Douglas Carswell – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Douglas Carswell on 2016-02-02.

To ask Mr Chancellor of the Exchequer, what assessment his Department made of the merits of other potential methods of debt insurance before authorising use of government buildings in London as security for the sukuk bonds.

Harriett Baldwin

In the Sukuk structure, rental payments provide the income for investors. When the Sovereign Sukuk were issued in July 2014 the profit rate was set at 2.036% in line with the yield on gilts of similar maturity, making the investor return on the Sukuk broadly equivalent to that on conventional gilts of similar maturity.

Three central government properties form the underlying assets which underpin the Sukuk.

The Government was clear at the time of issuance that the Sukuk issuance was not for debt financing purposes. Instead, it was issued to deliver on the government’s commitment to become the western hub for Islamic finance. The issuance showed that the UK is open for business with all parts of the world and provided high quality capital to UK-based Islamic banks.

UK based institutions that offer Islamic finance services are contributing to jobs and growth with assets totalling $4.5bn at the end of 2014.