Pound today: Ex-Bank of England deputy says Truss tax cuts behind market turmoil

When I was a small boy at school, Andrew Bailey was a prefect and, then as now, a distant figure of authority, writes Sean O’Grady. We called this stout disciplinarian “Bastard Bailey”, because he showed little mercy towards any pupil he discovered enjoying an illicit Rothmans behind the science labs. Entreaties for clemency based on fictional bereavements or medical conditions were routinely ignored. Names were obtained, noted and passed on for appropriate action.

Seems he hasn’t changed that. The distressed pension funds begging him to buy their devalued British government bonds have been met with that same stony resistance. He’s right, in the sense that propping up pension funds in trouble isn’t the role of the Bank of England. It’s not their fault that they’re in trouble – that’s because the panic-inducing effects of the mini-Budget are still being felt throughout the financial system and the economy.

The House of Commons is to debate a 575,000-signature petition calling for an early general election.

Our political editor Andrew Woodcock has this breaking story:

Conservative MPs are said to be discussing with Labour ways to block Liz Truss’s move to allow fracking at sites across England.

The prime minister is determined to press ahead with plans to boost drilling for shale gas, despite opposition from environmentalists, opposition parties and some Tory MPs.

Several Tories told the BBC they had talked with the opposition about which parliamentary mechanisms could be used to force ministers into yet another U-turn.

A Labour source confirmed they had discussed ways to force a vote in the Commons with backbench Tories opposing fracking.

The Bank of England has confirmed in a statement that gilt purchases “will end on 14th October” as “has been made absolutely clear in contact with the banks at senior levels”.

“The Governor confirmed this position yesterday, and it has been made absolutely clear in contact with the banks at senior levels,” the statement reads.

“Beyond 14 October, a number of facilities, including the new TECRF, are in place to ease liquidity pressures on LDIs.”

The “origin” of turmoil in the markets is the chancellor’s mini-Budget, the director of policy and advocacy at the Pensions and Lifetime Savings Association has said.

Nigel Peaple said: “The origin of these problems seems to have been caused mainly by the mini-budget, because of market reaction to that mini-budget, because of uncertainty about the government’s plans.”

He suggested the markets could be calmed when the chancellor sets out more details about how he intends to manage the public finances.

A Conservative Party minister has been accused of reeling off “right-wing dystopian soundbites” for suggesting a policy to encourage women to have more children to boost the UK labour force.

Campaigners condemned the policy, which an unnamed Tory MP suggested to The Sun on Sunday in a weekend story headlined “Bonk for Britain”.

The minister argued the policy would boost the UK economy by following the lead of Viktor Orbán, Hungary’s far-right populist nationalist prime minister.

Our women’s correspondent Maya Oppenheim reports:

The Bank of England’s failure to raise interest rates in line with the US is driving turbulence in financial markets rather than Kwasi Kwarteng’s mini-budget, Business Secretary Jacob Rees-Mogg has said.

His comments came as Liz Truss prepared to face MPs with the Government battling for credibility over its economic policies as turmoil in the markets continued.

The Prime Minister will face her first Commons questions since Mr Kwarteng’s £43 billion mini-budget tax giveaway was blamed for unleashing chaos in the City.

MPs always “have a say”, Jacob Rees-Mogg has said amid reports that some Tory MPs could work with Labour to force a vote on the government’s fracking plans.

The move to reverse the ban on fracking is opposed by many Tories, one of several issues causing splits in the party since Liz Truss became leader.

The business secretary told BBC Radio 4’s Today programme: “MPs always have a say on what goes on.

“There are any number of mechanisms that MPs can use to have a say on things. The government doesn’t have to give votes. There are backbench business debates, there are opposition day debates, there are amendments.”

Responding to Jacob Rees-Mogg’s comments on the economy being in a “good state”, the Lib Dems’ deputy leader Daisy Cooper said he was “denying economic reality.”

She added: “His bluff and bluster will do nothing to reassure people worried about their mortgages, pensions and living standards.“

He’s admitted his own mortgage has gone up, but won’t take the action needed to help the millions terrified of losing their homes as interest payments go through the roof.”

The radical economic plan put forward by Liz Truss and her chancellor Kwasi Kwarteng is the “original sin” to blame for ongoing market turmoil, said the Bank of England’s former deputy governor.

Sir Charlie Bean said the mini-Budget’s “unfunded tax cuts” had panicked the markets, as the Bank deliberates whether to continue its emergency support beyond Friday in a bid to protect pensions.

“We shouldn’t forget that this is the prime cause of it [market turmoil] – the original sin here was the mini-Budget a couple of weeks ago, and the looming prospect of unfunded tax cuts in the medium term,” he told BBC Radio 4’s Today programme.