Farage and Tice right to scrutinise one of Bank of England’s most radical monetary experiments in history

Published

3 hours ago

September 25, 2025

admin

There was some speculation, when it emerged that Nigel Farage was heading to Threadneedle Street to see the Bank of England governor, that he was about to “do a Trump”.

You might recall, if you follow American politics, how the US president has been, for want of a better word, trolling the chairman of the Federal Reserve, Jerome Powell, threatening to fire him if he didn’t cut interest rates. Might Mr Farage and Reform be about to do the same thing in the UK, raising deep (and, for economists, scary) questions about the independence of the central bank?

The short answer, as far as anyone can tell following today’s meeting, is: no. Instead, Mr Farage and his fellow Reform MP Richard Tice enjoyed a relatively cordial meeting with the governor, where they discussed the intricacies of quantitative easing, the Bank’s reserves policies and even cryptocurrency – a slightly unexpected addition to the agenda which might reflect the fact that Reform is hoping to raise lots of campaign funds from crypto dudes.

Money latest: HMRC can now take money direct from your account if you don’t pay

The main Bank-related issue Reform has been campaigning on – Mr Tice in particular – comes back to something seemingly arcane but certainly important. As you may be aware, in recent years, the Bank of England has, alongside its interest rate policy, been engaged in something called quantitative easing (QE). QE is complex, but it boils down to this: in an effort to boost the economy, the Bank bought up a lot of government bonds and they now sit awkwardly in its balance sheet. In recent months, the Bank has begun to reverse QE (quantitative tightening) – selling off billions of pounds of bonds.

Anyway, reach deeper into the arcane mechanism of how QE works and something interesting leaps out. Two things, actually. First, as part of QE, in order to get hold of those government bonds, the Bank created “reserves” – sort of bank-account-at-the-Bank-of-England – for the high street banks from whom it bought them.

Tens of billions to high street banks

Those reserves earn interest at the Bank’s official interest rate. At the time of QE, the rate was near zero, so no one spent much time thinking about reserves. But since then, rates went up to 5.25%, and are now at 4%, and hence the Bank has recently been paying out a hefty amount – tens of billions of pounds – in interest to high street banks.

This, says Richard Tice, is an abomination. In the last Reform manifesto, he said the Bank should stop paying out those reserves. Which, on the face of it, sounds perfectly sensible. However, there are a few catches.

A big bank tax

The first is that while in theory it might help recoup billions of pounds of public money, that money has to come from somewhere, and in this case, it would come from high street banks. In other words, this is, in all but name, a very big bank tax. The Bank of England’s point, when asked about all this, is that if anyone is going to do something like that, it should really be the government, since it’s rightly in charge of taxing and spending.

The other catch is that Bank of England reserves systems are desperately complex. Changing the way they’re structured is a delicate operation. Running a coach and horses through it, as Mr Tice is suggesting, could have all sorts of unintended consequences, including undermining confidence in UK economic policy.

This, by the way, is not the only thing Reform is unhappy about: they also think the Bank should slow down its quantitative tightening programme.

But the point of all the above is that while there are some big question marks about the particular idea Reform is proposing, the worst thing of all would be not to discuss this as publicly as possible.

The worst outcome of all would be for the government and Bank to take certain decisions which affect billions of pounds of public money with only the merest of scrutiny, save at the Treasury Select Committee, whose sessions rarely get much attention beyond the financial pages. And that is more or less the situation we’ve had for the past decade and a half.

The Bank of England has introduced one of the most radical monetary experiments in history, which may or may not have been a success or a failure, but few outside of the City are even aware of it. Mr Tice’s policy platform may be flawed, but his overarching point – that this stuff desperately needs more scrutiny – is quite right.

Business

Jaguar Land Rover was not insured for cyber attack, journal claims

Published

9 hours ago

September 25, 2025

admin

Jaguar Land Rover was not insured for cyber attack, journal claims

Jaguar Land Rover (JLR) “failed to finalise” a cyber insurance deal before it was struck by hackers last month, forcing a halt to production and threatening the future of its supply chain, according to an industry journal.

The Insurer, citing three insurance sector sources, said Britain’s biggest carmaker was still in negotiations over cover before the cyber attack at the end of August.

It opens the prospect that the company faces footing the bill for the hacking by itself.

Losses will easily run into many hundreds of millions of pounds, with its global factory shutdown set to last for a month at least.

Money latest: Rich Britons reveal the taxes they hate most

Marks and Spencer, which was targeted back in April, said it expected that the estimated £300m bill it was facing from the disruption would be largely offset by the cyber insurance cover it had taken out.

As frantic efforts continue at JLR to recover its systems, the government is exploring ways to support JLR’s supply chain and the 200,000 jobs within it.

One idea under consideration, according to ITV News, was taxpayer money being used to purchase parts.

These components could then be sold back to JLR as its manufacturing operations got back up to speed, resulting in no direct losses for the public purse.

The “just-in-time” nature of automotive production means that many suppliers had little choice but to shut down immediately after JLR announced its manufacturing freeze.

Industry sources estimate that around 25% of suppliers have already taken steps to pause production and lay off workers, many of them by “banking hours” they will have to work in future.

Union demands for a COVID-style furlough scheme have not been taken up by ministers, who have said that support to date has come only from JLR.

Industry minister Chris McDonald said on a visit to a West Midlands manufacturer on Tuesday he was “supremely confident” that JLR would get through the cyber attack.

He added: “What I really want this to be is a wake-up call to British industry. I’m affronted by this attack on British industry. This is a serious attack on a flagship of British industry.”

Jaguar Land Rover said it declined to comment on commercial matters.

The government has also been approached for comment.

Business

Co-op reveals £80m profit hit from cyber attack disruption – with more to come

Published

12 hours ago

September 25, 2025

admin

Co-op reveals £80m profit hit from cyber attack disruption - with more to come

A cyber attack in April delivered an £80m hit to half-year operating profits at the Co-operative Group, it has been revealed.

The results showed an underlying pre-tax loss of £75m over the six months to 5 July compared to a profit of £3m over the same period a year ago.

The £80m figure included a £20m hit from one-off costs. The impact of the attack on sales revenue was estimated at £206m.

Money latest: Rich Britons reveal the taxes they hate most

While the mutual had insurance cover for operational disruption, it did not have a policy to meet full losses arising from a cyber incident.

It further revealed that the total profit damage was expected to nudge £120m over its full financial year.

Co-op was among several retailers hit in April, including M&S, and iall its members had data stolen.

In-store, customers faced problems making payments initially and latterly empty shelves as the group struggled to restore control of key systems.

It prioritised rural stores for limited deliveries until stocks recovered in late May.

Co-op chair Debbie White said: “The first half of 2025 brought significant challenges, most notably from a malicious cyber attack.

“Our balance sheet strength and the magnificent response of our 53,000 colleagues enabled us to maintain vital services for our members and their communities.

“We must now build our Co-op back better and stronger to meet the challenges and opportunities that lie ahead.”

The attacks on the retailers, which have resulted in four arrests, have brought the insurance issue to the fore as Jaguar Land Rover battles the impact of a similar attack.

Its factories are currently on track to produce nothing for at least a month and the government is now actively considering some kind of taxpayer support for its vast supply chain.

It has been reported that it was in discussions over cyber cover when its systems came under attack at the end of August.

Like the Co-op, it leaves the company facing the prospect of meeting many of the costs itself.

M&S put a £300m cost on the ransomware attack on its own systems ahead of Easter but expects to claw much of that money back through insurance payouts.

The government has this week described the run of hacking attempts as a further wake up call to the business community and urged continued investment in cyber security.

Business

Jaguar Land Rover cyber attack: No easy options for taxpayer aid

Published

12 hours ago

September 25, 2025

admin

Jaguar Land Rover cyber attack: No easy options for taxpayer aid

Ministers are considering offering financial support to Jaguar Land Rover’s suppliers but are understood at this stage to have ruled out a broad furlough-style scheme for their employees.

JLR, Britain’s largest car manufacturer, has been debilitated by a malicious cyber attack, with production lines in the UK, India, Slovakia and Brazil shutdown since the start of September, and scheduled to be closed until at least the start of next month.

The prolonged shutdown of its assembly lines and engine manufacturing in the midlands and on Merseyside poses enormous risks for the hundreds of companies in its supply chain.

Money latest: Rich Britons reveal the taxes they hate most

Around a quarter of those companies are already laying off temporary staff and restricting permanent hires to short hours, with another quarter thought to be facing similar decisions in the next week.

At one major supplier some staff have been reduced to working zero hours, others cut back to half their paid hours, and others told they are free to seek temporary work elsewhere until production resumes.

Business secretary Peter Kyle, who only took up the post five days into the shutdown, has been under mounting pressure to act since it became clear JLR faces a prolonged closure.

That is only likely to have intensified if a report that JLR had no cyber insurance cover is true.

He is understood to be willing to offer financial support and is considering a range of options. One proposal, first reported by ITV News, is for the government to buy stock from suppliers in order to provide them with cash flow, and then sell it on to JLR when it resumes production.

That would be deeply complex given the just-in-time nature of the supply chain, with JLR unable to store parts and no guarantee they would all be required when production resumes.

It would also be hard to discriminate between the major multi-national companies in the supply chain, who arguably have the cash flow to support their local operations, and smaller companies in the lower tiers of JLRs supply chain at a real risk of bankruptcy.

While smaller suppliers are already laying off staff and struggling with cash flow others are unaffected.

Japanese company Denso, the world’s second-largest car parts supplier with turnover of more than $45bn last year, told Sky News: “As of now, our operations and supply in the UK are continuing as usual and there have been no layoffs or production stoppages at our facilities.”

Unions have called for a furlough scheme similar to that operated during the pandemic to be offered to the auto supply chain, but sources have indicated that is not considered the right option.

It would come with significant cost and carry the same risk of offering indiscriminate support rather than targeting those smaller firms most at risk.

Mr Kyle and industry minister Chris McDonald visited JLR and some of its suppliers on Tuesday. Speaking to Sky News Mr McDonald said they were “mapping the supply chain” to assess where help might be required, but indicated that he considered JLR should take responsibility for supporting companies: “This is JLR’s supply chain,” he said.

While unions favour intervention, any decision to deploy taxpayer funds would have to be justified against JLR’s own resources.

The company made profits of £2.5bn last year and is backed by Tata, the giant Indian conglomerate that has received close to £1bn in state support for its other UK concerns in the past 18 months, including a battery factory in Somerset and the electrification of the Port Talbot steelworks.

JLR cannot say how long they will be closed, but they will need the supply chain when the production lines start rolling again.