Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what consideration they have given to paying interest on a proportion of reserve deposits made with the Bank of England by commercial banks and providing for any reduction in reserves to be paid out of the interest on that proportion, rather than the current arrangements in which interest is paid on the whole deposit and provided to the Bank by HM Treasury from public funds.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
Bank Rate is the reference rate that commercial banks both receive on their reserve holdings and must pay to borrow additional reserves from the Bank of England. Remuneration of reserves at Bank Rate plays a role in the implementation of monetary policy and ensures commercial banks pass on changes in interest rates to household and businesses.
Data on payments to and from HM Treasury to the Asset Purchase Facility (APF) is made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data is available in worksheet PSA9B.
Time period | Interest receivable (£ million) | Interest payable (£ million) | Net interest receivable (£ million) | Cash transfers to HM Treasury total (£ million) | Cash transfers from HM Treasury total (£ million) |
Dataset identifier code | MDD6 | MDD7 | MDD8 | MT6A | MF7A |
2021-22 | 17,990 | 1,859 | 16,131 | 7,218 | 0 |
2022-23 | 17,003 | 20,567 | -3,564 | 4,164 | 5,010 |
2023-24 | 15,403 | 39,748 | -24,345 | 0 | 44,549 |
2024-25 | 13,753 | 34,045 | -20,291 | 0 | 36,323 |
2025-26 | 11,802 | 23,596 | -11,793 | 0 | 16,660 |
These data refer to reserves backed only by bonds held in the Asset Purchase Facility (APF). A range of financial institutions hold reserve deposit accounts at the Bank of England and data on reserves held by commercial banks specifically is not publicly available. But the Bank of England does publish the aggregate level of outstanding reserves and the Bank Rate. As of 23 September 2026, total outstanding central bank sterling reserves were £642,336m.
The Monetary Policy Committee at the Bank of England are responsible for the conduct of monetary policy, and the separation of fiscal and monetary policy is essential to its effective delivery.
The UK’s approach of indemnifying the APF is in line with best practice as set out in a 2023 IMF working paper, relating to several areas of governance, accountability, and transparency. Other central banks do share both past Quantitative Easing-related profits and future losses with their national treasuries but do so, and account for doing so, in a variety of ways and over different time periods.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what is the current total level of reserve deposits from commercial banks held by the Bank of England; and whether the interest paid by the Bank to commercial banks on those deposits is fixed at the Bank Rate by convention or another reason.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
Bank Rate is the reference rate that commercial banks both receive on their reserve holdings and must pay to borrow additional reserves from the Bank of England. Remuneration of reserves at Bank Rate plays a role in the implementation of monetary policy and ensures commercial banks pass on changes in interest rates to household and businesses.
Data on payments to and from HM Treasury to the Asset Purchase Facility (APF) is made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data is available in worksheet PSA9B.
Time period | Interest receivable (£ million) | Interest payable (£ million) | Net interest receivable (£ million) | Cash transfers to HM Treasury total (£ million) | Cash transfers from HM Treasury total (£ million) |
Dataset identifier code | MDD6 | MDD7 | MDD8 | MT6A | MF7A |
2021-22 | 17,990 | 1,859 | 16,131 | 7,218 | 0 |
2022-23 | 17,003 | 20,567 | -3,564 | 4,164 | 5,010 |
2023-24 | 15,403 | 39,748 | -24,345 | 0 | 44,549 |
2024-25 | 13,753 | 34,045 | -20,291 | 0 | 36,323 |
2025-26 | 11,802 | 23,596 | -11,793 | 0 | 16,660 |
These data refer to reserves backed only by bonds held in the Asset Purchase Facility (APF). A range of financial institutions hold reserve deposit accounts at the Bank of England and data on reserves held by commercial banks specifically is not publicly available. But the Bank of England does publish the aggregate level of outstanding reserves and the Bank Rate. As of 23 September 2026, total outstanding central bank sterling reserves were £642,336m.
The Monetary Policy Committee at the Bank of England are responsible for the conduct of monetary policy, and the separation of fiscal and monetary policy is essential to its effective delivery.
The UK’s approach of indemnifying the APF is in line with best practice as set out in a 2023 IMF working paper, relating to several areas of governance, accountability, and transparency. Other central banks do share both past Quantitative Easing-related profits and future losses with their national treasuries but do so, and account for doing so, in a variety of ways and over different time periods.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what has been the cost in each year since 2021–22 of payments to the Bank of England by HM Treasury, to enable the Bank to pay interest to commercial banks on their reserve deposits with the Bank.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
Bank Rate is the reference rate that commercial banks both receive on their reserve holdings and must pay to borrow additional reserves from the Bank of England. Remuneration of reserves at Bank Rate plays a role in the implementation of monetary policy and ensures commercial banks pass on changes in interest rates to household and businesses.
Data on payments to and from HM Treasury to the Asset Purchase Facility (APF) is made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data is available in worksheet PSA9B.
Time period | Interest receivable (£ million) | Interest payable (£ million) | Net interest receivable (£ million) | Cash transfers to HM Treasury total (£ million) | Cash transfers from HM Treasury total (£ million) |
Dataset identifier code | MDD6 | MDD7 | MDD8 | MT6A | MF7A |
2021-22 | 17,990 | 1,859 | 16,131 | 7,218 | 0 |
2022-23 | 17,003 | 20,567 | -3,564 | 4,164 | 5,010 |
2023-24 | 15,403 | 39,748 | -24,345 | 0 | 44,549 |
2024-25 | 13,753 | 34,045 | -20,291 | 0 | 36,323 |
2025-26 | 11,802 | 23,596 | -11,793 | 0 | 16,660 |
These data refer to reserves backed only by bonds held in the Asset Purchase Facility (APF). A range of financial institutions hold reserve deposit accounts at the Bank of England and data on reserves held by commercial banks specifically is not publicly available. But the Bank of England does publish the aggregate level of outstanding reserves and the Bank Rate. As of 23 September 2026, total outstanding central bank sterling reserves were £642,336m.
The Monetary Policy Committee at the Bank of England are responsible for the conduct of monetary policy, and the separation of fiscal and monetary policy is essential to its effective delivery.
The UK’s approach of indemnifying the APF is in line with best practice as set out in a 2023 IMF working paper, relating to several areas of governance, accountability, and transparency. Other central banks do share both past Quantitative Easing-related profits and future losses with their national treasuries but do so, and account for doing so, in a variety of ways and over different time periods.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government why the practice of using public funds from HM Treasury to pay the Bank of England to enable the Bank to pay interest to commercial banks on their reserve deposits is continuing in the UK, in the light of international comparisons with the EU, Swiss National Bank and US Federal Reserve Bank.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
Bank Rate is the reference rate that commercial banks both receive on their reserve holdings and must pay to borrow additional reserves from the Bank of England. Remuneration of reserves at Bank Rate plays a role in the implementation of monetary policy and ensures commercial banks pass on changes in interest rates to household and businesses.
Data on payments to and from HM Treasury to the Asset Purchase Facility (APF) is made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data is available in worksheet PSA9B.
Time period | Interest receivable (£ million) | Interest payable (£ million) | Net interest receivable (£ million) | Cash transfers to HM Treasury total (£ million) | Cash transfers from HM Treasury total (£ million) |
Dataset identifier code | MDD6 | MDD7 | MDD8 | MT6A | MF7A |
2021-22 | 17,990 | 1,859 | 16,131 | 7,218 | 0 |
2022-23 | 17,003 | 20,567 | -3,564 | 4,164 | 5,010 |
2023-24 | 15,403 | 39,748 | -24,345 | 0 | 44,549 |
2024-25 | 13,753 | 34,045 | -20,291 | 0 | 36,323 |
2025-26 | 11,802 | 23,596 | -11,793 | 0 | 16,660 |
These data refer to reserves backed only by bonds held in the Asset Purchase Facility (APF). A range of financial institutions hold reserve deposit accounts at the Bank of England and data on reserves held by commercial banks specifically is not publicly available. But the Bank of England does publish the aggregate level of outstanding reserves and the Bank Rate. As of 23 September 2026, total outstanding central bank sterling reserves were £642,336m.
The Monetary Policy Committee at the Bank of England are responsible for the conduct of monetary policy, and the separation of fiscal and monetary policy is essential to its effective delivery.
The UK’s approach of indemnifying the APF is in line with best practice as set out in a 2023 IMF working paper, relating to several areas of governance, accountability, and transparency. Other central banks do share both past Quantitative Easing-related profits and future losses with their national treasuries but do so, and account for doing so, in a variety of ways and over different time periods.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have, if any, to make pension tax relief conditional upon undertakings by the funds to invest at least 15 per cent of their equity portfolios in British public and private companies.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
The Government's approach is underpinned by the Pension Schemes Act 2026, which introduced a package of reforms, including measures to support scheme consolidation, improve value for money and create the conditions for greater long-term investment in productive assets.
Under the Mansion House Accord, 17 of the UK's largest workplace pension providers have voluntarily committed to invest at least 10 per cent of their default funds in private markets by 2030, with at least half of that invested in the UK.
This voluntary industry-led commitment aims to unlock significant additional investment in productive assets across the UK economy, including in private companies, and the Government is encouraged by the progress made to date.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what estimate they have made of the effect of bond sales by the Bank of England, undertaken because of quantitative tightening, on long-term borrowing rates; and what assessment they have made of the additional 30 basis points on the yields of long-dated bonds, including its effects on long-term interest rates and its cost to public finances.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
The Bank of England has operational independence from the government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including the pace of quantitative easing and quantitative tightening, is the responsibility of the independent Monetary Policy Committee at the Bank of England. The Government does not comment on monetary policy decisions.
The Office for Budget Responsibility (OBR) forecasts debt interest costs as part of the fiscal forecasts in its Economic and Fiscal Outlook.
Since October 2022, HM Treasury has transferred £110.72bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound. Since 2013, the Bank of England has transferred £123.85bn to HM Treasury, giving HM Treasury a net position of £13.13bn to date.
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what estimate they have made of (a) gains to HM Treasury from the years of operation of quantitative easing, and (b) the losses to HM Treasury since 2022 from quantitative tightening as a result of the implementation of the agreement for HM Treasury to cover losses made as a result of the decision by the Bank of England to sell bonds.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
The Bank of England has operational independence from the government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including the pace of quantitative easing and quantitative tightening, is the responsibility of the independent Monetary Policy Committee at the Bank of England. The Government does not comment on monetary policy decisions.
The Office for Budget Responsibility (OBR) forecasts debt interest costs as part of the fiscal forecasts in its Economic and Fiscal Outlook.
Since October 2022, HM Treasury has transferred £110.72bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound. Since 2013, the Bank of England has transferred £123.85bn to HM Treasury, giving HM Treasury a net position of £13.13bn to date.
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the approach to quantitative tightening undertaken by the European Central Bank and US Federal Reserve, which allow the relevant bonds to mature rather than engaging in the sale of such bonds.
Answered by Lord Livermore
The Bank of England has operational independence from the Government to carry out its statutory responsibilities for monetary policy, including quantitative easing and quantitative tightening.
HM Treasury’s response to the Treasury Select Committee’s inquiry into QT set out that different unwind paces will impact the time profile of when losses are incurred but are expected to have little effect on total cost in present value terms. Therefore, all else equal, there is no reason to believe that holding gilts for longer would avoid these losses. Instead, a higher net interest cost would be incurred from holding the portfolio for longer. QT also reduces the sensitivity of the public finances to changes in interest rates.
Since October 2022, HM Treasury has transferred £107.64bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound. Since 2013, the Bank of England has transferred £123.85bn to HM Treasury, giving HM Treasury a net position of £16.21bn to date.
Data on these cash transfers are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what has been the cost to public funds of the Treasury's arrangement to support the Bank of England practice of quantitative tightening since 2022.
Answered by Lord Livermore
The Bank of England has operational independence from the Government to carry out its statutory responsibilities for monetary policy, including quantitative easing and quantitative tightening.
HM Treasury’s response to the Treasury Select Committee’s inquiry into QT set out that different unwind paces will impact the time profile of when losses are incurred but are expected to have little effect on total cost in present value terms. Therefore, all else equal, there is no reason to believe that holding gilts for longer would avoid these losses. Instead, a higher net interest cost would be incurred from holding the portfolio for longer. QT also reduces the sensitivity of the public finances to changes in interest rates.
Since October 2022, HM Treasury has transferred £107.64bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound. Since 2013, the Bank of England has transferred £123.85bn to HM Treasury, giving HM Treasury a net position of £16.21bn to date.
Data on these cash transfers are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.
Asked by: Lord Kinnock (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what discussions they have had with the Bank of England about suspending its quantitative tightening policy of selling bonds accumulated through quantitative easing, as opposed to allowing maturing debt to expire.
Answered by Lord Livermore
The Bank of England has operational independence from the government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England.
The separation of fiscal and monetary policy is a key feature of the UK’s economic framework, it is in line with international standards and essential for the effective delivery of monetary policy, so the government does not comment on the conduct or effectiveness of monetary policy.
Since October 2022, HM Treasury has transferred £93.32bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound. Since 2013, the Bank of England has transferred £123.85bn to HM Treasury, giving HM Treasury a net position of £30.53bn to date
Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.