Monday 7 November 2022
Bank of England Asset Purchase Facility
The Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stock of UK Government bonds (gilts) and sterling non-financial investment-grade corporate bonds held in the Asset Purchase Facility by ceasing to reinvest maturing securities.
On 28 September 2022, in line with the Bank’s financial stability objective, the APF carried out purchases of long-dated gilts to restore orderly market conditions. This was then expanded on 11 October to include index-linked gilts. As noted in the written ministerial statement of 12 October 2022 the authorised total size of the APF was increased from £866 billion to £966 billion at the time to allow for a time-limited intervention.
Total gilt purchases under this financial stability operation reached £19.3 billion when the daily auctions ended as planned on 14 October. I have therefore agreed to reduce the authorised maximum size of the APF from £966 billion, as was agreed on 28 September 2022, to £886 billion. This reduction reflects the unused portion of the recent £100 billion financial stability related APF expansion.
The Governor and I will continue to jointly agree the authorised maximum size of monetary policy related asset purchases every six months, as the size of APF holdings reduces, to reflect the size of the portfolio. This month a further reduction in the authorised maximum size of the APF will be agreed in relation to the ongoing unwind of assets acquired for monetary policy purposes.
The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, and the Bank of England Asset Purchase Facility Fund (BEAPFF), from any losses arising out of, or in connection with, the facility. If the liability is called, provision for any payment will be sought through the normal supply procedure.
A full departmental minute has been laid in the House of Commons providing more detail on this contingent liability.
Digital, Culture, Media and Sport
Arts Council England 2023-2026 Investment Programme: Announcement of National Portfolio Organisation
Further to the written statement made by my right hon. Friend the Member for Mid Bedfordshire (Nadine Dorries) on 23 February 2022, I would like to update the House on Arts Council England’s 2023-2026 investment programme. The provisional outcome of this competitive funding round has been communicated to applicants, and will see 990 national portfolio organisations and investment principles support organisations offered £446 million per annum in funding over the next three years.
These provisional offers fulfil the ambitious and challenging targets set for Arts Council England by my predecessor. Specifically—including national lottery funding—these offers would see nearly an extra £45 million in each of 2023-24 and 2024-25 invested outside of London, rising to nearly £53 million extra in 2025-26. This will result in 215 new organisations being funded outside of London—a net increase of 135 organisations. This extra investment outside London is supported largely by the overall uplifts agreed by the Government at the comprehensive spending review, and Arts Council England decisions about its use of national lottery funding.
DCMS worked with Arts Council England to agree on a list of 109 levelling up for culture places, which are areas identified as having historically low cultural engagement. The provisional funding offers that have been announced will increase the number of funded organisations in levelling up for culture places by 79%—from 107 to 192 organisations—and will increase the level of investment in levelling up for culture places by 95%, or £21.2 million per annum. This funding will play a vital role in fulfilling the Government’s intention to tackle cultural disparities, and ensure that everyone, wherever they live, has the opportunity to enjoy the incredible benefits of culture in their lives.
Funding agreements will be finalised over the next few months, so are subject to change, but alongside the levelling-up progress that has been made, I would like to highlight the following:
10% of all library services in England are now national portfolio organisations;
20% more organisations will be funded to deliver work for children and young people, with a total of 79% of the portfolio delivering activity specifically for children and young people, up by six percentage points from the 2018-2022 portfolio;
Improved diversity on boards;
Overall more days of cultural activity provided.
Finally, it should be noted that these are preliminary decisions which will be negotiated further with organisations. Arts Council England will need to work closely with organisations to review the aims previously submitted in their applications for this programme to ensure they are still achievable in the current economic context. In particular, my predecessor asked all organisations receiving more than £2 million per annum to work to increase their outreach to levelling up for culture places by 15% as a cohort. Given the economic challenges, this target will not apply for this funding round, noting the considerable outreach work these organisations are already doing.
Arts Council England will also support organisations leaving the portfolio by providing transition funding, and I am glad to inform the House that it has been able to more than double the budget for this. This means that any organisation currently in the portfolio, but due to leave, will have the opportunity to apply for funding to support them until next October while they adjust to their changed income.
I am sure Members across the House will be interested to see the outcomes in their local area, and I would direct them to the Arts Council website where all the provisional offers are listed.
Foreign, Commonwealth and Development Office
Just Energy Transition Guarantee: South Africa
It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement, except in cases of special urgency.
I have today laid a departmental minute outlining details of a new liability being undertaken by the Foreign, Commonwealth and Development Office to support South Africa’s Just Energy Transition Partnership (JETP). This guarantee will reduce the impact of climate change and support an important legacy of the UK’s COP presidency, the Just Energy Transition Partnership with South Africa. The $1billion guarantee facility will support projects in South Africa’s JETP investment plan, which has been drafted by the South African Government with the input of international partners—the United States, the UK, the European Union, France and Germany. The investment plan sets out areas for investment in renewable energy, hydrogen, electric vehicles and the coal mining region.
An announcement on the South Africa Just Energy Transition Partnership is expected to be made at COP27, which is between 6 and 18 November 2022. Any announcement on this UK guarantee will note that the guarantee is subject to the parliamentary notification process being completed. The Public Accounts Committee, the Foreign Affairs Committee and the International Development Committee have been notified of this.
FCDO Ministers and HM Treasury have approved this guarantee proposal. If, during the next 14 parliamentary sitting days, a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.