Rishi Sunak has been accused of failing to act soon enough to save £11bn of taxpayers’ money that has been used to pay interest on government debt.

The National Institute of Economic and Social Research (NIESR) said the losses stemmed from the chancellor’s failure to insure against interest rate rises.

It meant higher than necessary payments on £900bn of reserves created through the quantitative easing (QE) programme.

The Treasury said it has “a clear financing strategy” on debt.

NIESR’s Prof Jagjit Chadha, told the Financial Times that Mr Sunak’s actions had left the country with “an enormous bill and heavy continuing exposure to interest rate risk”.

According to the FT report, the Bank of England (BoE) created £895bn of money through quantitative easing, most of which was used to buy government bonds from pension funds and other investors.

When those investors put the proceeds in commercial bank deposits at the Bank, it had to pay interest at its official interest rate.

Last year, when the official rate was still 0.1%, NIESR – an economic research group – said the government should have insured the cost of servicing this debt against the risk of rising interest rates.

It suggested converting the debt into government bonds with longer to pay it back.

Prof Chadha said Mr Sunak’s failure to do this had cost taxpayers £11bn.

“It would have been much better to have reduced the scale of short-term liabilities earlier, as we argued for some time, and to exploit the benefits of longer-term debt issuance,” he told the FT.

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