Yvette Cooper says no change in funding policy

I asked the Treasury to tell me if they were going to start underfundign the deficit, to aid a policy of printing more money. Yvette Cooper assures me not. She says:

“The Government intends to continue to finance the Central Government net cash requirement using the framework that was established in the 1995 debt Management Review. The Government aims to finance its net cash requirement plus maturing debt and any financing required for additional net foreign currency reserves through the issuance of debt.” Elsewhere she says they are not planning more use of short term debt.

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20 Comments

  1. Adrian Peirson
    Posted February 19, 2009 at 6:34 pm | Permalink

    This isn’t Just about money.
    http://www.youtube.com/watch?v=waIOW_-SO6Q

  2. Brian Tomkinson
    Posted February 19, 2009 at 7:36 pm | Permalink

    In your previous posting you wrote: “I just want to know why it has taken so long, and why we had to put up with all those denials when I tried to set out the true figures in the Commons and elsewhere.”
    Now you have had an “assurance” from Yvette Cooper but you can’t possibly believe a word from a minister in this mendacious rotten government.

  3. mart
    Posted February 19, 2009 at 8:24 pm | Permalink

    Dear John, I’m sorry for my ignorance but what does any of this mean?

    Reply: The government is saying it will raise all the money it needs to cover the excess of its spending over tax revenue by issuing bonds, not by printing bank notes.

  4. James D
    Posted February 19, 2009 at 9:07 pm | Permalink

    Okay, so what’s the loophole in the 1995 framework that they’re using?

  5. chris southern
    Posted February 19, 2009 at 11:09 pm | Permalink

    so they plan to continue using debt to fund more debt, marvelous.

    i want some of the stuff that their on!

  6. Ted Foan
    Posted February 20, 2009 at 12:36 am | Permalink

    Does this mean they are now actively employing quantative easing (ie printing money) or not?

    Reply: It means they want us to think they are not yet. We will only know for sure when we see all the figures.

    • brian kelly
      Posted February 20, 2009 at 10:18 am | Permalink

      As i understand it they have recently decided not to publish weekly figures, as has been the established practice, but at some other, unspecified, period. I further understood, perhaps mistakenly, that this was done specifically to attempt to hide the extent of ‘quantitative easing’ for as long as possible, ie. whether and by how much money was money was being printed.

    • Andrew Forbes
      Posted February 20, 2009 at 10:33 am | Permalink

      Precisely. She isn’t saying there will be no “quantitative easing”. She is merely refusing to engage in a debate on the subject, which is a pattern of behaviour with which your readers are very familiar.

  7. Ian Jones
    Posted February 20, 2009 at 8:10 am | Permalink

    John,

    She is probably right, the Govt is raising debt by selling it via the usual channels and not “directly” via QE.
    However, the BoE has clearly stated it will buy Govt debt so there is nothing stopping the banks selling on said debt. Therefore, maybe not directly purchased via QE (yet) but indirectly for sure.

    They are quite cunning eh!!!!

  8. Colin D.
    Posted February 20, 2009 at 8:15 am | Permalink

    This is the woman that prefaces every statement with the words ‘it must be right to …’ thereby making her audience think that vast research and intelligence underpin her every word.
    The words quoted by John are pretty meaningless to me so perhaps she is adopting an alternative strategy of ‘you don’t understand me because you are not nearly so clever as I am’.
    Some of her irritated audience may beg to differ!

    • not an economist
      Posted February 21, 2009 at 10:20 am | Permalink

      To be fair to Yvette this seems to have been an answer to an MP (John) so the technical jargon she used was probably reasonable in that context. BUT, If she had talked like this on “PM” or “Today” then I would agree with you – the language she used would then have been designed solely to confuse the radio audience.

      I would add though that I didn’t understand what the hell she was talking about. It was only John’s answer to Mart above (20:24, 19/02/09) that clearly explained what she said.

  9. BristolDave
    Posted February 20, 2009 at 8:15 am | Permalink

    “We will only know for sure when we see all the figures.”

    But I thought Guido had highlighted a change passed through parliament whereby the Bank of England no longer has to publish the amount of money they are printing. This, he speculated, was purely because the government was planning on printing a lot more of it. I’m sure he and others will be proved right.

    • brian kelly
      Posted February 20, 2009 at 11:04 am | Permalink

      Sorry, I said something similar to you but 2 hours later – serves me right for not reading all posts first!

  10. rugfish
    Posted February 20, 2009 at 8:41 am | Permalink

    Unfortunately, I’m unable to believe a word uttered by this government as it has told too many diabolical untruths already. I’d even disbelieve it if Gordon Brown came on the BBC today and said he would hold an autumn election because he’d only say “I didn’t mean THISW autumn I meant next autumn”.

    Such is my level of disbelief I can almost hear the printing machines and the pound notes being stacked as I hear her saying “we’re not doing it”.

    I for one will NEVER trust a Labour politician again, and I’m verging on mistrust of David Cameron too over a few things he “hasn’t said”.

  11. Alfred T Mahan
    Posted February 20, 2009 at 12:05 pm | Permalink

    John,

    Cynicus Economicus has just written a letter to the Bank of England asking them to come clean on quantitative easing. It’s not the first time he’s asked and so far he’s been given the bum’s rush.

    What’s the betting that he’ll get a better answer this time than the one you had from Yvette Cooper?

    Here’s the link:

    http://cynicuseconomicus.blogspot.com/2009/02/letter-requesting-information-on-policy.html

  12. Derek
    Posted February 21, 2009 at 2:31 am | Permalink

    Despite the minister’s assurance, if I worked in the public sector, and demanded my salary be paid in cash, I’d be very doubtful the ink on the notes proffered would be dry.

  13. not an economist
    Posted February 21, 2009 at 10:13 am | Permalink

    “The government is saying it will raise all the money it needs to cover the excess of its spending over tax revenue by issuing bonds, not by printing bank notes.”

    I frankly don’t believe her or her colleagues. If you look at the scale of the debt they have incurred in the last 11 years then repyament of that debt would be astronomical. For that reason alone they will be tempted to trigger inflation thru QE to whittle down the size of the debt in real terms.

    The only caveat I would post to this is a consideration of Labour’s electoral fortunes. IF they have seriously given up on the next election Labour may be inclined to avoid QE, simply because then the Tories will have to sort this mess out. That said, I don’t actually believe they have given up on the next election. Labour still wants to win. And QE – because of the short term economic stimulus it will probably generate – could be their route to re-election. And when the inflation kicks in expect to see the usual fingering of scape goats – evil capitalists, selfish trade unions, greedy foreigners, short sighted investors. Oh yeah … I nearly forgot … Thatcher aswell.

  14. skooch
    Posted February 21, 2009 at 10:32 pm | Permalink

    Let’s just get this right:

    Yvette Cooper has said that the government is not going to underfund the deficit, to aid a policy of printing more money.

    Can we say that again:

    Yvette Cooper has said that the government is not going to underfund the deficit, to aid a policy of printing more money.

    Good.

    Good?

    “The Government intends to continue to finance the Central Government net cash requirement using the framework that was established in the 1995 debt Management Review. The Government aims to finance its net cash requirement plus maturing debt and any financing required for additional net foreign currency reserves through the issuance of debt.”

    What the eff does all this mean?

    Sorry, an

    Reply: It probably means the government is about to recieve a letter from the Monetary Policy Committee asking it to approve “printing money” to which the government will agree. In that case Miss Cooper’s answer is designed to create the impression that the governemnt has not being doing any money printing so far, and will only respond to the so called “independent” MPC. PS that was a good answer by the standards PQs these days!

  15. Ian Jones
    Posted February 23, 2009 at 12:15 am | Permalink

    I know this is an old thread but it really needs to be brought to the attention of people again following the announcement that the Govt will print 150bn to spend on bonds & gilts.

    Rereading your blog it seems to me that it does not exclude the BoE buying gilts directly from the Govt using the 150bn it is printing. Your question seems to ask if they will directly use printed money to fund spending and the answer is that they will continue to issue gilts. It does not preclude the Bank of England buying the gilts.

    This would be a total disaster for the UK, in the short term it would drive down interest rates as the added BoE demand for gilts would push up the price but once it reaches a tipping point the real investors will run for the hills and interest rates will explode.

    The Govt needs to focus the printed money on the private sector companies only, not housing or Govt spending.

  16. Alfred Barron
    Posted March 8, 2009 at 12:52 am | Permalink

    Is it true that they got married and that she

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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