PENSION funds in a £1 trillion pot were within a whisker of going bust as the Bank of England frantically moved to save a calamitous downturn brought on by a UK Government policy announcement, a new document revealed this week.

A letter to the Treasury from Sir Jon Cunliffe, Bank deputy governor, states that “had the bank not intervened” pension fund investments in a large number of pooled funds “would be worth zero”.

While the pound has stabilised somewhat since the extraordinary intervention, average mortgage interest rates have since risen to six per cent, the highest since 2008, and there is still little confidence in the plans of Prime Minister Liz Truss and Chancellor Kwasi Kwarteng.

Sir Jon wrote: “Against the backdrop of an unprecedented repricing in UK assets, the Bank announced a temporary and targeted intervention on Wednesday, September 28 to restore market functioning in long-dated government bonds and reduce risks from contagion to credit conditions for UK households and businesses.”

Sir Charlie Bean, predecessor to Sir Jon, said on the wider position in an interview with the BBC: “I don’t think MPs have woken up to this or the public at large, because instead of headroom of £30 billion, which Liz Truss was claiming could be used to finance her tax cuts during the leadership campaign, even before the measures a fortnight ago, it is likely there was a shortfall of the order of £20bn to which the Government have layered on top measures which were £45bn, now £43bn with the reversal of the diminution of the 45% tax bracket.”

The Herald: Chancellor Kwasi Kwarteng and Prime Minister Liz Truss at the Tory conference in Birmingham this week. Picture: Leon Neal/Getty ImagesChancellor Kwasi Kwarteng and Prime Minister Liz Truss at the Tory conference in Birmingham this week. Picture: Leon Neal/Getty Images (Image: Getty)

He added: “Talking about indexing benefits with respect to pay growth rather than inflation, which saves about £5bn and is politically highly contentious, is just a drop in the bucket.

“This is a very big challenge for the Chancellor to come up with measures that will convince the markets that the public finances are on a sustainable track in the medium term.”

Bank bailout activities continue until next week, when the short-term impact of the tax-burning mini-budget may yet be further felt.

Pat McFadden MP, shadow chief secretary to the Treasury, described the UK Government plans as "reckless and cavalier". 

Business editor Ian McConnell takes the Cabinet to task on its plans in his Called to Account column on Friday, where he writes: “It should go without saying that it would be obscene if the Conservatives were to fund their £17bn a year, mini-budget giveaway on corporation tax in any way through further austerity, from a societal perspective.

“However, with the Tories seemingly weighing up the notion of not raising welfare benefits in line with rampant inflation, it seems that this does need to be said.”

Deputy business editor Scott Wright revealed the value of the pay-off that the state-backed Scottish National Investment Bank gave to its former chief executive as he examined its accounts this week.

“SNIB posted a loss of more than £3 million in its maiden accounts,” he also writes.

Away from the office, Dunbar Golf Club is set for a new £3.6 million clubhouse, a nine-hole short course, golf academy, driving range and new greenkeeper facilities, with funding generated by a new residential development by Cala Homes, and both programmes expected to begin in the spring or summer of next year, writes business correspondent Kristy Dorsey.