chance we’ll see the Chancellor using his 3 March Budget to offer a broader range of investors further targeted incentives to invest in certain areas of the UK economy. And in places, these might well resemble Starmer’s British Recovery Bond concept.”

AJ Bell senior analyst ,Tom Selby, added: “On the face of it this policy ticks three key boxes for Starmer – boosting the funding available to rebuild the country post-COVID, providing a return to hard-working savers keen to play their part in the recovery, and with a dollop of patriotism thrown in for good measure.

“However, it is important to be realistic about what this could mean in reality. The creation of a British Recovery Bond would not spin gold out of thin air – it is simply an alternative way of raising finance.

“Furthermore, the more attractive the interest rate offered to savers, the worse the deal for UK taxpayers – the same people who would presumably be encouraged to buy the bonds.

“So while this policy has an obvious political attraction, in terms of addressing the £400bn hole left in the country’s finances by the pandemic, it feels like rearranging the deckchairs on the Titanic.”

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