Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what discussions they have had with the Bank of England about suspending its quantitative tightening policy of selling bonds accumulated through quantitative easing, as opposed to allowing maturing debt to expire.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Bank of England has operational independence from the government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England.
The separation of fiscal and monetary policy is a key feature of the UK’s economic framework, it is in line with international standards and essential for the effective delivery of monetary policy, so the government does not comment on the conduct or effectiveness of monetary policy.
Since October 2022, HM Treasury has transferred £93.32bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound. Since 2013, the Bank of England has transferred £123.85bn to HM Treasury, giving HM Treasury a net position of £30.53bn to date
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what losses have been sustained by the Treasury since 2022 as a result of the Bank of England's decision to sell bonds as part of its policy of quantitative tightening.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Bank of England has operational independence from the government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England.
The separation of fiscal and monetary policy is a key feature of the UK’s economic framework, it is in line with international standards and essential for the effective delivery of monetary policy, so the government does not comment on the conduct or effectiveness of monetary policy.
Since October 2022, HM Treasury has transferred £93.32bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound. Since 2013, the Bank of England has transferred £123.85bn to HM Treasury, giving HM Treasury a net position of £30.53bn to date
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government how much quantitative tightening has cost the Treasury since it began in 2022; and what they estimate the cost will be by 2029.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Bank of England has operational independence from the Government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England.
In a letter to the Chancellor (12 November 2024), the Governor of the Bank of England said:
“Whilst different unwind strategies might affect the timing of cash flows between HMT and the APF, they are expected to have little effect on total cost in present value terms. For example, active sales incur upfront costs, but they also reduce lifetime net interest costs from carrying gilts on the APF’s portfolio when Bank Rate is higher than coupon payments.” [1]
Since October 2022, HM Treasury has transferred £85.9bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound.
Between 2012 and 2022, the APF transferred £124bn in excess cash to HMT under the terms of the indemnity from net interest payments on purchased assets.
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.
The independent OBR provides detailed projections of the underlying losses from the APF and the impact on different fiscal metrics. As per the OBR’s Economic and Fiscal Outlook for the Spring Forecast 2025, the lifetime cost of the APF is forecast to be £133.7bn.
[1] Letter from the Governor of the Bank of England to the Chancellor of the Exchequer 12 November 2024
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the Bank of England's policy to sell bonds, in the light of the US Federal Reserve and European Central Bank practice of disposing of bonds through maturation.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Bank of England has operational independence from the Government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England.
In a letter to the Chancellor (12 November 2024), the Governor of the Bank of England said:
“Whilst different unwind strategies might affect the timing of cash flows between HMT and the APF, they are expected to have little effect on total cost in present value terms. For example, active sales incur upfront costs, but they also reduce lifetime net interest costs from carrying gilts on the APF’s portfolio when Bank Rate is higher than coupon payments.” [1]
Since October 2022, HM Treasury has transferred £85.9bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound.
Between 2012 and 2022, the APF transferred £124bn in excess cash to HMT under the terms of the indemnity from net interest payments on purchased assets.
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.
The independent OBR provides detailed projections of the underlying losses from the APF and the impact on different fiscal metrics. As per the OBR’s Economic and Fiscal Outlook for the Spring Forecast 2025, the lifetime cost of the APF is forecast to be £133.7bn.
[1] Letter from the Governor of the Bank of England to the Chancellor of the Exchequer 12 November 2024
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the relative merits of selling bonds as part of quantitative tightening, verses disposing of them at maturity.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Bank of England has operational independence from the Government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England.
In a letter to the Chancellor (12 November 2024), the Governor of the Bank of England said:
“Whilst different unwind strategies might affect the timing of cash flows between HMT and the APF, they are expected to have little effect on total cost in present value terms. For example, active sales incur upfront costs, but they also reduce lifetime net interest costs from carrying gilts on the APF’s portfolio when Bank Rate is higher than coupon payments.” [1]
Since October 2022, HM Treasury has transferred £85.9bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound.
Between 2012 and 2022, the APF transferred £124bn in excess cash to HMT under the terms of the indemnity from net interest payments on purchased assets.
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.
The independent OBR provides detailed projections of the underlying losses from the APF and the impact on different fiscal metrics. As per the OBR’s Economic and Fiscal Outlook for the Spring Forecast 2025, the lifetime cost of the APF is forecast to be £133.7bn.
[1] Letter from the Governor of the Bank of England to the Chancellor of the Exchequer 12 November 2024
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government why the cost of Crossrail in England justified consequential proportionate funding for Wales while the construction of HS2 in England does not.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
HS2 is a heavy rail programme. The UK Government is responsible for heavy rail infrastructure across England and Wales, so spends money on this in Wales rather than funding the Welsh Government to do so through the Barnett formula. This approach is consistent with the funding arrangements for all other policy areas reserved in Wales, as set out in the Statement of Funding Policy.
The Government remains committed to heavy rail schemes in Wales, by providing funding for both operations, maintenance and infrastructure, and enhancement schemes such as modernising Cardiff Central Station.
Conversely, Crossrail is a local transport project. Since local transport is devolved to the Welsh Government, the Barnett formula is applied in the usual way when the Department for Transport is allocated additional funding for Crossrail.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they plan to undertake an audit of the usefulness and results of the Enterprise Investment Scheme and the Venture Capital Trust scheme with regard to (1) their value for public money, sustained investment, employment and innovation, and (2) recommendations about the continuation and development of the schemes.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
An evaluation of the venture capital schemes was undertaken in 2022. These were published on gov.uk 1.
The Government is committed to ensuring early-stage, innovative companies have access to the investment they need to grow and develop. These schemes provide a range of tax reliefs to encourage investment in higher-risk, early-stage companies which face the biggest challenges in accessing growth capital.
The Government legislated on 3 September to extend the UK venture capital tax relief sunset clause, from April 2025 to April 2035.
[1] Evaluation of Venture Capital Schemes - GOV.UK
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how much has been allocated from the £3 billion earmarked in the November 2017 Budget for 2018–20 to public bodies in Wales, Scotland and Northern Ireland to assist with the costs of leaving the EU; and, of these provisions, how much will be available for border policing and security in Northern Ireland.
Answered by Lord Bates
My Written Ministerial Statement[1] of 13 March 2018 set out that UK departments have been allocated £1.5bn to prepare for EU Exit and meet their responsibilities across the whole of the UK, including Scotland, Wales and Northern Ireland. The Home Office was allocated £395m, which includes funding to take the steps necessary to prepare the UK border.
Where responsibilities are devolved, this generated Barnett Consequentials for each of the devolved administrations as set out in my Written Ministerial Statement.
[1] https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Lords/2018-03-13/HLWS521/
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what is their response to reports that industry representatives in the UK have been asked by Her Majesty's Government to sign non-disclosure agreements before meetings with HM Treasury relating to the UK's departure from the EU.
Answered by Lord Bates
The government believes that businesses from across the UK have an important role to play in the policymaking process.
It is standard practice for the Government to use Non-Disclosure Agreements when appropriate. Non-Disclosure Agreements with industry representatives are crucial to open exchange of information on options and scenarios. They ensure that planning, negotiations and decisions are based on what is achievable and in the best interests of the UK when we leave the EU.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what advice they (1) sought, and (2) received, from (a) the Bank of England, and (b) the financial services industries, including insurance and financial derivatives, before tabling their amendment to the European Union (Withdrawal) Bill which specifies 11pm on 29 March 2019 as the statutory time and date for departure from the EU.
Answered by Lord Bates
It became clear in the run up to EU (Withdrawal) Bill’s Committee Stage that there was uncertainty as to whether the ‘exit day’ appointed by the Bill would correspond to the day that the UK actually leaves the EU. The Government listened carefully to the debate around setting ‘exit day’ for statutory purposes of the Bill and recognised the importance of providing as much certainty as possible.
The Treasury is working closely with the Bank of England to ensure the UK’s smooth and orderly withdrawal from the European Union.