Connect with us

Economy

On this day in 1956: premium bond scheme debuts

Published

on

Fifty-eight years ago today, the premium bond scheme was presented to MPs by then-chancellor of the exchequer Harold Macmillan. Introduced as a means of controlling inflation as well as incentivising the general public to save money, it is now one of Britain’s most popular forms of savings account.

Despite being introduced in the late-50s, premium bonds were first proposed in 1916. Rejected at the time, it took 40 years for them to be accepted.

Initially offered to the public in April 1956, premium bonds didn’t officially go on sale until November 1 of that year. The tagline for their promotion was ‘saving with a thrill’, with the word ‘prize’ adopted to encourage investment. This appeared to work, as the first day of sales saw the bonds sell more than £5m.

Yet, it wasn’t until June 1957 that prizes were given out; six months after their launch. Using an Electronic Random Number Indicator Equipment, pictured, also known as ERNIE, winners were chosen by picking out a holder’s numbers that then corresponded to investors. The minimum eligible investment was £1, with potential winnings of £1,000.

How do they work?

Premium bonds differ from most other investments in that they offer ‘prizes’ and not interest. These financial rewards are also tax-free, and do run less risk due to the initial investment being secured by the government. The investor can take their money out of the bond whenever they wish without losing the initial investment.

National Savings and Investments (NS&I) issues the bonds, as well as determining the odds on how much can be won. Odds can vary, meaning that the chance of winning alters depending on when the bonds were purchased. Premium bonds have been available for online purchase since early 2005.

Those wishing to purchase the bonds must be over the age of 16. Guardians and parents can purchase bonds for children under-16 as long as the purchaser holds them until the child comes of age. The bonds are sold at various outlets, with post offices and supermarkets most popular. Each bond is then entered into the prize ballot two months after being purchased.

Each £1 buys one bond, meaning there is an equal chance to get the prize. It also means that the more that is invested, the greater the possibility of winning.

Where are they now? 

Since its inception, the premium bond has gone on to become the UK’s most popular form of savings account. Offering the chance for the general public to win large sums of money, the UK now has over £47 billion tied up in them.

The minimum investment is now £100, with a maximum of £30,000. According to the NS&I, as of 2006, a premium bond is bought every 10 seconds. Indeed, more bonds were purchased between 2001-2006 than in the entire 45-year period before that.

As with many saving accounts, a portion of investments has remained unclaimed. Roughly £30m is reportedly waiting to be given to ‘winning’ investors.

Nowadays, premium bonds divide opinion. To some, they are seen more as a lottery, where the chance of winning is idealised as being life-changing sums of money. Others – typically those who invest larger amounts – see premium bonds as a more risk-free form of investment, offering greater returns.

Moneysavingexpert critiques the relevancy of the bonds in the current market, arguing that they offer less than typical ISA accounts.

The value of prizes paid out is determined by an interest rate, which is currently 1.3%. It usually changes when the Bank of England base rate changes, but can also change depending on prevailing market savings rates – NS&I shouldn’t be a best buy”, it writes.

If you owned every premium bond in existence, the amount won over a year would be equal to 1.3% of what you put in. So very roughly, for every £100 put into premium bonds on average, you’d expect a £1.30 annual return.

Joseph Iddison is a master’s student at the University of Leicester. Having graduated from the same institution in July 2013 in BA English, he is currently studying environmental science.

Photo: Rob Brewer via Flickr

Further reading:

Consider sustainability and ethics when investing in ISAs this year

Budget 2014: Investment tax relief to boost social enterprises

2014 could be ‘perfect time’ to invest in an ISA

Poor ISA rates deter consumers – costing £191bn in tax-free savings

The Guide to Sustainable Investment 2014

Joseph Iddison is a master's student at the University of Leicester. Having graduated from the same institution in July 2013 in English, Joseph will start the global environmental change course in September.

Economy

Will Self-Driving Cars Be Better for the Environment?

Published

on

self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

Continue Reading

Economy

New Zealand to Switch to Fully Renewable Energy by 2035

Published

on

renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

Continue Reading
Advertisement

Facebook

Trending