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Home News

Fury as Sunak accused of squandering eye-watering sum of taxpayers’ money

"An absolute master when it comes to protecting his own money. A complete liability when it comes to protecting ours…"

Joe Mellor by Joe Mellor
2022-06-10 08:05
in News
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Chancellor Rishi Sunak has been accused of wasting £11 billion of taxpayers’ money by paying too much in interest servicing the Government’s debt.

The National Institute of Economic and Social Research (NIESR) said the losses were the result of Mr Sunak’s failure to insure against interest rate rises on £900 billion of reserves created through the quantitative easing (QE) programme.

The losses were said to exceed the amount that the Conservatives have accused Labour former chancellor Gordon Brown of losing when he sold some of the UK’s gold reserves at rock bottom prices.

The institute’s director, Professor Jagjit Chadha, told the Financial Times that Mr Sunak’s actions had left the country with “an enormous bill and heavy continuing exposure to interest rate risk”.

Labour said the losses were “astronomical” and accused the Government of “playing fast and loose” with the public finances.

In response, the Treasury said that it had a “clear financing strategy” in place to meet the Government’s funding needs.

According to the FT report, the Bank of England (BoE) created £895 billion of money through the QE programme, most of which was used to buy government bonds from pension funds and other investors.

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When those investors put the proceeds in commercial bank deposits at the BoE, the Bank had to pay interest at its official interest rate.

Failure

Last year, when the official rate was still 0.1%, the NIESR urged the Government to insure the cost of servicing this debt against the risk of rising interest rates by converting it into government bonds with longer maturity.

Prof Chadha said they had now calculated that Mr Sunak’s failure to heed their advice – despite having regularly warned about the risks of higher inflation and interest rates on the costs of servicing the Government’s debt – had cost taxpayers £11 billion.

“It would have been much better to have reduced the scale of short-term liabilities earlier, as we argued for some time, and to exploit the benefits of longer-term debt issuance,” he told the FT.

For Labour, shadow treasury minister Tulip Siddiq said: “These are astronomical sums for the Chancellor to lose, and leaves working people picking up the cheque for his severe wastefulness while he hikes their taxes in the middle of a cost-of-living crisis.

“This Government has played fast and loose with taxpayers’ money. Britain deserves a government that respects public money and delivers for people across the country.”

A Treasury spokesman said: “There are long-standing arrangements around the asset purchase facility – to date £120 billion has been transferred to HM Treasury and used to reduce our debt, but we have always been aware that at some point the direction of those payments may need to reverse.

“We have a clear financing strategy to meet the Government’s funding needs, which we set independently of the Bank of England’s monetary policy decisions.

“It is for the Monetary Policy Committee to take decisions on quantitative easing operations to meet the objectives in their remit, and we remain fully committed to their independence.”

Reactions

As you would expect losing this amount of money has not been greeted with a positive response:

1.

An absolute master when it comes to protecting his own money

A complete liability when it comes to protecting ours…https://t.co/B2EXf6WC1s

— Marina Purkiss (@MarinaPurkiss) June 10, 2022

2.

Rishi Sunak losing £11bn of taxpayers’ money seems somewhat careless.

— John Crace (@JohnJCrace) June 9, 2022

3.

Sunak was lauded as “one of the good tories” at the start of his tenure and now I have to wonder if he may be one of the worst chancellors of the last 60 years. https://t.co/8Jz3pNm7gX

— Daviemoo-politically enraged-🏳️‍🌈🏳️‍⚧️✊🏿✊🏾✊🏽 (@Daviemoo) June 9, 2022

4.

Uhoh @Siobhain_Mc has just handed @RishiSunak his arse on a plate…. pic.twitter.com/GMUnxBeIBT

— MrBounceBack.com (@Bounce_BackLoan) June 6, 2022

5.

The only financial issue the Tories pinned on Brown was the untimely sale of bullion. Now the boot is on the other foot, don't let them forget Rishi Sunak ran up an £11bn bill failing to insure the debt against interest rises when inflation was already spiralling out of control.

— steven wilkinson (@UrbaneSlave) June 10, 2022

6.

I thought he’d run a hedge fund? Wouldn’t this be 101 stuff?

— Neil Poynter (@neilpoynter) June 9, 2022

7.

Having an international banker pretending to be a Chancellor is really starting damage the country.

— James T (@JamesTa01913565) June 9, 2022

8.

And they would have people believe they are the party of fiscal responsibility?
🤦🏻‍♂️🤦🏻‍♂️🤦🏻‍♂️🤦🏻‍♂️🤦🏻‍♂️

— Viscount John Lindsey – 💙😷#FBPE #FBPPR #FUBARUK (@JL_998) June 9, 2022

Oh and remember this…

A firm linked to Tory peer Michelle Mone was awarded £200m of taxpayers’ money in contracts via the VIP fast lane.

MedPro is now under National Crime Agency investigation but Ministers won’t come clean about these contracts.

What have they got to hide?https://t.co/Q46daFRhSE

— Angela Rayner 🌹 (@AngelaRayner) June 9, 2022

Related: As Gove ‘enthusiastically’ backs Boris, flashback to when he knifed him in 2016

Tags: headlineRishi Sunak

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