Jacob Rees-Mogg Insists Pension Funds "Not At Risk” When Bank Ends Support
3 min read
Business Secretary Jacob Rees-Mogg has dismissed concerns that pension funds could be “at risk” after the Bank of England indicated support for markets would end this week.
It was announced on Tuesday that the Bank’s emergency bond buying scheme, which was introduced to stop a collapse of some pension funds, would be brought to an “orderly end” on Friday, although there have since been hints to lenders that the deadline could be extended.
Speaking from Washington, its governor Andrew Bailey said there could be no further support beyond Friday and it was up to the funds concerned to rebalance their holdings.
“My message to the funds involved – you’ve got three days left now. You have got to get this done,” he said, before the pound once again too a sharp downturn.
Rees-Mogg told Sky News that the "rightly independent" Bank of England intervened to protect these "risky investments".
“I’m not going to criticise the Bank of England or the Governor. It is not for me to speculate on what the Bank of England is doing,” he said.
The Business Secretary added that pension funds were not “at risk”, but admitted some “have taken some high risk investments” which prompted the Bank of England’s intervention.
He also played down new ONS figures showing that the UK economy shrank by 0.3 per cent in August, claiming this represented “a small amount in a very large economy” and that “there are bits of [the economy] in a good state”
“I think the economy has some good points and some areas of difficulty,” he told Sky News.
“There is a problem with inflation, and the difficulty with inflation is that monetary policy has to tighten, and if you tighten monetary policy it leads to higher mortgages and rates of interest for businesses. And that is never easy.”
Speaking to BBC Breakfast, Rees-Mogg also stressed that the ONS data is "highly subject to change", but added that the did suggest that Chancellor Kwasi Kwarteng was right to provide "a modest fiscal stimulus" to encourage economic growth.
"I think this ties in with what the Chancellor was doing, moving away from the highest tax rates in 70 years, moving away from the risk outlined by the governor of the Bank of England early in the summer of five quarters of recession,” he said.
The Business Secretary also commented on the government's decision to impose a cap on the earnings of renewable energy companies, which some consider an effective windfall tax.
The detail was contained in the government’s new energy prices bill, which limits power prices for households at an average of £2,500 a year
Both Rees-Mogg and Prime Minister Liz Truss have repeatedly ruled out imposing a windfall tax on energy companies in the past.
Speaking to BBC Radio 4's Today programme, Rees-Mogg said those who viewed the move as a windfall tax “do not understand the market”.
In a statement, he said: "The intervention in the market is done on the basis of limiting the gas price which feeds through to the electricity price. This feeds through to participants within the market.
“So, if we had capped the wholesale price of gas rather than the retail price of gas, this would have affected the renewable generators anyway.”
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