3 days ago
Bailey warns Reform will make ‘no money' from Bank of England raid
Reform wants to stop this money being paid out and use it instead to help fund an increase in the tax-free personal allowance to £20,000, as well as tax cuts for businesses.
But Mr Bailey warned these savings were 'illusory', telling The Times: 'Please don't rely on that as income because it's not gonna be there.'
'Akin to a tax on banks'
The Bank's unwinding of its money printing programme has come under increasing scrutiny owing to estimates that it could cost the taxpayer up to £150bn.
The Telegraph revealed that Richard Tice, Reform's deputy leader, wrote to the Bank last month, accusing Threadneedle Street of prioritising bank profits over the interests of working people.
Mr Tice said the unwinding of this programme, known as quantitative tightening (QT), was pushing up borrowing costs and piling pressure on the public finances.
The Bank is reportedly preparing to fight back against accusations that QE did not provide value for money by publishing estimates of how much its bond buying reduced UK borrowing costs.
Mr Bailey also published a five-page riposte to Mr Tice in which he warned that Reform's plan would hurt lending to the wider economy.
He also warned that removing interest on reserves 'is akin to a tax on banks'.
Mr Tice said he was planning to take up an offer by Mr Bailey to meet, although a date has not yet been confirmed
He said: 'He is accepting my point on QT it sounds, which is good; and I look forward to discussing the interest payments when we meet. He does accept it is up for debate.'
Mr Bailey also suggested last week that recent volatility in the bond market could change the way it sells its huge stockpile of UK debt going forward.
The Bank is currently losing much more money on its stockpile of long-term debt because it is selling the bonds through QE evenly, resulting in steeper losses on long-term debt.
While Mr Bailey would not be drawn on a looming decision in September, he said policymakers would 'look carefully' at how the rise in long-term borrowing costs 'plays into our decision'.
