Rishi Sunak has been accused of squandering £ 11bn of taxpayer money by paying too much in interest to pay off government debt.
The National Institute for Economic and Social Research (NIESR) said the losses were the result of the chancellor’s failure to insure against rising interest rates on the £ 900bn reserves created through of the Quantitative Relief Program (QE).
The losses were said to exceed the amount the Conservatives have accused of losing to former Chancellor Gordon Brown when he sold some of the UK’s gold reserves at low prices.
The director of the institute, Professor Jagjit Chadha, told the Financial Times that Sunak’s actions had left the country “with a huge bill and continued continued exposure to interest rate risk”.
Labor said the losses were “astronomical” and accused the government of “playing fast and loose” with public finances.
In response, the Treasury said it had a “clear funding strategy” to meet the government’s funding needs.
According to the FT report, the Bank of England (BoE) created £ 895 billion through the QE program, most of which was used to buy government bonds from pension funds and other investors.
When these investors put their deposits into commercial bank deposits in the BoE, the Bank had to pay interest at its official interest rate.
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 turning it into government bonds. with a longer maturity.
Chadha said they had now calculated that the fact that Sunak did not listen to his advice, despite regularly warning about the risks of higher inflation and interest rates on government debt service costs, had cost to taxpayers £ 11 billion.
Shadow Treasury Minister Tulip Siddiq said: “These are astronomical sums to lose the chancellor and let workers receive the check for their severe waste while raising their taxes amid a crisis in the cost of life.
A Treasury spokesman said: “There are long-standing agreements around the ease of buying assets – so far 120 billion pounds have been transferred to HM Treasury and used to reduce our debt, but we have always been aware that at some point the direction of these payments may need to be reversed.
“We have a clear funding strategy to meet the government ‘s funding needs, which we set independently of the Bank of England’ s monetary policy decisions.
“It is up to the Monetary Policy Committee to make decisions on quantitative easing operations to achieve the objectives of its remit, and we are fully committed to its independence.”