Baroness Kramer
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Interest Rates
Baroness Kramer Excerpts(1 day, 7 hours ago)
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Lord Pitt-Watson (Lab)
The answer is yes to those questions. How it works will be complicated for different people, depending on the terms they got from the banks. We have an absolute commitment to the fiscal rules.
Baroness Kramer (LD)
My Lords, the OBR has forecast that, by 2031, the Government’s payment on annual debt interest will rise to a staggering £160 billion. Part of the reason for that very high number is that the Government remain, through the Treasury and the Debt Management Office, absolutely addicted to issuing index-linked bonds, which pay not a fixed coupon but a coupon based on the level of inflation and, even worse, on RPI. No other G7 country does this general idiocy and the pension industry, which once benefited from such bonds, no longer uses them. Can the Minister please explain why the Treasury and the Debt Management Office, which is part of the Treasury, continue with this addiction?
Lord Pitt-Watson (Lab)
I answered a similar question in the past, maybe as a Written Question, and noted that the issuance of index-linked bonds was indeed falling, but I would be more than happy to write further to the noble Baroness if she thought that was critical.