Rishi Sunak accused of wasting £11bn servicing government debt

Rishi Sunak has been accused of failing to act soon enough to save £11bn of taxpayers' money that has been used to pay interest on government debt.

The National Institute of Economic and Social Research (NIESR) said the losses stemmed from the chancellor's failure to insure against interest rate rises.

It meant higher than necessary payments on £900bn of reserves created through the quantitative easing (QE) programme.

The Treasury said it has "a clear financing strategy" on debt.

The NIESR's 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".

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

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

Last year, when the official rate was still 0.1%, the NIESR - an economic research group - said the government should have insured the cost of servicing this debt against the risk of rising interest rates.

It suggested converting the debt into government bonds with longer to pay it back.

Prof Chadha said Mr Sunak's failure to do this had cost taxpayers £11bn.

"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.

Labour's 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 £120bn 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 [Bank's] 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."