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Friday, 6 March 2009

image for Darling to pocket £1.7m from quantitative easing pot
Darling raises eyebrow over quantitative easing bung

Alistair Darling will personally receive £1.69 million from the Bank of England's quantitative easing slush money pot.

After it was announced the Bank of England would create £75 billion worth of funds from thin air and the Treasury cleared a total of £150 billion to be used, it emerged the chancellor will pocket a seven figure payday.

Mr Darling said: "The Bank of England has full independence on how it uses the Asset Purchase Scheme.

"If they want to hand me a minuscule 0.22 per cent creation fee I cannot and should not - honouring their judgement - turn down the funds."

If the second half of the funds are used the creation fee will double - as a performance related bonus - to 0.44 per cent or £3.38 million extra.

Mervyn King, Bank of England governor, defended the payout.

"The creation fee is standard practice for quantitative easing and such a precedent is repeated in many other countries. Zimbabwe's central bank also provides payments to members of the country's government.

"We feel this payment will be used for the greater good of the economy."

Mr King denied some money would be used to fund "some nice dresses" for Mrs King, the governess of the Bank of England.

The appearance of a fleet of Bentleys on Threadneedle Street have been denied as being part of the Bank's quantitative easing - although David Blanchflower, senior MPC member, is reported as saying he was "looking forward to investing in the motor industry".

Sir John Gieve, a fellow MPC member, said he wanted to buy Newcastle United.

It is not the first time the chancellor has been embroiled in using state funds for his personal gains.

In February 2008 he nationalised Novocastrian lender Northern Rock, the very same bank where he had a £1.5 million mortgage on his £124,000 London pied a terre, which did have repayments covered by ministerial allowances.

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