Gilt yields have soared in the past three days - partly it seems because of worries that the Government may have to issue lashings of extra debt to feed its putative mortgages-for-gilts swap plan. Details of the plan, intended to lubricate the paralysed interbank lending market, have yet to be released. But banks are expecting to take a “haircut” of 5 to 15 per cent on the value of the securities they swap.

The Bank of England should be able to include other safeguards to ensure that it doesn't lose any of our money if those mortgages go sour. What it can't guarantee is that the rescue plan is costless for taxpayers. All government borrowing over the next few years is likely to be a little bit more expensive than otherwise. That's a cost for everybody.

david.wighton@thetimes.co.uk

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