Overview

• Deputy leader Richard Tice wrote to Governor Andrew Bailey accusing the Bank of England of “systemic misuse of taxpayers’ money” and estimating that ending reserve interest payments could save about £35 billion a year.
• Under the Bank’s quantitative easing programme, roughly £895 billion was created to buy government bonds, leading commercial banks to deposit about £700 billion at the Bank of England and earn interest at the 4.25% base rate.
• The Bank of England has no plans to end reserve interest payments, and Governor Bailey has warned that removing them could weaken rate control and prompt banks to shift funds into gilts.
• Banks including Barclays, Lloyds, NatWest and Santander earned about £9.2 billion in interest on reserves in 2023, drawing criticism that City institutions are benefiting from emergency measures at the taxpayer’s expense.
• Reform proposals range from a tiered reserve system endorsed by former deputy governors to warnings from UK Finance that cutting payments could lead to higher costs for consumers and businesses.