The independent Monetary Policy Committee of the Bank of England has primary responsibility for maintaining price stability and returning inflation sustainably to the 2% target. The Government primarily supports the Bank to control inflation through fiscal discipline, controlling borrowing and reducing long term pressures on our public finances. Last year, borrowing fell by 1ppt to its lowest level for six years at 4.2% GDP.

We know that people across the country are struggling with the cost of living and are worried about events in the Middle East and what that means for consumer prices in the UK. In March, the Government announced a £50 million support package for families struggling with high heating oil costs as a result of the conflict – with £17 million dedicated to consumers in Northern Ireland specifically. The Government has been working with the Northern Ireland Executive to ensure that protections are fit for purpose for Northern Irish households, who are particularly reliant on heating oil.

Since July, the Government has taken action to reduce energy bills by removing VAT from household electricity from October 1. This will take around £45 off the yearly Ofgem price cap in October, benefitting millions of households this winter. To ensure that households in Northern Ireland (NI) receive the same support as quickly as the rest of the UK, the NI Executive will receive comparable funding to enable it to support NI Households with the cost of living. The VAT cut on domestic electricity comes on top of the £150 removed from bills at the last Budget, when the OBR estimated that Government policy at Budget 2025 would bring down inflation by 0.4ppt in 2026-27. The 5p cut and freeze to fuel duty has also been extended to the end of the year.

The Government is monitoring the situation in the Middle East carefully. We are committed to helping people across the UK and providing breathing space with everyday costs.

Since October 2022, HM Treasury has transferred £110.72bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound.  

Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication.

The Office for Budget Responsibility (OBR) forecasts the fiscal impact of quantitative tightening, including for the next three years, as part of the fiscal forecasts in its Economic and Fiscal Outlook. This was last updated in March 2026 (see table below), and the next scheduled update will be published on 28 October 2026.

Since October 2022, HM Treasury has transferred £110.72bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound.  

Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication.

The Office for Budget Responsibility (OBR) forecasts the fiscal impact of quantitative tightening, including for the next three years, as part of the fiscal forecasts in its Economic and Fiscal Outlook. This was last updated in March 2026 (see table below), and the next scheduled update will be published on 28 October 2026.

Fiscal stability and credibility underpin this Government's plans and the Chancellor is committed to meeting his fiscal rules. The Chancellor makes decisions on tax policy at fiscal events.

The Government recognises the pressure facing mortgage borrowers across the United Kingdom. Earlier this year, Ministers met with the six largest mortgage lenders alongside UK Finance to discuss the outlook for mortgage rates following the latest global developments. At that meeting, these lenders committed to proactively contact 1.6 million customers whose fixed-rate deals were due to end during 2026, setting out options well before payments change.

Lenders across the industry also reaffirmed their commitment to the Mortgage Charter. The Mortgage Charter is a voluntary agreement that covers 90% of the mortgage market and provides flexibilities to help borrowers manage their repayments over a short period. This includes permitting eligible borrowers to switch temporarily to interest-only payments, or extend their mortgage term, for six months, after which they can switch back without a new affordability check or affecting their credit score.

Financial Conduct Authority rules also provide significant protections for all borrowers, including ensuring all customers are treated fairly. Any borrower who is concerned about making their repayments should contact their lender. Seeking support and engaging with lenders to discuss options will not affect a borrower’s credit score in any way, and earlier engagement will mean that lenders can offer more support.

The Government introduced a temporary easement so that taxpayers joining Making Tax Digital for Income Tax from April 2026 will not receive penalty points for late quarterly updates during 2026/27.

Any decision on future penalty easements will be announced in the usual way.

The Government keeps the framework for managing insurer distress and failure under review. The Prudential Regulation Authority (PRA) is responsible for the prudential regulation and supervision of insurers and has a range of powers to intervene where firms experience financial difficulties. Insurers are subject to robust prudential requirements and ongoing supervision designed to protect policyholders and promote the safety and soundness of firms.

In 2023, HM Treasury consulted on proposals for an Insurer Resolution Regime, which would provide the authorities with additional tools to manage the failure of a systemic insurer in an orderly manner. The Government is considering the implementation of these proposals and will continue to engage with stakeholders on the development of the regime.

The Prudential Regulation Authority carefully supervises insurers and requires them to maintain sufficient financial resources and robust risk-management arrangements. If a UK-regulated insurer fails, eligible annuity policies, as contracts of long-term insurance, are protected by the Financial Services Compensation Scheme at 100% with no upper limit.

The Government is also developing proposals for an Insurer Resolution Regime, following consultation in 2023. This would provide additional powers to manage the failure of a systemic insurer in an orderly way, helping to protect policyholders and financial stability.

Publication of tax returns is a matter for individual Ministers. Any such publication would be made in the usual way.

The Government has announced a cut in VAT on electricity bills to give millions of households breathing space on the cost of living. These changes to VAT apply and are funded for this winter (from 1 October 2026 to 31 March 2027).

The Windsor Framework provides the legal basis and mechanism for changes to VAT on goods in Northern Ireland, and the Government has begun discussions with the European Union on applying this mechanism for these changes.

To ensure that households in Northern Ireland receive the same support as quickly as the rest of the UK, the Northern Ireland Executive will receive comparable funding to enable it to support households in Northern Ireland with the cost of living this winter.

The Government recognises that increasingly capable artificial intelligence systems present both opportunities and risks for the financial sector.

As noted in July’s Financial Stability Report, frontier AI may materially increase the flow of vulnerabilities requiring assessment and remediation by firms, which could itself become a source of systemic risk, even if cyber-attacks were not to increase. A materially higher volume of identified vulnerabilities would require firms and suppliers to patch and validate changes at much greater speed and frequency, increasing the risk of errors, outages, and disruption across interconnected systems.

In May 2026 the National Cyber Security Centre issued guidance to firms encouraging them to prepare for a wave of software updates that will need to be applied across the technology stack to address the disclosure of new vulnerabilities.

The UK financial authorities have made clear that firms should maintain effective protective, detective, threat containment and cyber response capabilities, and should be able to identify, assess and remediate vulnerabilities more quickly and at greater scale as AI capabilities develop. Firms are responsible for ensuring they have the skills, expertise and resources necessary to manage risks appropriately, including cyber security and engineering capacity.

The Government supports this through technical advice and guidance from the NCSC and ongoing engagement with industry and regulators, including through the Cross Market Operational Resilience Group (CMORG).

Sir Jim Harra’s review into the background to the tracing problem and the lessons to be learned has been received, and the Government is considering its recommendations. The review will be published in due course.

The government is committed to supporting local leaders to drive growth and improve public services.

In the Cabinet Statement on ‘Rewiring the State’ the government committed to replace grants from central government with a share of local income tax for every mayor beginning in 2028, such that where a region grows its tax base, it benefits from the increased receipts. This will sit alongside greater retention of the revenue from business rates for local councils and strategic authorities.

At the Budget, the government will publish a roadmap setting out further detail on the design of fiscal devolution, and we will use the upcoming Spending Review to confirm the detailed arrangements for assigned income tax.

The Government is aware that cryptoasset firms are facing challenges associated with access to banking services, and is engaged with the sector on these matters.

Whilst the Government recognises that decisions around the provision of banking services are largely commercial in nature, we also expect businesses to be treated fairly. That is why the Government has taken action in this space, including legislating to enhance relevant protections in cases where a business has their bank account terminated by their provider.

The Government has also legislated to create a financial services regulatory regime for cryptoassets in the UK. Under this regime, firms will need to be licensed by the Financial Conduct Authority to provide relevant cryptoasset services, and the Government would not expect such licensed firms to be subject to restrictions by banking services providers simply because of the sector they belong to.

The Government recognises that increasingly capable artificial intelligence systems present both opportunities and risks for the financial sector. As noted in July’s Financial Stability Report, rapid progress in frontier AI capabilities presents a significant increase in the risks to financial stability from cyber and operational vulnerabilities.

HM Treasury works closely with the financial regulators, the National Cyber Security Centre and industry to strengthen the resilience of the UK financial system in the face of evolving cyber threats, including those enabled by AI. The authorities continue to work with firms through established resilience frameworks and industry bodies, including the Cross Market Operational Resilience Group (CMORG), which issued guidance for firms in June to help them assess their current capabilities and accelerate their response.

Frontier AI also has the potential to strengthen the financial sector’s cyber defences. To help firms share best practices on this front, the Bank of England has established a forum for systemically important UK financial institutions and Financial Market Infrastructure to share their experiences on the use of frontier AI for cyber defence.

War bonds are not being considered by the government. The Defence Investment Plan, which places defence on a stronger, more sustainable footing, is being funded by reprioritising public spending, with £10.3 billion already identified and a further £4.7 billion to be confirmed at Budget 2026 in a fair and balanced way.

The Government is clear that our core gilt programme is the most stable and cost-effective way of raising finance to fund the day-to-day activities of the government, owing to the depth and liquidity of the market. Finance raised via gilts or National Savings and Investments products is generally not tied to specific areas of government spending, in order to offer the best value-for-money for taxpayers. Issuing bonds aimed at specific areas of spending risks fragmenting the gilt market, which would not be consistent with the government’s debt management objective of minimising the cost of long-term financing.

The Government remains open to the introduction of new debt instruments; however, HM Treasury and the UK Debt Management Office apply certain criteria when considering the launch of a new type of debt instrument. These include consistency with the Government’s debt management objective (to minimise the long-term cost of financing, taking into account risk); the impact on the general functioning of the gilt market; the expected size, sustainability, and nature of investor demand for the instrument; and an assessment of the cost and resource commitment required for its introduction into the market.

The Government would also need to be satisfied that any new instrument would meet value-for-money criteria, enjoy strong and sustained demand in the long term, and be consistent with wider fiscal objectives. We keep the introduction of new debt financing instruments under regular review.

The UK and Canada share a common objective of strengthening Allied defence industrial capacity through closer international cooperation. The Multilateral Defence Mechanism (MDM) and Canada's proposed Defence, Security and Resilience Bank (DSRB) are intended to address related challenges within the defence industrial ecosystem.

Following the joint-PM statement at the NATO Ankara summit in July, we committed to working closely with our Canadian allies on how the MDM and DSRB can work together, and we continue to do this.

The Government wants consumers to be able to access high-quality support to make informed decisions about their finances and is committed to the safe adoption of AI in financial services, including financial guidance and advice. We support a principles-based, outcomes-focused approach to AI regulation enabling firms to innovate while maintaining high standards of consumer protection.

We recognise that general-purpose AI technology has already changed the nature of financial advice and guidance.

On 6 July, the Financial Conduct Authority published the Mills Review, which recommended a rapid FCA review on this issue.

On 14 July, the Government published the Financial Services AI Champions’ Adoption Plan, which included a high-priority recommendation that the FCA should consider the impacts of financial guidance and advice-like outputs through general purpose large language models (LLMs).

The Government are engaging with the FCA to determine next steps. This is an important piece of work that complements the Government’s broader ambition to make the UK a global leader in AI, leveraging our dual strengths in financial services and AI to drive growth, productivity and better, safe outcomes for consumers.

The Government does not comment on financial market movements. Last year borrowing fell 1 percentage point (over £20 billion) to its lowest level in six years. The IMF have forecast that, between 2025-2030, the UK will be reducing the deficit by more than any other G7 or G20 country.

The Government does not comment on financial market movements. Last year borrowing fell 1 percentage point (over £20 billion) to its lowest level in six years. The IMF have forecast that, between 2025-2030, the UK will be reducing the deficit by more than any other G7 or G20 country.