The Bank of England’s Monetary Policy Committee implements its quantitative easing (QE) programme through a subsidiary entity known as the Asset Purchase Facility (APF). HM Treasury agreed to indemnify the APF against losses when it was set up in 20091.
To date, the APF has transferred circa £120 billion of excess cash to HMT from interest payments on purchased gilts. As QE is unwound and gilts are sold back into the market, this cash flow is expected to reverse. Further information can be found in HMT’s annual reports and accounts.
No provision for payments to the APF was made in HMT’s main estimate. However, MPC decisions since this time have meant the reversal of cash flows, not previously expected to impact this financial year, will begin in October 2022, when HMT will need to make a payment to the APF.
Parliamentary approval for additional capital of £828,267,000 for this new expenditure will be sought in a future supply estimate for HM Treasury. Pending that approval, immediate expenditure estimated at £828,267,000 will be met by repayable cash advances from the Contingencies Fund.