Between 2000 and 2025, UK taxpayers will have paid £1.21 trillion in interest payments on government debt. That's £1,207,800,000,000. To put this in perspective, that's enough to fund the NHS for eight years, or about £46,000 for every household in the UK.
But where did all this money actually go? Who received these vast sums extracted from British taxpayers over a quarter century?
The shocking answer is that the UK government refuses to tell us. When citizens have tried to get this information through Freedom of Information requests, the Debt Management Office hides behind claims of "commercial sensitivity" and "data protection" (https://www.whatdotheyknow.com/request/overseas_holdings_breakdown_by_c). Apparently, knowing who receives £105 billion annually courtesy of UK taxpayers might upset someone.
Despite this deliberate opacity, we can piece together the picture from various sources. According to the Office for Budget Responsibility, at the end of September 2024, the ownership of UK government debt breaks down roughly as follows:
- Overseas investors: 32% of total gilt holdings
- Bank of England (QE programme): 24%
- UK insurance companies and pension funds: 21%
- UK banks and building societies: 6%
- Other UK holders: 17%
Let's follow the money.
Foreign Holders - The £380-400 Billion Transfer
With foreign holders owning around 30-32% of UK debt throughout this period, approximately £380-400 billion of that £1.26 trillion has left the country entirely. According to research from CEPR, "foreign investors only hold about 25-30% of UK government debt" but this still represents massive capital outflows (https://cepr.org/voxeu/columns/sovereign-subsidy-zero-risk-weights-and-sovereign-risk-spillovers).
While the UK government won't tell us exactly which countries hold our debt, we know from the global pension fund data that the largest pension markets are:
- United States: Controls 65% of global pension assets
- Canada: Major player in global pension funds
- Japan: Significant holder of foreign government bonds
- Netherlands: Massive pension funds relative to country size
- Switzerland: Ditto
Source: Global Pension Assets Study 2024 (https://www.thinkingaheadinstitute.org/research-papers/global-pension-assets-study-2024/)
It's reasonable to estimate that US and Canadian pension funds alone have received £130-160 billion of UK taxpayer money since 2000. British workers struggling with the cost of living crisis are literally funding comfortable retirements for Americans and Canadians.
UK Banks - The Money Creation Scam
Here's where it gets truly scandalous. UK banks don't need to use existing money to buy government bonds. They create it. As we've established, under Article 114(4) of the Capital Requirements Regulation, UK government bonds carry a 0% risk weight for banks (https://www.eba.europa.eu/single-rule-book-qa/qna/view/publicId/2021_6160).
This means:
- Banks need zero capital to hold unlimited amounts of UK government debt
- They can create new money from nothing to buy these bonds
- They face no regulatory constraint on how much they hold
The 18 Gilt-Edged Market Makers (GEMMs) have exclusive rights to buy government bonds at auction (https://www.dmo.gov.uk/responsibilities/gilt-market/market-participants/). These include:
- UK banks: Barclays, HSBC, Lloyds, NatWest, RBS
- Foreign banks: Goldman Sachs, JP Morgan, Deutsche Bank, BNP Paribas, and others
Together, UK banks and foreign banks operating in the UK have likely collected £250-315 billion of that £1.26 trillion - money they created from thin air and lent to the government at interest.
UK Pension Funds and Insurance Companies
According to the OBR's July 2025 Fiscal Risks and Sustainability report, "private sector DB schemes held 52 per cent of their total assets in the form of gilts" (https://obr.uk/frs/fiscal-risks-and-sustainability-july-2025/). These holdings generated approximately £260-280 billion in interest payments over our period.
But here's the inequality angle: defined benefit pension schemes are increasingly rare and concentrated among higher earners and older workers. The government claims there's no money to properly fund the state pension, yet it's paid over a quarter of a trillion pounds to already well-funded private pension schemes.
The Bank of England Shell Game
The Bank of England, through its quantitative easing programme, owns about 24% of UK government debt. The interest paid to the BoE (approximately £300 billion of our total) technically stays within the public sector. But even this isn't straightforward - the unwinding of QE means the government is now paying higher interest rates on the reserves created, effectively transferring money to commercial banks that hold reserves at the BoE.
What Could We Have Done With £1.26 Trillion?
Instead of enriching foreign pension funds and banks that create money from nothing, that £1.26 trillion could have:
- Eliminated student debt (currently £206 billion) six times over
- Built 4.2 million council houses at £300,000 each
- Installed solar panels on every home in Britain and made the country energy independent
- Given every UK household £46,000
- Funded a genuine "levelling up" of the entire country
The Great Silence
Perhaps most revealing is what politicians don't talk about. When did you last hear a Prime Minister or Chancellor explain that we're paying £105 billion this year in interest, with a third going overseas? When has anyone in government admitted that banks create the money they lend to the government from nothing, then collect interest on it forever?
Both Labour and Conservative governments maintain this system. They'll argue about a few billion here or there on public services, but the £105 billion annual transfer to bondholders is treated as untouchable, inevitable, almost a law of nature.
It's not. It's a choice. A choice to prioritize bondholders over citizens, banks over public services, the wealthy over everyone else.
The Solution Exists
The UK has the sovereign power to create its own money. The Bank of England proved this with £895 billion of quantitative easing. Instead of maintaining a system where private banks create money and charge us interest on it, we could:
- Use direct monetary financing for public investment
- Create a national investment bank that returns profits to the public
- End the GEMM monopoly on government financing
- Save £105 billion annually for public services
The £1.21 trillion transfer since 2000 represents one of the largest wealth extractions in history. It's not economics - it's plunder. And it continues to increase every year, so that we UK taxpayers can expect to fork out £122 billion by 2030.
Until we demand transparency about where our money goes and why we're paying banks interest on money they create from nothing, this extraction will continue. The first step is understanding the scam. The second is ending it.
All data from official UK government sources: Office for Budget Responsibility, UK Debt Management Office, Bank of England, Office for National Statistics, House of Commons Library, European Banking Authority.
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