Commissioners for the Reduction of the National Debt - Investment of Government Funds


From their earliest days the Commissioners had associations with the financial market and this led to the acquisition of other roles, especially the responsibility for the investment and administration of major Government funds. This now constitutes the main function of CRND, which currently administers holdings of around £66bn as at 31 March 2022, representing the assets of the various investment funds. The investment powers differ to some extent from fund to fund, depending upon the provisions of the relevant Acts of Parliament, but basically investments are restricted to securities issued or guaranteed by central or local Government or Government-backed deposits. The largest funds are currently the National Insurance Fund Investment Account, the National Lottery Distribution Fund Investment Account and the Court Funds Investment Account.

The objectives of investment are, generally, to maintain sufficient liquid funds to meet withdrawals by the "client" Departments, to maximise income and/or to protect the capital value of the fund. To meet these objectives it is necessary to have frequent exchanges of information and periodic meetings with the client Departments. The relevant statutes generally make investment subject to HM Treasury's direction or concurrence.

While CRND can, and does, invest in marketable gilts where feasible, the purchase by CRND of large amounts of gilts in the market might cause conflicts for the debt manager in its efforts to implement the Government's debt issuance policy. In the past, specific amounts of new gilt issues were often reserved for CRND, which mitigated the need for large-scale market purchases, but this was not always a practicable solution, and these days might conflict with principles of predictability and transparency in debt issuance. In 1981, HM Treasury arranged to create "NILO" stocks specifically to meet CRND's investment needs when there was no other way to do so. HM Treasury issues non-marketable NILO (named after the former National Investment and Loans Office) stocks on the same terms and conditions as the marketable parent gilt issue(s) to which they relate. All transactions in NILO stocks are dealt with on the basis of the current market price of the parent gilts. NILO stock that is no longer required by CRND is purchased and cancelled by the Treasury.