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21/09

03 March 2009

Innovative Vaccine Investment now available in ISAs

Retail investors are to be offered an opportunity to invest in a new Vaccine Investment ISA that aims to raise £50 million to vaccinate children in the world’s poorest countries.

The ISA is the Government’s primary vehicle for tax advantaged saving outside pensions and has proven extremely popular, with over 18 million people (1 in 3 adults) now holding an ISA. The Government has been keen to build on this success and in the 2008 Pre-Budget Report announced that it was extending the qualifying investments for ISAs to securities issued by Multilateral Development Institutions. This enables retail investors to support the work of these institutions in helping developing countries to reduce poverty and provide healthcare, education, water and important services to their citizens.

Under this new scheme, retail investors will be able to earn a competitive return on their investments in a tax-efficient manner, thereby enabling the International Finance Facility for Immunisation (IFFIm) to raise funds to be used by the GAVI Alliance, a public private partnership, to support vaccination programmes in more than 70 developing countries.

IFFIm has raised $1.6 billion to support GAVI immunisation programmes since 2006. This has been facilitated by IFFIm’s triple-A rating, in turn due to the support of major governments, led by the UK, who have pledged to contribute money over 20 years. The proceeds of these pledges are used to repay the initial investments, plus the fixed return.  The World Bank acts as IFFIm’s Treasury Manager and manages its finances.

The Financial Secretary to the Treasury, Stephen Timms, said:

"I am delighted the extension of ISAs to cover securities issued by Multilateral Development Institutions, such as IFFIm, has borne fruit so soon.  I congratulate GAVI, HSBC, IFFIm and the World Bank for developing this opportunity for personal investors to benefit from the tax advantages of ISAs and simultaneously to fund child vaccination in developing countries against life-threatening diseases such as polio, diphtheria, hepatitis and measles."

International Development Secretary, Douglas Alexander, said:

 "The economic downturn could push millions of people into extreme poverty and cause the deaths of up to 2.8 million children. Innovative initiatives like this are vital if we are to prevent this financial crisis from becoming a human crisis. That is why Gordon Brown is leading a new Taskforce on Innovative International Financing for Health Systems, to help save the lives of many millions more"

Notes for Editors

1.       The changes announced in the 2008 Pre-Budget Report build on measures announced in April 2008 to allow people to save more in ISAs and make them simpler and more flexible to use. Saving in ISAs was supported by an estimated £2.4 billion in tax relief in 2007-08.

2.       The annual investment limit for ISAs rose to £7,200 for 2008-09, of which £3,600 can be saved in cash.

3.       Worldwide, nearly 29,000 children under five die every year, that is nearly one every three seconds. Around 25% (2-3 million) of under-five deaths are, or will be soon, vaccine preventable.

4.       The GAVI Alliance (formerly the Global Alliance for Vaccines and Immunisation) has immunised 213 million children and saved 3.4 million lives since 2000. GAVI has also accelerated the introduction of new vaccines and is strengthening health and vaccine delivery systems. Before its creation, immunisation programmes suffered from a lack of stable, predicatable and coordinated cash flow.

5.       Since 2000 The Department for International Development (DFID) has provided £68.5 million funding for GAVI immunisation programmes which contributed to the immunisation of 213 million children and saved up to 3.4 million lives

6.       IFFIm uses long-term binding commitments from donors as collateral against which to borrow money up front from institutional and private investors, which can be spent immediately on mass vaccination programmes. GAVI aims to raise $4 billion by 2015 through IFFIm bond launches.   When fully funded,  IFFIm will have the potential to save 10 million lives.

7.       Frontloading financing for immunisation in this way enables many more lives to be saved than if the same amount of funding were to be spread over a longer time period. Commitments have so far been made by the UK, France, Italy, Spain, Sweden and South Africa. The UK is the largest donor to IFFIm and has committed £1.38 billion during the period 2006 to 2026.

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