I have long argued the Bank of England should stop selling long bonds in the market, taking big losses and sending Treasury and taxpayers the bill. I was pleased to see an article in yesterday’s Telegraph going over this old ground again. It does need a new push with a new Chancellor, who could persuade the Governor to change this damaging policy.
Labour had no criticism of the Bank’s decision to announce a major sale of bonds at the time of the Truss budget,. They watched the predictable big sell of in bonds, then saw the Bank reverse its policy, announce temporary buying of bonds and watched as the market rallied strongly. They never objected to the huge losses the Bank recorded from end 2022 onwards both by selling bonds at big losses in the market which were needless and by having to accept smaller losses on bonds as they matured, all covered by taxpayers and the Treasury.
Now the new Chancellor should think again. He should ask the Governor why he still thinks it a good idea to lose well over £200 bn on bonds from Q3 2022 to the end of the bond programme and seek to persuade him in private that a change of policy is needed. No other Central Bank is behaving like this. The losses can and should be reduced.Taxpayers deserve a break from the Bank’s extreme policy.
I have written about it many times from 2022 onwards. Here are two takes from this site:
10 June 2025
The first thing to do is for the Chancellor to tell the Bank she will not pay for any more losses from selling bonds in the market. No other central bank does this. There is no stated good purpose for the policy.The Chancellor’s permission was needed for the purchase, and the Treasury guarantees against loss.This gives her the right to order a stop to sales.
The second is to raise with the Bank the running losses where the Bank spends far more on interest on commercial bank deposits than it receives in interest on the bonds which were bought at very high prices when interest rates were much lower. The ECB for example pays a lower rate of interest on its deposits than its lending rate . The Bank of England has the same rate for lending and borrowing. The Bank could require a minimum level of reserve deposits by commercial banks at zero interest.
Some suggest paying nothing on any of the deposits. This has not been tried in recent years when these much larger deposits have built up. The ECB got away with reducing the interest it pays. Markets might be more alarmed by the sudden withdrawal of all interest payments to banks. There could also be a knock on effect on bank lending and growth from the sudden sharp reduction in bank profits and cashflow. Better to proceed with more prudent steps to carry markets with you.
And
Bank of England losses
Amidst the many figures and forecasts in the March budget there was one that stood out which got too little attention. The Official figures said the Bank of England’s bond buying which had sent the Treasury £124 bn of profits in the early years will end in overall loss of £104 bn when they have finished their fire sale and run off of the bonds. That is a hidden way of saying they plan to lose £228 bn on bonds from Q3 2022 onwards. Taxpayers have so far had to stump up £49 bn of this loss by March 2024, with more big bills this year.
This whopping increase in public spending goes undiscussed in Parliament now I have stood down. The last Chancellor wrote a letter saying this is a real cost to the public sector which reduces scope for other spending and or leads to higher taxes. The Bank of England for its part denies that selling all these bonds at low prices is important to its monetary policy. It wants us to believe these sales do not depress bond prices and therefore push up interest rates. The time when they first announced a major programme of £ 80 bn of sales was the start of the big autumn 2022 bond sell off, when the news coincided with a rate hike and triggered the LDI problems.
No other Central Bank thinks it clever to incur big losses by selling bonds they paid too much for at depressed prices they help create by the sales. No other central Bank sends a huge bill to taxpayers. Why do we put up with this? Why do we pay the Governor more than £500,000 a year for being the world’s worst large scale bond trader, presenting us, the taxpayers, with a forecast £228 bn bill?
Today:
It is high time the Bank took its selling pressure off a worried gilt market, and high time the Treasury was spared yet more and bigger bills for these avoidable and needless losses from sales in the market. The Bank’s big bond experiment is proving far too expensive and far from helpful.
August 23, 2026
at least you can work out the magnitude of what is going on from the published figures.
compare and contrast to the crime figures per type of immigrant from each different country, the state has these stats but refuses to release them. freedom of information laws totally ineffectual. the state actively conspiring to try and divert attention away from massive problem.
August 23, 2026
On another level John, can you investigate the workings of the electricity grid. Last night on a quiet Saturday in the evening we were Importing 32% of our electricity at circa £160 per mwh.
There was very little wind and no solar after 8pm and our CCGT plants were ticking over on minimum load.
No doubt it will be claimed that Importing power reduces our CO2 output but this is offset by running gas turbines on minimum load as 40% of the gas they use is to maintain turbine speed. In other words, they are only efficient at base loads.
As with the Bond selling mentality, it appears the same mindset is operating the electricity grid. i.e anything to punish UK consumers.
We are being Royally shafted by the uniparty antics.
August 23, 2026
Or the refusal of the UK government to release death and health statistics, broken down by Covid vaccines taken, (suitably anonymised). Why would they want to do that if it showed that they were safe and effective as they still claim?
It certainly does not show this in countries where it is available.
August 23, 2026
Even taking worldmetrics.org ‘Covid vaccine death statistics’ Report 2026 (25/07/2026) and ourworldindata.org ‘Total Covid-19 vaccine doses administered’ one gets about 50,000 deaths linked to the vaccines internationally for 7 billions doses administered 50,000 / 7,000,000,000 = 7.1*10^-6 ie 0.00071 %.
Whatever one believes (belief, not statistically demonstrated) the rate of death linked to the Covid vaccines had never been higher, in fact slightly lower, than the rate usually seen for other types of vaccines (influenza, yellow fever, diphteria, MMR, various pneumococcal, cholera, hepatitises, encephalitis, …)
August 23, 2026
The figures where available are generally very dire.
But if the stats. you quote are true then why are they still refusing to release the statistics? The government experts will know what the data indicates and they have it. What other reason do they have to hide this data? £600bn borrowed and spend doing net harm on Covid “vaccines” and “lockdowns” it is this they are hiding.
August 23, 2026
the stats for the AZ vaccine will be dramatically worse than the others.
August 23, 2026
I think the jury is still out on this question, and I’m not sure how far the authorities are giving reliable information. The whole Covid business was far too much dominated by the interests of the pharmaceutical industry, and that may be continuing. I see that in a medical study published last year the Covid vaccines were associated with a higher risk of myocardial attacks and thrombosis. This accords with what was being frequently reported in the media at the time, of far more younger, healthy people than usual experiencing heart problems.
August 23, 2026
It’s a good point. There are indeed known and quantifiable errors like this, and known and unquantifiable ones because of lack of transparency.
Where are these new arrivals being placed, how much money is it costing?
Just how much farmland is being taken over by solar farms, and and what cost? Even on a local level, the sunk cost of Barkham solar farm isn’t being released by the Libdem council, no ROI figures, indeed no sales contract for the power, no guaranteed connection to the grid, even as the supposed “lifetime” is being extended to 40 years from 25 to justify the scheme. We won’t be here then to argue.
Other cockups where the costs are far more difficult to quantify-the local council digging holes, closing a key through road in Twyford for several days, only to realise they couldn’t repair whatever it was, fill in holes again. Local resident reports that they had to call the council to get the signs down and road reopened. Direct cost to council tax payers – hidden. Cost to residents unquantifiable but material.
Reply Yes am talking to local Councillors about the pending disaster of the solar farm costs, and about incessant and often pointless road closures to disrupt business and family life
August 23, 2026
Solar farms and panels are indeed a disaster (a fire risk too and rather polluting) in the UK we need more electricity in the cold short days of winter not the long, warm days of summer. We cannot cost effectively store it after all.
August 23, 2026
The BoE’s Monetary Policy Committee states that its decisions on managing the gilt portfolio are driven strictly by inflation and monetary control, separate from profit and loss considerations. As JR says, other central banks handle these shortfalls differently or avoid active sales, but the UK structure legally binds the state to cover the cash shortfall. Under a 2009 agreement, HM Treasury fully indemnified the BoE’s asset purchase facility
During quantitative easing (QE), the BoE bought massive amounts of gilts when interest rates were very low and bond prices were high. To combat high inflation, the BoE then raised interest rates, which caused existing bond market values to fall. Where did the money for buying the vast amounts of government debt involved come from? The BoE printed it.
For reasons than nobody can understand, rather than just holding bonds until they mature, the BoE actively sells them back to the market at current lower prices, locking in the capital losses in what is called quantitative tightening. They say this active selling reduces inflation, shrinks the money supply and covers past monetary expansion – though it costs taxpayers £billions
In 2009, gold bullion averaged roughly £869.75 to £1,104.00 per troy ounce. Last week, the price of gold bullion hovered around £3,376.20 per troy ounce, reaching a weekly high of about £3,395.97. It would be far better if the BoE used the money from the sales to buy gold for the reserves. No chance of that though!
August 23, 2026
“Prudent” Gordon Brown sold around 395 to 401 tonnes of the UK’s gold reserves between 1999 and 2002 at an average price of about $275 per troy ounce then he wasted the proceeds and went on to destroy private pensions and hugely assisted in causing the banking crash.
August 23, 2026
Look what happened to mr Fred Goodwin formerly of RBS when he destroyed a similar amount of value for the taxpayer. There are few consequences even to the worst incompetence in politics. Indeed brown is still praised in some (mainly leftwing) quarters for his grasp of economics and for his chancellorship. On any rational analysis he ranks as one of the the most damaging chancellors in UK history.
August 23, 2026
PM Burnham faces intense pressure to approve North Sea drilling at the Rosebank and Jackdaw fields, challenging his previous commitment to a global fossil fuel treaty. This conflict highlights a deep divide between corporate energy interests – which are reporting record profits – and the UK’s climate goals, during the current period of unprecedented and dangerous global climate heating
The amount of economically viable oil and gas has declined rapidly in the past two decades and by 2030 the N Sea basin will produce just 15% of its peak output. Despite this Farage and Badenoch have called for a massive expansion of drilling in the North Sea, despite there being no economically viable reserves left. Industry experts note that the North Sea basin has been in decline since 2000. There are no credible prospects of reversing this. Both are appeasing Trump, who believes the climate emergency is a Chinese hoax
Energy prices are set globally and there is not enough oil or gas in the North Sea left to have any impact, so there would be no reduction in UK bills whatever the country did. The vast majority of what is left in the North Sea is oil that overwhelmingly goes abroad to be refined and is then sold on the international markets – meaning it has no impact on the UK’s energy security
High fossil fuel prices caused by the Ukraine war and Trump’s war on the Ayatollahs have resulted in fattening the margins of fossil fuel companies, which made a record $93bn in profit in the three months to June. While fossil fuel-driven climate disasters, including wildfires and droughts, hit Europe, the UK experienced five heatwaves this summer and fossil fuel energy costs continued to rise.
Source :- the Guardian
Reply What nonsense. Jackdaw is a gas field. There is a likely abundance of undiscovered oil and gas onshore and offshore. There is no single gas price as there are no gas pipes to us from the US or Middle East requiring much more expensive importation of LNG also producing much more CO 2.
August 23, 2026
There is media hysteria in energy companies excessively profiting from new oil and gas development in the North Sea. Simultaneously there is media hysteria that remaining oil and gas fields are so depleted as to be not worth exploiting.
Which is the truth?
August 23, 2026
@Dave Andrews – that were truth gets distorted. No one entity makes more money from the North Sea than the UK Government. The chunk all everyone else receives as profits is collectively less than the UK Governments share by a very large margin
August 23, 2026
1/ commonslibrary.parliament.uk ‘Taxation of North Sea oil and gas’, 20/07/2026
The taxes are ring fence corporation tax (RFCT), the supplementary charge (SC), petrol revenue tax (PRT) and the energy profit levy (EPL).
Total receipts from these taxes for 2024/25 were £4.4 bn. In 2023/24 they were £6.1 bn, in 2008/09 they were £10.6 bn.
2/ Shareholders of companies involved in the North Sea oil and gas receive very variable dividends dependent on the market: £1.2 bn in 2022 a good year, usually £500 m, with Hormuz it should be another good year.
3/ eciu.net ‘Around 90% of UK North Sea oil and gas already drained dry – Analysis’, 20/03/2026.
93% appear to have been extracted.
4/ post.parliament.uk ‘North Sea oil and gas’, 11/03/2026.
The cost of extracting one barrel of oil went from £13.82 in 2020 to £19.49 in 2024 (all in 2024 prices).
5/ economicshelp.org ‘How Norway got rich from oil, but the UK didn’t’, 21/12/2023.
In any discussion about North Sea oil and gas, watch out whether they are reserves, contingent resources or prospective resources and then within these categories whether they are proven (>90% chance they are there), probable (>50 and <90%) or possible ( 4 (2.9 bn boe vs 13.7 bn boe) (boe: barrel of oil equivalent). The 14 bn boe is the amount according to the DailySkeptic (21/09/2021).
Reply If you do not look for oil and gas you do not find it. If you overtax oil and gas companies close down fields earlier or sell up. Plenty of gas onshore.
August 23, 2026
I agree but it appears that the majors have all left the North Sea and left much smaller companies to see whether there is still something to retrieve. A problem might be that individual investors who were going for BP are not going to switch to much smaller extraction companies specially if they appear on the AIM market.
August 23, 2026
oilauthority.com 01/08/2026 ‘BP launches North Sea sale process as last supermajor with standalone UK operations’.
adura.com 01/12/2025 ‘Shell and Equinor complete formation of Adura, which will be the largest independent North Sea producer’.
August 23, 2026
@SK – The Guardian?
August 23, 2026
There was only 40 years left in 1964!
August 23, 2026
“This conflict highlights a deep divide between corporate energy interests – which are reporting record profits – and the UK’s climate goals, during the current period of unprecedented and dangerous global climate heating.”
There is no climate crisis or “dangerous global climate heating” and any global temperature rise is not attributable to the level of CO2 in the atmosphere as evidenced both by the history of CO2 and temperature, such as the Antarctic Vostok ice core data showing that CO2 has followed temperature for the last 450,000 years when both have been at exceptionally low levels, and the science of Happer & Wijngaarden and Shula & Ott. The IPCC’s Working Group 1 (“The Science”) AR6 report shows in Table 12 of Chapter 12 no signals for climate change (precipitation, droughts, storms) other than some mild warming which UAH satellite data since 1979 shows to be 0.16C/decade. “Climate action” is only #13 on the UN’s list of “Sustainable Development” Goals. Whilst certain parts of Europe have been warmer than average this summer other parts of the world have been colder than average. The amount of Arctic summer ice is close to the 1979-2025 average despite being predicted by “scientists” in 2007 it would disappear by 2013.
August 24, 2026
nsidc.com 22/08/2026 ´Sea ice today’.
The Arctic sea-ice has not disappeared but is much below the 1981-2010 median and values obtained applying the related standard deviation.
In case you don’t know there are various actors willing to use the ice-free areas:
telegraph.co.uk 13/08/2026 ‘China cracks Arctic shipping route in new era for global trade’.
August 23, 2026
It won’t surprise you to learn that the London investment community thought that long gilts were a bargain a year ago. So oddly both sides of this argument have been wrong-the Bank being wrong (and illogical) for selling but at the same time predicting low inflation, but the investment community for both buying and for predicting low inflation. Inflation is the yardstick here-at 1% inflation guaranteed for 30 years, a 3% bond should still be a good buy as part of a balanced portfolio. At 6% guaranteed inflation, it’s a disaster.
The Bank has been selling into a falling market, and the only thing worse than that is buying into a falling market. But yes, it should have been holding to redemption, particularly with inflation constantly edging up, and letting bond holders take the loss. You wonder whether some influential bondholders weren’t too keen on that idea.
August 23, 2026
Stopping the taxpayer bailing out the bank in this way wouldn’t actually help the taxpayer, the government would just find something else to spend the money on and it wouldn’t be tax cuts.
August 23, 2026
Does the governor not have to agree monetary interventions with the chancellor? I believe this is the case for QE, if so why not for QT? And if that is the case then Kwarteng must have been consulted on the QT at the time of the truss budget.
If this is not the case then it certainly should be. We cannot have a civil servant, unaccountable to parliament, with such a power with no constraints.
Reply Yes all Chancellors from Darling had to agree and sign off all QE so a Chancellor should insist on sign off for QT which they do not seem to have done. They after all pay the bill for QT with taxpayer money.
August 23, 2026
I remember both your previous articles on this subject. Then and now, I cannot understand the BOE policy. Why take losses that allow someone else to profit? Could it be that we are short of cash and need the money?
Surely the last thing we need in the UK’s current dire financial situation is to deliberately lose money!
Maybe our new Chancellor needs a new BOE Governor?
August 23, 2026
John.
I simply do not understand why any Chancellor or Prime Minister would allow the BOE to behave in such a way as to allow losses on such a scale, when it would appear to be unnecessary.
These huge loses will surely need to be made good at some stage, because we do not to my knowledge have a magic money tree growing anywhere in the UK, unless there is a secret Ai one in the garden to 10 Downing Street.
August 23, 2026
This one has always seemed such a ‘No brainer’ to me that I cannot understand why the policy has not been much more widely questioned. You, and now the Daily Telegraph, have been almost the only people asking. The avoidable losses are so huge that you would have thought that even the BBC would have wanted to know whether they were justified. And as far as I an recall, none of the other political parties, not even Reform, have expressed any doubts about the Bank’s bond repurchasing policy. Of course, they would probably fall back on the idea of the Bank’s so called independence, which as you point out, cannot apply in this case, but which conveniently could be said to lift responsibility from ministerial shoulders.
August 23, 2026
I don’t know the real reality, but one presumes that a lot of these Quango’s like the BoE and their advisors appear to be on some sort of ‘gravy train’, a money ‘gravy train’ with a naturally assumed over and above being paid out as bonuses for just doing ‘ones job’. Everyone knows the type, turn up in the work place, or on teams and a bonus appears.
I am all for performance related rewards, but my interpretation of what that means is different and appears to be remote from to-days actual practice. Rewards in my world is as always as a result of achievement, real contributory profit over and above the norm and over and above what was happening before.
As I said I don’t know, but there is feeling that bonuses are being paid to individuals involved with these entities that are loosing the ‘Taxpayer’ money adding up-to £billions. The Treasury, The Chancellor, the Government, the UK Parliament are the ones managing the UK’s finances they authorise the ‘paying out’, no one else. As they pay the ‘piper’ so to speak they call the tune. Its the Government team that through neglect of duty that is loosing the taxpayer £billions. They have the same control over the money out as they have on demanding it should be paid in. So for the rest of us we need to ask ‘what are they doing?’
Even by doing and saying nothing the losses racked up at the BoE are ‘owned’ by this Parliament its Government, the Chancellor – neglect of duty, failure of management and all the other examples of ineptitude come to mind … They didn’t have to have it that way ‘they’ chose failure as their norm
August 23, 2026
As mentioned, this topic has been covered several times, but nobody is taking any notice.
The only implication to be taken is that the loss is deliberate!
There is no logical reason to sell so many bonds at such a loss, so we can safely say that this treachery is done with intent. The Bank is consciously throwing our money down the drain.
August 23, 2026
Heck John, expecting the Labour Chancellor to do anything about the excesses within the BoE is asking a lot, after all it is only money……
August 23, 2026
Hi John, what the $ 950 billion of us treasury doing on the uk treasury balance sheet,
Most central bank are buying gold and selling us treasury.
August 23, 2026
”Trains across the UK have been cancelled by rail operator CrossCountry after a power cut at its control centre” https://www.bbc.co.uk/news/articles/cy9w9y0lz5go
Are power cuts the new norn
August 23, 2026
Ian B:the losses are not owned by Government but incurred by them(of many colours).The repayments have to
be extracted from all of us and commercial enterprises operating in UK.Trouble is Whitehall and lower
echelon cadres hasn’t a scoobie of who what and where despite huge expansion of “support” employees
August 23, 2026
If they give away power, there’s something else going on which isn’t British.
GBrown sold out once with QE but why again?