• Kenneth Gibson MSP

Tory Chancellor's Incompetence costs Taxpayers £11 Billion


The National Institute of Economic and Social Research (NIESR), the oldest non-partisan economic research institute in the UK, has criticised UK Chancellor Rishi Sunak MP after he failed to take out insurance against rate rises in Quantitative Easing reserves. Quantitative Easing refers to the Bank of England’s practice of “creating” cash to buy government bonds from pension funds and other investors in the financial markets. When those investors put the proceeds in commercial bank deposits at the Bank of England, it had to pay interest at its official interest rate. Last year, when the official rate was only at 0.1%, the NIESR recommended that the UK Government insure the cost of servicing this debt against the risk of rising interest rates by converting it into government bonds with a longer maturity. NIESR Director Jagjit Chadha, said Mr Sunak’s decisions not do so had saddled the UK with “an enormous bill and heavy continuing exposure to interest rate risk.” Kenneth Gibson MSP commented: “It is shameful that the Chancellor wasted £11,000 million (£11 billion) of taxpayers’ money out of sheer incompetence. To put that in perspective, it equates to more than £2,000 for every man, woman and child in Scotland. “Being a multi-millionaire and the richest man in the House of Commons, Mr Sunak can perhaps afford to be profligate in his private life, however in this cost-of-living crisis the people of Scotland cannot afford the UK Chancellor to just ‘lose’ such an astronomical sum of money. “This £11 billion could have instead been used to halt the Tories’ shameful 1.25% hike in National Insurance, which is estimated to generate £13 billion, making the UK the only major world economy to be raising taxes on working people during the cost-of-living crisis. “Meanwhile, the Tories in Scotland have the cheek to attack the SNP for investing £20 million – less than one 500th of the amount Mr Sunak has lost – in taking forward our democratic mandate to hold another independence referendum.” ENDS