Chancellor cuts the Bank of England's bond-buying ceiling to £482.4 billion
John Healey and Andrew Bailey have lowered the authorised size of the Asset Purchase Facility to match the gilts it now holds, down 46 per cent from its January 2022 peak, as the Bank weighs selling the remaining gilts to the Government rather than to the market.
The Chancellor, John Healey, and the Governor of the Bank of England, Andrew Bailey, have agreed to lower the authorised maximum size of the Asset Purchase Facility, the vehicle that holds the government bonds bought under quantitative easing. In letters exchanged on Tuesday, the ceiling was reduced from £524.9 billion, agreed in the exchange of letters on 5 May 2026, to £482.4 billion. The new ceiling matches the stock of gilt holdings in the facility as of 4 November.
Of that £482.4 billion total, £362.4 billion may be held for monetary policy purposes, and £120 billion may be held to back, indirectly, the banknotes now in circulation and those issued in future. Mr Bailey confirmed in his letter that gilts are the only assets the facility holds. Mr Healey's letter puts the fall since the January 2022 peak of £894.9 billion at £412.5 billion, or 46 per cent.
The reset follows a system settled on 3 February 2022: every six months, the ceiling is brought down in line with the shrinking stock of assets. Mr Healey said the two sides will review and confirm the amount again in six months. The Treasury indemnifies the facility's activities, as agreed when it was set up in 2009, and Mr Bailey's letter says the authorised maximum should be adjusted periodically to reflect the size of the portfolio.
As of 4 November 2026, the APF has been reduced by £412.5 billion from its peak of £894.9 billion in January 2022.John Healey, Chancellor of the Exchequer, letter to the Governor of the Bank of England, 10 November 2026
The letters also map out how the facility will be run down. The Monetary Policy Committee plans sales of £20 billion a year, measured in purchase proceeds, continuing until the gilts held for monetary policy have gone entirely, by the end of 2034. Allowing for maturities, that equates to the stock falling by an average of £46 billion a year. The Bank Executive has said no gilt maturing before 2035 will be sold, and the £120 billion of longest-dated gilts will stay in the facility as indirect backing for banknote issuance.
A change to the sales method is also under consideration. Mr Bailey wrote that the Bank Executive is looking at a different way of carrying out the gilt sales that remain, and intends to run the committee's multi-year plan by selling to the Government instead of into the market. That approach needs a final agreement with HM Treasury, he said, and the Bank will announce the operational details of the plan by April 2027 in any event. Mr Healey's letter says officials at the Bank and the Treasury are working together on a model under which the Government, rather than the market, would buy in all active gilt sales; progress is to be reviewed before April 2027 so that, if a final decision is taken to proceed, the arrangement can be built into the annual financing remit that HM Treasury sets for the Debt Management Office.
Both letters return to value for money. Mr Healey welcomed the fact that the run-down continues in a way designed to keep cost and risk as low as possible across the facility's life, subject to the committee's objectives, and said Treasury and Bank officials will keep monitoring how the facility is run and the risks it poses to the Exchequer. Mr Bailey said the Bank's operations should aim for the same balance, subject to the committee's chosen target for the unwind and its key principles. Cash transfers in future will be handled under the indemnity, as they have been until now.
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