Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answer by Baroness Penn on 28 March (HL7077), whether they will describe the risks that they have assessed regarding their decision not to publish the Asset Purchase Facility deed indemnity; and which of these risks would “not advance the public’s understanding" of the arrangement by which HM Treasury indemnifies the Asset Purchase Facility.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Asset Purchase Facility (APF) deed indemnity will not be published. The disclosure of the APF deed indemnity would be likely to expose sensitive information relating to the quantitative easing scheme and related processes.
HM Treasury indemnifies the APF which means that any losses or gains from the APF accrue to HM Treasury. This is public knowledge and the publication of the deed of indemnity will not advance the public’s understanding of that arrangement.
The Bank of England publishes quarterly reports for the APF, which explain to the public the implications of indemnity for the Treasury and the cash transfer arrangements between the Bank and Treasury.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what they consider would constitute the withdrawal of banking services from the Central Bank of Russia by the Bank of International Settlements; what discussions they have had with the Bank of England about the withdrawal; and what assessment they have made of the effectiveness of the measures to withdraw such banking services from Russia.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The government and Bank of England have cooperated closely in implementing sanctions on Russia and will continue to do so. Decisions over the nature of services provided by the Bank for International Settlements (BIS) are a matter for that body and its members. The Bank of England, which is the United Kingdom’s member, has engaged with the BIS on this issue. The BIS has suspended access of the Central Bank of Russia to all BIS services, meetings and other BIS activities. The government is confident that the range of unprecedented measures announced by the international community are having a significant effect on the Russian economy undermining its ability to wage war in Ukraine.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they have encouraged the Bank of England to make representations to the Bank of International Settlements in order to ensure that the Bank of International Settlements is not used to circumvent sanctions on Russia; if so, whether they are aware of any such representations; and if not, whether they will ask the Bank of England to make such representations.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The government and Bank of England have cooperated closely in implementing sanctions on Russia and will continue to do so. The Bank of England has engaged with the Bank of International Settlements (BIS). The BIS has suspended access of the Central Bank of Russia to all BIS services, meetings and other BIS activities.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what representations they have made to the Bank of International Settlements to ensure that the suspension of international reserves prevents Russia from making international payments.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The government and Bank of England have cooperated closely in implementing sanctions on Russia and will continue to do so. The Bank of England has engaged with the Bank of International Settlements (BIS). The BIS has suspended access of the Central Bank of Russia to all BIS services, meetings and other BIS activities.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the Written Answer by Baroness Penn on 9 March (HL6405), whether they will publish the Asset Purchase Facility (APF) deed indemnity with the “operationally sensitive information” redacted.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Asset Purchase Facility (APF) deed indemnity will not be published.
HM Treasury indemnifies the APF which means that any losses or gains from the APF accrue to HM Treasury. This is public knowledge and the publication of the deed of indemnity will not advance the public’s understanding of that arrangement.
This decision not to publish the information based on an assessment of risk that the Treasury has considered.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimate they have made of the cost to the Exchequer of the Bank of England raising interest rates by one per cent, in order to meet the Government’s commitment under the Asset Purchase Facility’s deed of indemnity.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
At the 2021 Autumn Budget, the Office of Budget Responsibility estimated that a one percentage point increase in Bank Rate and short-term interest rates at the beginning of 2022-23 would increase debt interest costs by £9.1bn in 2026/27, the final year of the forecast. This includes the impact via the Asset Purchase Facility as well as other short-term liabilities such as Treasury bills.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they will publish the Asset Purchase Facility's deed of indemnity.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Asset Purchase Facility (APF) deed indemnity will not be published.
HM Treasury indemnifies the APF which means that any losses or gains from the APF accrue to HM Treasury. This is public knowledge and the publication of the deed of indemnity will not advance the public’s understanding of that arrangement. Furthermore, the indemnity contains operationally sensitive information which should not be made public.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimate they have made of the impact on the economy of a rise in interest rates of one per cent.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Monetary policy is the responsibility of the independent Monetary Policy Committee of the Bank of England and this includes decisions on Bank Rate and quantitative easing. The separation of fiscal and monetary policy is a key feature of the UK’s economic framework, and essential for the effective delivery of monetary policy, so the Government does not comment on the conduct or effectiveness of monetary policy.
The Government continually monitors economic developments, including any changes to the interest rate, to consider the impact of these developments on businesses and households.
Asked by: Lord Tyrie (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what contingency plans they have put in place since the temporary liquidity shortage in March 2020 for the management of subsequent liquidity shortages.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
As the Chancellor has made clear publicly before, the government will continue to use the markets as its primary source of financing.
HM Treasury and the Bank of England (“the Bank”) announced in March 2020 that the government’s long-established Ways and Means (W&M) facility could, if necessary, play a role in providing a short-term source of additional liquidity to the government to smooth its cashflows and support the orderly functioning of markets, through the period of disruption from Covid-19. It was agreed that any use of the W&M facility was to be repaid as soon as possible before the end of the year.
The W&M facility is the government’s long-established overdraft at the Bank. Ordinarily, a standing balance of around £400m is maintained in the W&M facility to support Exchequer cash management. That remained the case throughout 2020-21 (a period during which the W&M facility had not been drawn on).
HM Treasury, the Debt Management Office and the Bank continue to cooperate closely to support the orderly functioning of the gilt and sterling money markets.