Latest news with #taxpayersmoney
Telegraph
2 days ago
- Business
- Telegraph
Reform launches attack on the Bank of England
Reform has launched a blistering attack on the Bank of England for wasting tens of billions of taxpayers' cash on its money-printing programme. Richard Tice, the party's deputy leader, accused Threadneedle Street of prioritising bank profits over the interests of working people as he vowed to order it to stop paying billions of pounds in interest to commercial lenders. In a letter to Andrew Bailey, the Governor of the Bank of England, Mr Tice says the Bank has engaged in 'systemic misuse of taxpayers' money' by paying interest on cash parked at the Bank as well as selling its existing stockpile of government bonds at substantial losses. Reform, which is leading several polls, claims it could save £35bn a year by scrapping interest on central bank reserves, created as part of the Bank's £895bn quantitative easing (QE) programme to boost the economy during the financial crisis and Covid lockdowns. It wants to use this money to help pay for an increase in the tax-free personal allowance to £20,000 and cut corporation tax. 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 of England is unnecessarily wasting tens of billions of pounds of taxpayers' money, whilst enriching City institutions,' the letter says. 'The nation's accounts are already under very severe pressure. QT is also partly responsible for keeping gilt yields higher than they otherwise would be, resulting in even more punitive interest costs, imposing yet more strain on the [public finances].' The remarks put the Bank on a collision course with Reform if the party wins the next election. Mr Bailey has warned that a victory for Reform could lower savings rates or push up borrowing costs for consumers. Commercial banks earn interest on reserves held at the Bank at the base rate. Threadneedle Street made huge profits from QE when interest rates were at record lows of 0.1pc because the returns on the government gilts it bought were far higher than the amount it had to pay in interest on reserves. A total of £123.9bn was generated and sent to the Treasury. However, this rapidly reversed when borrowing costs started to rise, with £85.9bn transferred back from the Treasury to the Bank since the end of 2022. NatWest, Barclays, Lloyds and Santander received more than £9bn in interest on Bank of England reserves in 2023 – a 135pc increase on the previous year, according to the Treasury committee of MPs. The Office for Budget Responsibility (OBR), the Government's tax and spending watchdog, expects the cumulative lifetime loss to the taxpayer to total £133.7bn – which is bigger than the annual education budget and more than twice what the UK spends on defence. Reform is not alone in its criticism of QT. Former Bank deputy governors including Sir Paul Tucker and Sir Charlie Bean have also suggested changes to how reserves are remunerated. Rachel Reeves, the Chancellor, also wrote to Mr Bailey last month to stress that the process of reducing the Bank's stockpile of bonds must provide 'value for money'. However, the Governor has repeatedly warned that ending interest payments on reserves could undermine the Bank's ability to influence the cost of borrowing, while another former policymaker, Gertjan Vlieghe, said such a move would be a 'disaster' akin to a debt default. Mr Tice used the letter to describe the comparison as 'complete nonsense'. He said: 'This money was created out of thin air by the Treasury and Bank of England to lubricate the wheels of the economy at two times of extreme national stress over the last 18 years. 'It did not belong to those City institutions in the first place. It is no coincidence that commercial bank profits have soared as interest rates rose as the Bank of England paid out tens of billions of this voluntary interest. Those institutions cannot believe their luck.' Catherine Mann, a member of the Bank's Monetary Policy Committee (MPC) that sets interest rates, has also warned that policymakers must pay closer attention to the impact of QT on financial markets and the wider economy now that it is cutting interest rates. She estimated that QT could raise borrowing costs by almost a quarter of a percentage point. Mr Bailey has repeatedly spoken out against changing the way commercial lenders are compensated for parking their cash at the Bank, warning that it could undermine financial and monetary stability if lenders no longer wished to hold extra buffers at the Bank. In a letter to the Treasury select committee in April, Mr Bailey said: 'Remuneration of reserves is a key component of the Bank's approach to ensuring rate control. Any loss of rate control would undermine the MPC's ability to affect the real economy with its interest rate decisions and could cause significant harm to credibility of monetary policy.' However, Mr Tice denied that Reform would be interfering with the Bank's independence, comparing the Bank's choices to 'extraordinary strategic decisions which amount not to monetary policy but to fiscal policy, costing the taxpayer tens of billions of pounds of losses'. He added: 'The role of elected governments and politicians is to protect taxpayer's money and the broader interests of the electorate. It would be negligent of us to ignore this very significant issue and leave it in the hands of unelected people. Our job is to challenge, scrutinise and question'. A Bank of England spokesman said: 'The Governor set out the Bank's views on the matter in a letter to the Treasury Select Committee.'
Daily Mail
26-05-2025
- Politics
- Daily Mail
Former judge fears taxpayers' cash wasted on inquiry reports 'gathering dust'
A former top judge has raised fears that taxpayers' money is being wasted because SNP ministers do not act on the recommendations of public inquiries. Lord Hardie, who led the long-running £13million inquiry into the Edinburgh tram project, called for a new parliamentary body to be set up to monitor the way the Scottish Government responds to the findings of inquiries it sets up. He said there is now a perception that the reports produced 'sit on ministers' shelves gathering dust', leading to concerns about 'wasted public money'. It comes after it emerged that the total cost of all Scottish public inquiries since 2007 has ballooned to £230million. In a further new development, it was also revealed yesterday that the cost of the Sheku Bayoh inquiry soared by £1million in just three months. In a written submission to Holyrood's finance committee, which is carrying out an inquiry into the cost-effectiveness of public inquiries, Lord Hardie highlighted that there have previously been calls for a joint parliamentary committee 'to monitor government responses to inquiry recommendations and hold the government to account for implementing accepted recommendations'. He said: 'The committee may wish to consider a similar approach to allay perceptions that reports of public inquiries sit on ministers' shelves gathering dust and result in concerns that the expenditure incurred on the relevant public inquiry was wasted public money.' Lord Hardie, a retired judge, headed up the Edinburgh tram inquiry, which was set up in June 2014 and finally produced its report in September 2023. In his new written evidence to the finance committee, he highlighted that the then First Minister Alex Salmond said the inquiry would be 'swift and thorough' and said this 'merely raised expectations of the public about the early conclusion of the inquiry' without the public realising that the statement had been made 'without any knowledge of what would be involved in undertaking an independent, transparent and thorough inquiry into the scandal of the Edinburgh Tram Project'. He said there had been 'no discussion' prior to his appointment about timescales or agreed budgets, and criticised issues including 'inadequate IT' at the inquiry's office, which was paid for by the Scottish Government. Lord Hardie said: 'The effect on staff morale was significant and there was a considerable waste of time and money during that time.' He said 'little or no guidance' was provided to assist with the early stages of the inquiry, and added: 'The process of setting up the inquiry with accommodation, staff and other resources gave the impression of our reinventing the wheel.' Since 2007, five public inquiries have been completed - the ICL Stockline disaster, fingerprinting, contaminated blood, Edinburgh's trams and the healthcare acquired infections - at a cost of £42.6million. Five more are currently ongoing - on child abuse, hospitals, Sheku Bayoh, Covid-19 and Eljamel. In a letter to the finance committee, Lord Bracadale, chairman of the Sheku Bayoh inquiry, confirmed that total costs have increased to £24.8 million at the end of March 2025, which was £1 million higher than £23.8 million in December 2024. It included staff costs of £13.3 million, £6.8 million of administration and accommodation costs, and £4.7 million on legal fees and expenses for core participants. A Scottish Government spokesman said: 'We welcome the committee's interest and look forward to hearing their views. 'Public inquiries are set up when no other avenue is deemed sufficient given the issues of public concern. In many cases, such as the Scottish Covid Inquiry, they are set up with the support of, or in response to calls from, the Scottish Parliament. 'Public inquiries operate independently of government and the Chair has a statutory duty to avoid unnecessary costs.'
