Treasury must be more active on re-financing government debt

1.40.04pm GMT Thu 26th Jan 2006

In Parliament today, Vince Cable MP, Liberal Democrat Shadow Chancellor, urged Gordon Brown to be much more active in refinancing government debt, taking advantage of low real yields. He accused the Treasury of being 'asleep' and missing a major opportunity to save money by cutting debt service costs. The Chancellor replied by pointing to the £650m 50 year gilt issue.

Commenting, Dr Cable said: "A reasonably agile Treasury, supported by Ministers with some private sector expertise, would have spotted the very lucrative refinancing opportunity. Their tokenistic approach means they have so far re-financed barely 0.1% of debt.

"The need for urgent, large scale intervention is not simply that of saving on debt service but helping occupational pension schemes pull out of the downward spiral of falling returns, widening deficits and a further move into low yield bonds.

"The scale of the recent fall in yields indicates that the risks are now asymmetric, the likelihood of yields rising from the current rate is much larger than them falling. The Treasury should act now."