But the Reeves budget also had another less visible, equally brazen innovation: Issuing more short-term debt to force down the yields on longer-dated bonds. This is a cunning technocratic plan to get those borrowing costs down. The UK Treasury’s Debt Management Office said last week it was looking to issue more short-dated UK Treasury bills, government IOUs that don’t pay a coupon but are sold at a discount so people get a payout when they mature. This probably heralds a dramatic increase in sales of these bills rather than regular gilts, which are normal government bonds that pay interest.
The upshot is that even if the UK’s overall amount of debt doesn’t change, its makeup will. With more “T-bills” being pumped out, the country won’t need to issue so many longer-dated gilts. An oversupply of the latter is a prime reason why yields on longer-maturity gilts — and thereby Britain’s debt costs — have been stuck at elevated levels.
The tradeoff with short term bonds is that the government takes on more interest rate risk. If interest rates jump all of a sudden, you’ll have a number of years before you have to reissue the bonds. If you have shorter term debt, you’ll start paying higher interest rates sooner.
Not necessarily a bad thing. The UK has an unusual amount of long term bonds. That’s one of the reasons the BoE started selling bonds costing the treasury billions instead of letting them expire. However, it’s not a panacea.
The DMO has actually been shortening the term of UK bonds for a few years now in various interest rate environments. So I don’t think it’s due to interest rates expectations.
The average maturity started decreasing in 2019. In 2020 the 30-year gilt dropped to below 1%. The same is above 5% now.
Rather, I think it’s a reflection in changes in demand. Pension funds, for example, are buying less long term debt. So it’s basically due to the government wanting to pay less in interest payments.
Agreed. Seems as close to a free win as possible, assuming the demand is it. They've done a lot of done stuff for political reasons but this would be a significant win if they can execute.
It's not really rocket science all borrowers already weigh this up
Shorter issuance is normally cheaper, but you have higher refinance risk and refinance costs (as you do it more often).
It's the same thing a homeowner does when weighing up a 2 year fix Vs a 5 year fix.
One particular quirk of gilts though is pushing to shorter term gilts means you don't pay a coupon but the cost is built into the maturity. That will help short term cashflow for the next couple of years, but aggregate cash flows further out...but that'll be some other chancellors problem.
T bills are sold at a discount so you raise less cash at issue than you do versus an instrument issued at par. If anything it’s worse for cashflow in the short term
T bills are sold at a discount so you raise less cash at issue than you do versus an instrument issued at par.
This is correct.
If anything it’s worse for cashflow in the short term
But this isn't right. They still need to raise the same amount for today. That means they need to issue more to account for the upfront discounting, and that means at redemption they need to repay more.
So you raise the same funds today, pay no coupon for the term (better cashflow), pay more at maturity.
You as in the Treasury, the You being the decision maker.
Longer term bonds have an illiquidity premium to encourage an investor to tie money up for 30 years. Longer term bonds are typically more stable interest rate.
The opposite is true. Shorter term bonds are typically cheaper. Less chance of the UK going bust in 1 year than in 30. However, because you’re constantly refinancing, you’re more exposed to short term increases or decreases in the demand for UK debt.
No it’s not. It’s taking on more interest rate risk in the return for slightly better pricing on the debt. It’s bog standard liability management any national debt office would do, if they felt the risk-reward was right.
Baldrick, you wouldn’t know a cunning plan if it painted itself purple and danced naked on top of a harpsichord singing, 'Cunning plans are here again'.
Farage is like who I imagine Blackadder turns into in the Christmas Carol episode after being visited by the 3 spirits, when he realizes if he’s bad his descendants can be Supreme Leader of the universe instead of wearing Baldrick’s posing pouch
Rachel Reeves has had a rough first 18 months as UK Chancellor of the Exchequer with very little going to plan. One persistent bugbear is that Britain’s borrowing costs still carry a so-called “moron premium” — ascribed for political ineptitude — above its developed-world peers. With yearly interest payments of £110 billion ($150 billion), the stubbornly high yield on gilts is seriously restricting her fiscal wiggle room. Time to get creative then.
In her November budget there was an unorthodox experiment in spending to reduce inflation, by letting the newly nationalized rail service (excluding London) freeze fares and doling out hefty subsidies for household energy bills. The Bank of England acknowledged these measures could cut inflation by as much as half a percentage point this year, and that could make it amenable to lowering its official rate further from 3.75%.
But the Reeves budget also had another less visible, equally brazen innovation: Issuing more short-term debt to force down the yields on longer-dated bonds. This is a cunning technocratic plan to get those borrowing costs down. The UK Treasury’s Debt Management Office said last week it was looking to issue more short-dated UK Treasury bills, government IOUs that don’t pay a coupon but are sold at a discount so people get a payout when they mature. This probably heralds a dramatic increase in sales of these bills rather than regular gilts, which are normal government bonds that pay interest.
The upshot is that even if the UK’s overall amount of debt doesn’t change, its makeup will. With more “T-bills” being pumped out, the country won’t need to issue so many longer-dated gilts. An oversupply of the latter is a prime reason why yields on longer-maturity gilts — and thereby Britain’s debt costs — have been stuck at elevated levels. If this stealth operation manages to bring them down, Reeves will doubtless claim success. The chancellor has already shortened substantially the duration of UK bonds by reducing medium- and long-maturity sales and preferring shorter-dated bonds. The average maturity of gilts has dropped to less than 13 years (still double that of the US) from more than 14 years when Labour took office. Maturities of new inflation-linked gilts have dropped by two-thirds.
This “longer to shorter” trick is gaining finance ministry fans globally, but the Reeves shift toward T-bills is a big departure for the UK. It is straight out of the US Treasury playbook, where a fifth of all debt is in bill format. Nothing so seismic is on the British slate but there’s plenty of room to do more. And the DMO is good at assessing demand. Presently there’s only £98 billion worth of one-, three- and six-month UK Treasury bills outstanding. That’s a rounding error versus nearly £3 trillion of gilts. Bills yield about 3.8% — roughly 10 basis points more than equivalent-maturity gilts, but 80 basis points less than 10-year yields. You can see the attraction for Reeves. The reason they yield slightly more than equivalent maturity gilts is down to a different tax treatment. Gilts aren’t subject to capital gains tax but bills are.
There will be plenty of demand from banks for the flood of bills, and from pension and investment funds looking for more liquid short-term assets. It provides high-quality collateral, too, for derivatives traders and hedge funds and their ilk in the overnight repo market. The BOE will be pleased by that. Increasing the share of government debt that has one-month to two-year maturities should reduce the cost of servicing the UK’s debt. But big commercial banks are potential losers. They’ll face much stiffer competition from a government offering T-bills at 3.8%, which is higher than most savings accounts offer.
As a result, retail savers will welcome the new measures, according to Michael Smith, head of debt capital markets at Winterflood Securities Ltd. (now part of Marex Financial). It’s all part of Reeves’ slow-burning but creditable efforts to open up UK capital markets to individual investors. Both T-bills and corporate bonds should be excellent candidates for the Individual Savings Accounts (ISAs) that are a staple for Britain’s savers, but which are criticized for enabling savings that sit idly in cash or aren’t invested in UK-domiciled assets. Reeves’ real rationale is, of course, to force long gilt yields lower by opening up other sources of supply. But at least there ought to be a benefit for UK capital markets access and liquidity.
One persistent bugbear is that Britain’s borrowing costs still carry a so-called “moron premium” — ascribed for political ineptitude — above its developed-world peers.
The irony of the recent budget was the leak about income tax increase led the markets to react favourably because it showed strong leadership to tackle debt crisis if needed. This then led to forecasts reducing the cost of future borrowing and so meant there was more fiscal headroom predicted which meant Reeves u-turned on the policy itself. This governement is so eager to take wins it cashes cheques before they're finished being written. They need to realise they're in a stronger position than they think they are, otherwise continue to compromise on everything and please no one.
I say this as somebody who thinks this government has been dealt a shit hand and has had to make something good of it. But God they don't understand anything about how to build a political coalition
This plan is nice if they can feasibly reduce the amount of debt. Shift what they can to short term at the lower rate, and then retire it rather than roll it.
However (and the article hints at this), if there is no meaningful reduction in debt, it's basically a gamble that the shape of the yield curve doesn't change much. That's not in the government's control. If the curve inverts then it could be a disaster.
Reeves and the treasury has rightly assessed we're living in a stable peaceful world and that there's only a miniscule chance of it going wrong in the short term.
Well I don't really understand a word of the explanation but the end result sounds promising? Just the sort of boring technocratic levers the treasury should be pulling IMO. Looking forward to seeing how this will be reported as being a blow to Reeves.
As far as I can understand the government has started to borrow short term debt at an interest rate of 3.8% rather than long term debt of 4.6% not only is this cheaper to pay back it also will bring the interest rate of long term borrowing down due to reduced demand.
I'm struggling to see what the downside or risk is here though. Maybe that knowing what you have to pay back over a long term is good as you can plan for it, while if you suddenly have to borrow lots the price can be unpredictable and high. I guess Labour have calculated that they won't have to do that.
As someone considering a tracker mortgage rather than fixed in the hope interest rates go down that's a really good explanation, and I also understand why the government has made that decision.
lssuing more short-term debt to force down the yields on longer-dated bonds. This is a cunning technocratic plan to get those borrowing costs down.
Perhaps I'm being overly pessimistic or missing the point, but rather than being a sign of creativity, I feel like this level of fiddling and gaming the system shows that they're shit out of ideas.
Bold and radical changes are needed to make the country viable again and this minor faffing about with a broken system is just flogging a dead horse.
I’d say you are. I mean surely it’s not a bad thing to cut cost to serve debt in the short term even if it isn’t the transformative change people are hoping for…?
There’s expecting more from our politicians (rightly so) and then there’s refusing to acknowledge sensible moves to reduce cost
Of course it's not a bad thing, but if that's all they have then it's not enough. The celebratory tone of this article suggests very much the latter. Perhaps the journalists are missing something but given the lack of any big announcements along these lines elsewhere, I'm guessing not.
This is a practical step, amongst rather a lot of practical steps they've been taking across the board. They don't have the financial power to make sweeping changes. I don't know what you actually want from this government if not practicality in our current position.
I do agree with you. Unfortunately the UK is in a situation where we borrow so much money that we are a slave to the financial market. And every year we borrow a little bit more.
Unfortunately this is by design, and all it really achieves is the gradual siphoning of assets to corporations and the ultra wealthy, whilst we privatise our national services for a short-term cash injection, only to have them run into the ground and sold back to us at much higher prices.
I'm not even sure what you can do to get out of that spiral other than shrug off the markets and attempt to heavily nationalise a lot of sectors.
Because they were still stuck with the Tories planning system, their infrastructure bill only just went through parliament, and they are already planning an expansion of that legislation.
Labour came making exciting promises about planning, got to work, got a bit of pushback, and then capitulated in so many key areas.
We still have discretionary planning. We still have excessive local Power to block and stall. We still have the useless Building Safety Regulator. We still have Greenbelts. We still have Local Plans.
Labour have made some small progress in some areas, but have failed in others and made some parts even worse.
Personally I think the best thing about Labour is that they are dedicated to fixing the UK’s long term problems like this.
We don’t need more short termism with the Tories and Reform, I want a party who will focus on the UK as a whole, even if they are not around to reap the reward of their policies.
Term running out in... 3 and a half years? We're not even half way. Sure maybe it could be faster but it's a joke to say that they're urgently running out of time
So instead of labour taking too long to do planning reform we're gonna... Vote in the tories, who made the mess of red tape? Or farage, who will just get rid of the tape for his buddies and nothing else? Better is better, even if it takes time. Yes, delays may hurt future election prospects and delays to progress have an impact. But on a personal level, I'd rather it gets done than not at all
I mean the previous housing target was 300K a year and it was repeatedly not met, and I think so far under this government rates of building have reduced.
Property developers are also a big part of the problem, though. They prefer building property in expensive areas so they can charge as much as possible, rather than building suitable housing in poorer areas.
This causes nicer areas to become gentrified with overpriced homes and poorer areas to become like slums, with a concentration of rich and poor people in each respective area.
Something in the system needs to vastly change if you want to see a meaningful increase in supply and first-time buyers being able to get on the housing ladder; I don't think private property developers are going to be amicable to any such change.
Oh no, not property developers wanting to build in the areas with the highest demand to meet the needs of the country… Poor areas don’t need extra housing. They’re already cheap.
Gentrification is also good. Clearing out hovels into nice flat blocks for young professionals is good once you get over a bit of local NIMBYism and crying. You don’t have a god given right to live somewhere because your parents and grandparents did.
The UK isn’t fucked because there’s not enough construction in Grimsby. It’s fucked because our cities don’t build up nor out, and only a small number of them actually put in a shift to his their share of the targets.
I dunno man, pro-gentrification is an absolutely wild stance when you look at the effect it's had of turfing working class people out of prosperous areas and into slums, hahaha.
Your argument is totally missing the fact that creating exclusive enclaves for the wealthy has the effect of reducing education outcomes, opportunities, and increasing crime in poorer areas.
So long as sum stock materially increases, I simple don’t care, nor believe that would even happen.
If the UK were to gentrify every hovel, and build 400j units a year, I simply do not believe it would be and for poor people who would be enjoying real term rent cuts.
Why do you think the price of rent will go down when landlords have never lowered prices and collude through agents and AI software to steadily increase rent up to the affordability window?
Rents are not going to change when the wealthy are the only people who can afford these homes, because they can and will just buy all of the available stock and either rent it at extortionate prices or turn it into airbnb's.
Landlords lowered the rents in Texas when they were building at 2x the rate of The UK after deregulation. Why? The local supply and demand sets the rent.
Landlords are price takers in a competitive market. If supply is growing rapidly, that’s what happens.
The wealthy are also not ‘the only people who can afford homes’. A couple both on average wages can borrow £360k in mortgages.
Well the best ‘Cunning plan’ that I could suggest, would be to join the EU-Customs Union..
Which during Brexit, we were NOT originally going to leave !
Rachel, you wouldn't recognise a cunning plan if it painted itself purple and danced naked on top of a harpsichord singing 'Cunning plans are here again'.
Put it all on the Scots then have them declare bankruptcy, let them start again with a similar name. Like dodgy building companies do. Scotsland, a new country with no debts.
Until then maybe can stop giving them £26.2 billion more than they pay in to the UK ever year. Or stop puiblic spending being £2,699 more per person in Scotland than it is in England.
Issuing short-dated bonds at below the market borrowing rate is not a cheat code. It's one of the mechanisms of financial repression, which governments use to devalue their debt — essentially to soft-default on paying it off. It's how the UK government paid off the massive national debt after WW2. https://en.wikipedia.org/wiki/Financial_repression
Unfortunately it's a moronic plan. We are trading off the premium paid for the stability of long term debt , for the instability of short term debt. The problem is that if the economy goes into a tailspin short term rates, and interest costs will rise rapidly to attract foreign capital: thus worsening the downturn. One of the strengths of the UK gilt market was the long term average maturity - thereby reducing refinancing risk. This is now being undermined for political expediency. Remember that the chronic UK deficit and £1 trillion debt mountain is financed by foreign capital, not domestic borrowing - thus forcing the UK to offer rates attractive to foreign investors irrespective of the needs of the domestic economy. As the BoE put it : "we are dependent on the kindness of strangers" - this will just make us more dependent. The Labour government, the so called party of the workers, ironically, is making the UK economy more dependent upon foreign capital.
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This is genuinely an incredibly smart move.
I’m far too British- I see two extra words praising the measure (genuinely, incredibly and smart) and think “this must be sarcastic”.
I can't help but imagine Baldric tapping his nose.
I have a cunning plan Mr. B
I saw "cunning plan" and just instantly became sceptical. Not sure why
A cunning a subtle one? As cunning as a fox who’s just been appointed Professor of Cunning at Oxford University?
I imagined Dick Dastardly twiddling his moustache
Yes- the framing of the headline creates the illusion of impartiality while at the same time setting up in your mind that it’s a stupid idea.
The tradeoff with short term bonds is that the government takes on more interest rate risk. If interest rates jump all of a sudden, you’ll have a number of years before you have to reissue the bonds. If you have shorter term debt, you’ll start paying higher interest rates sooner.
Not necessarily a bad thing. The UK has an unusual amount of long term bonds. That’s one of the reasons the BoE started selling bonds costing the treasury billions instead of letting them expire. However, it’s not a panacea.
It does suggest that they think interest rates will fall over the next couple of years.
The DMO has actually been shortening the term of UK bonds for a few years now in various interest rate environments. So I don’t think it’s due to interest rates expectations.
The average maturity started decreasing in 2019. In 2020 the 30-year gilt dropped to below 1%. The same is above 5% now.
Rather, I think it’s a reflection in changes in demand. Pension funds, for example, are buying less long term debt. So it’s basically due to the government wanting to pay less in interest payments.
Agreed. Seems as close to a free win as possible, assuming the demand is it. They've done a lot of done stuff for political reasons but this would be a significant win if they can execute.
It's not really rocket science all borrowers already weigh this up
Shorter issuance is normally cheaper, but you have higher refinance risk and refinance costs (as you do it more often).
It's the same thing a homeowner does when weighing up a 2 year fix Vs a 5 year fix.
One particular quirk of gilts though is pushing to shorter term gilts means you don't pay a coupon but the cost is built into the maturity. That will help short term cashflow for the next couple of years, but aggregate cash flows further out...but that'll be some other chancellors problem.
T bills are sold at a discount so you raise less cash at issue than you do versus an instrument issued at par. If anything it’s worse for cashflow in the short term
This is correct.
But this isn't right. They still need to raise the same amount for today. That means they need to issue more to account for the upfront discounting, and that means at redemption they need to repay more.
So you raise the same funds today, pay no coupon for the term (better cashflow), pay more at maturity.
It’s a smart move so long as you’re prepared to endure more volatility in the shorter term markets.
Can you explain please? Genuinely interested to learn more.
When you say, 'you' need to be prepared for short term volatility, who is the you, and why would there be short term volatility?
Thanks
You as in the Treasury, the You being the decision maker.
Longer term bonds have an illiquidity premium to encourage an investor to tie money up for 30 years. Longer term bonds are typically more stable interest rate.
The opposite is true. Shorter term bonds are typically cheaper. Less chance of the UK going bust in 1 year than in 30. However, because you’re constantly refinancing, you’re more exposed to short term increases or decreases in the demand for UK debt.
Gilts are like having a 30 year fixed rate mortgage. You know your rate and can plan around it.
Bills are like remortgaging every year. You're much more at the mercy of the market rate when you refinance.
The government is so huge it has millions of each but the balance still matters.
Good luck explaining why this is smart to Reform voters though
I emailed this idea to the House of Lords last year!!!
Well not exactly this idea but a fairly similar one
No it’s not. It’s taking on more interest rate risk in the return for slightly better pricing on the debt. It’s bog standard liability management any national debt office would do, if they felt the risk-reward was right.
Is it as cunning as a fox, with a finance degree from the university of cunning?
Baldrick, you wouldn’t know a cunning plan if it painted itself purple and danced naked on top of a harpsichord singing, 'Cunning plans are here again'.
Buy a big turnip in the country
That was the head of
customer servicescunning economics at theretail bankBank of England department for financial cunning?Farage is like who I imagine Blackadder turns into in the Christmas Carol episode after being visited by the 3 spirits, when he realizes if he’s bad his descendants can be Supreme Leader of the universe instead of wearing Baldrick’s posing pouch
The irony of the recent budget was the leak about income tax increase led the markets to react favourably because it showed strong leadership to tackle debt crisis if needed. This then led to forecasts reducing the cost of future borrowing and so meant there was more fiscal headroom predicted which meant Reeves u-turned on the policy itself. This governement is so eager to take wins it cashes cheques before they're finished being written. They need to realise they're in a stronger position than they think they are, otherwise continue to compromise on everything and please no one.
Keir Starmer : "Allow me to introduce myself"
I say this as somebody who thinks this government has been dealt a shit hand and has had to make something good of it. But God they don't understand anything about how to build a political coalition
Shifting to short dated debt also increases the risk of a rapid yield spiral if things go wrong, because it radically increases debt turnover.
There is no such thing as a free lunch.
Exactly,
Smart in the sense that for now it looks good TODAY, but if, for some reason investors lose confidence, it will prove a problem to manage.
This plan is nice if they can feasibly reduce the amount of debt. Shift what they can to short term at the lower rate, and then retire it rather than roll it.
However (and the article hints at this), if there is no meaningful reduction in debt, it's basically a gamble that the shape of the yield curve doesn't change much. That's not in the government's control. If the curve inverts then it could be a disaster.
This is a reckless and stupid thing to do when it is well known the AI bubble is about to pop.
Did you short Nvidia?
Yes I currently have a small short on Nvidia
Reeves and the treasury has rightly assessed we're living in a stable peaceful world and that there's only a miniscule chance of it going wrong in the short term.
Are you saying they pizza’d when they should have French fried?
Should we assess Trump's presidency to be at least somewhat of a risk to world peace though?
Would a invasion of Greenland create a turmoil that would affect these plans?
[deleted]
Oh haha, now that you say that it does seem so.
Glad we're all on the same page then.
What a world we live in...
Exactly. Reeves is literally gambling with our national finances.
Ultimately is there any version of governing that does not gamble finances?
Rarely as nakedly as this, and rarely is naked gambling uncritically celebrated as technocratic genius.
3% of our total debt is not 'naked gambling' lol. You're fearmongering - look at the US debt makeup and then come back and say this is unacceptable
The debt is mostly in pounds though, which is our sovereign currency, so it's not really a gamble she can lose.
Unfortunately, printing money is not a way to print money.
It mitigates the immediate impact of the debt spiral by forcing a rapid inflationary spiral instead.
Britain has relied on long dated debt for decades for a reason.
It is entirely possible to lose a gamble in a sovereign currency.
Well surely she can't keep making bad decisions, surely her luck must change eventually?
Well I don't really understand a word of the explanation but the end result sounds promising? Just the sort of boring technocratic levers the treasury should be pulling IMO. Looking forward to seeing how this will be reported as being a blow to Reeves.
As far as I can understand the government has started to borrow short term debt at an interest rate of 3.8% rather than long term debt of 4.6% not only is this cheaper to pay back it also will bring the interest rate of long term borrowing down due to reduced demand.
I'm struggling to see what the downside or risk is here though. Maybe that knowing what you have to pay back over a long term is good as you can plan for it, while if you suddenly have to borrow lots the price can be unpredictable and high. I guess Labour have calculated that they won't have to do that.
It's the same dilemma as a cheaper tracker mortgage Vs a more expensive 5 year fixed rate. Risk of higher rates when you have to renew
As someone considering a tracker mortgage rather than fixed in the hope interest rates go down that's a really good explanation, and I also understand why the government has made that decision.
When the AI bubble pops and we need to prop up the economy yields will rocket and the country will be bankrupt. That's the downside.
Perhaps I'm being overly pessimistic or missing the point, but rather than being a sign of creativity, I feel like this level of fiddling and gaming the system shows that they're shit out of ideas.
Bold and radical changes are needed to make the country viable again and this minor faffing about with a broken system is just flogging a dead horse.
I’d say you are. I mean surely it’s not a bad thing to cut cost to serve debt in the short term even if it isn’t the transformative change people are hoping for…?
There’s expecting more from our politicians (rightly so) and then there’s refusing to acknowledge sensible moves to reduce cost
Of course it's not a bad thing, but if that's all they have then it's not enough. The celebratory tone of this article suggests very much the latter. Perhaps the journalists are missing something but given the lack of any big announcements along these lines elsewhere, I'm guessing not.
This is a practical step, amongst rather a lot of practical steps they've been taking across the board. They don't have the financial power to make sweeping changes. I don't know what you actually want from this government if not practicality in our current position.
I do agree with you. Unfortunately the UK is in a situation where we borrow so much money that we are a slave to the financial market. And every year we borrow a little bit more.
Unfortunately this is by design, and all it really achieves is the gradual siphoning of assets to corporations and the ultra wealthy, whilst we privatise our national services for a short-term cash injection, only to have them run into the ground and sold back to us at much higher prices.
I'm not even sure what you can do to get out of that spiral other than shrug off the markets and attempt to heavily nationalise a lot of sectors.
Is it as cunning as putting your pants on your head and sticking pencils up your nose?
Wibble!
Another way to cut borrowing costs is to reduce spending, and hence the need to borrow.
Has it considered letting property developers build more houses so we have more growth, more supply,and less need for welfare?
I mean thats literally one of their core policies
It was, then they watered it down massively because ‘backbenchuhs saad’
Cowards.
Because they were still stuck with the Tories planning system, their infrastructure bill only just went through parliament, and they are already planning an expansion of that legislation.
Tick Tick Tick, that’s the sound of their term running out.
They should have just done it properly the first time and told NIMBY backbenchers to eat shit.
Oh grow up. You thought you were asking a rhetorical question but then it got answered, lick your wounds and move on.
Labour came making exciting promises about planning, got to work, got a bit of pushback, and then capitulated in so many key areas.
We still have discretionary planning. We still have excessive local Power to block and stall. We still have the useless Building Safety Regulator. We still have Greenbelts. We still have Local Plans.
Labour have made some small progress in some areas, but have failed in others and made some parts even worse.
You've been unfairly downvoted here. The Planning bill is a macro bill that does nothing to unblock or preferably unleash, building of more homes.
We need to give owners of property far more leeway in upgrading and enhancing too, rather than forcing people to upsize in a move.
Personally I think the best thing about Labour is that they are dedicated to fixing the UK’s long term problems like this.
We don’t need more short termism with the Tories and Reform, I want a party who will focus on the UK as a whole, even if they are not around to reap the reward of their policies.
Term running out in... 3 and a half years? We're not even half way. Sure maybe it could be faster but it's a joke to say that they're urgently running out of time
3 1/2 years to go. Add another year for Planning Reform Round 2 (assuming they even bother)
Then do 18-24 months of lead time for it to have an impact on completed housebuilding, that’s 12-6 months of benefits from the policy. It’s too late.
We wouldn't feel the effects of it til next government even if it was enacted perfectly tomorrow
I disagree. You’d feel it if they’d passed the proper reforms in full at a quick pace.
If in 2027 they hit say 320k units, you’d feel it.
So instead of labour taking too long to do planning reform we're gonna... Vote in the tories, who made the mess of red tape? Or farage, who will just get rid of the tape for his buddies and nothing else? Better is better, even if it takes time. Yes, delays may hurt future election prospects and delays to progress have an impact. But on a personal level, I'd rather it gets done than not at all
Didn't you read the manifesto?
There'll be 1.5m new homes within 3 years.......
I mean the previous housing target was 300K a year and it was repeatedly not met, and I think so far under this government rates of building have reduced.
Dropped in 2024, rose in 2025 (although full year figures aren't available yet as it's April-April not calendar year).
They still need to pick up the slack to make the 1.5m in 5 years pledge. Tbh I don't see it happening without a big government-backed initiative.
Property developers are also a big part of the problem, though. They prefer building property in expensive areas so they can charge as much as possible, rather than building suitable housing in poorer areas.
This causes nicer areas to become gentrified with overpriced homes and poorer areas to become like slums, with a concentration of rich and poor people in each respective area.
Something in the system needs to vastly change if you want to see a meaningful increase in supply and first-time buyers being able to get on the housing ladder; I don't think private property developers are going to be amicable to any such change.
Oh no, not property developers wanting to build in the areas with the highest demand to meet the needs of the country… Poor areas don’t need extra housing. They’re already cheap.
Gentrification is also good. Clearing out hovels into nice flat blocks for young professionals is good once you get over a bit of local NIMBYism and crying. You don’t have a god given right to live somewhere because your parents and grandparents did.
The UK isn’t fucked because there’s not enough construction in Grimsby. It’s fucked because our cities don’t build up nor out, and only a small number of them actually put in a shift to his their share of the targets.
I dunno man, pro-gentrification is an absolutely wild stance when you look at the effect it's had of turfing working class people out of prosperous areas and into slums, hahaha.
Your argument is totally missing the fact that creating exclusive enclaves for the wealthy has the effect of reducing education outcomes, opportunities, and increasing crime in poorer areas.
So long as sum stock materially increases, I simple don’t care, nor believe that would even happen.
If the UK were to gentrify every hovel, and build 400j units a year, I simply do not believe it would be and for poor people who would be enjoying real term rent cuts.
Why do you think the price of rent will go down when landlords have never lowered prices and collude through agents and AI software to steadily increase rent up to the affordability window?
Rents are not going to change when the wealthy are the only people who can afford these homes, because they can and will just buy all of the available stock and either rent it at extortionate prices or turn it into airbnb's.
Landlords lowered the rents in Texas when they were building at 2x the rate of The UK after deregulation. Why? The local supply and demand sets the rent.
Landlords are price takers in a competitive market. If supply is growing rapidly, that’s what happens.
The wealthy are also not ‘the only people who can afford homes’. A couple both on average wages can borrow £360k in mortgages.
They lowered rents during covid
I think Covid may have been a bit of an outlier, mate.
Well the best ‘Cunning plan’ that I could suggest, would be to join the EU-Customs Union.. Which during Brexit, we were NOT originally going to leave !
Rachel, you wouldn't recognise a cunning plan if it painted itself purple and danced naked on top of a harpsichord singing 'Cunning plans are here again'.
Looking at the chart in the article she's simply continuing a trend started by Hunt shortly after Kwartang borked the gilt market.
They're not really different from individuals or businesses in choosing the cheapest available credit.
This is just copying what the US has been doing since 2023
Yeah everyone hated Yellen for this
If there's demand for short-dated debt then this is exactly what the treasury should be doing
Makes sense from a business point of view. Long is expensive when it should be cheap, so don’t sell it.
Here is an idea.
Could the rest of the UK declare independence from Scotland, claim we are a new country and leave the SNP with all the debt?
It is what they want to do to us, so lets do it first!
Will England ever get our independence referendum? Or at least our own Senedd or Holyrood devolved assembly?
If we can dump the debt on the Scots, why not?
Put it all on the Scots then have them declare bankruptcy, let them start again with a similar name. Like dodgy building companies do. Scotsland, a new country with no debts.
Until then maybe can stop giving them £26.2 billion more than they pay in to the UK ever year. Or stop puiblic spending being £2,699 more per person in Scotland than it is in England.
Issuing short-dated bonds at below the market borrowing rate is not a cheat code. It's one of the mechanisms of financial repression, which governments use to devalue their debt — essentially to soft-default on paying it off. It's how the UK government paid off the massive national debt after WW2. https://en.wikipedia.org/wiki/Financial_repression
Unfortunately it's a moronic plan. We are trading off the premium paid for the stability of long term debt , for the instability of short term debt. The problem is that if the economy goes into a tailspin short term rates, and interest costs will rise rapidly to attract foreign capital: thus worsening the downturn. One of the strengths of the UK gilt market was the long term average maturity - thereby reducing refinancing risk. This is now being undermined for political expediency. Remember that the chronic UK deficit and £1 trillion debt mountain is financed by foreign capital, not domestic borrowing - thus forcing the UK to offer rates attractive to foreign investors irrespective of the needs of the domestic economy. As the BoE put it : "we are dependent on the kindness of strangers" - this will just make us more dependent. The Labour government, the so called party of the workers, ironically, is making the UK economy more dependent upon foreign capital.