§ Mr. CaplinTo ask the Chancellor of the Exchequer if he will make a statement on the timing of the transfer of cash management from the Bank of England to the Debt Management Office. [95866]
§ Miss Melanie JohnsonThe Chancellor of the Exchequer announced on 6 May 1997 that the functions of debt management and cash management would be transferred from the Bank of England to the Treasury. The UK Debt Management Office (DMO) was established on 1 April 1998 and took over debt management from that date. The Government's debt management plans for 1999–2000 which were published in the Debt Management Report in March 1999 anticipated that cash management would be transferred from the Bank to the DMO during 1999–2000. This transfer, when complete, will separate the Bank's monetary policy operations from the DMO' s debt and cash management operations. This will avoid any perceptions of conflicts of interest between the two operations, and further deliver the Government's policy of predictability and transparency in debt management.
The transfer of cash management from the Bank to the DMO during 1999–2000 will be effected on a phased basis. The phasing is designed to avoid placing undue requirements on the markets in the period before and immediately after the change to the Year 2000 date.
From 15 November, the DMO will become accountable for the new Debt Management Account, which will take over from the Gilt-Edged Official Operations Account as the Treasury account for debt (and later) cash management operations. During January 2000, the DMO will start to issue Treasury bills from the Debt Management Account. During February, the DMO intends to undertake a limited range of bilateral transactions with counterparties. From the end of March 2000, full responsibility for managing the government's daily cash position will be transferred from the Bank to the DMO.
In order to enable the DMO to start the phased introduction of these cash management operations from 15 November, I have today laid before Parliament revised Treasury Bill regulations SI 1999–2907 and made a Commencement Order SI 1999–2908 (C.76) under paragraph 3 of Schedule 26 of the Finance Act 1998. Taken together, these statutory instruments will enable the Debt Management Office to begin accounting for its debt 711W and cash management operations through the new Debt Management Account, which will be subject to NAO audit. The Gilt-edged Official Operations Account is currently used to bring debt management operations to account. The Commencement Order will also provide for the transfer of the debt assets of the Gilt-edged Official Operations Account to the Debt Management Account.
The Executive Agency Framework Document for the DMO has also been revised to take account of the transfer of the cash management function to the DMO. Copies of the revised Framework Document have been placed in the Libraries of both Houses of Parliament.