The scale of QE losses is very sensitive to the path of interest rates in the coming years, which means the chancellor’s headroom to hit that target is vulnerable to minor moves in financial markets.

It is also a threat to Labour. The party has promised sound finances should it win the upcoming general election. However, like Hunt, it finds itself vulnerable to the whims of financial markets which can throw QE costs up or down by tens of billions of pounds.

To understand how a scheme meant to keep borrowing costs down ended up costing so much, it is necessary to look back to 2009 when QE was first used in Britain.

In the teeth of the financial crisis, the Bank of England cut interest rates from 5.75pc to 0.5pc. But this was not enough and officials, led at the time by Mervyn King, wanted to do more.

Taking its lead from the Federal Reserve in the US, the Bank of England agreed with Alistair Darling, then chancellor, that it would launch a programme of QE – creating money and buying bonds to loosen up financial markets and further lower borrowing costs.

Darling said the Treasury would indemnify the Bank against any losses on the asset purchase facility (APF) in what was seen as a radical decision.

Officials referred to it as “unconventional policy”. More colloquially it was described as the “nuclear option”.

Darling authorised up to £150bn of purchases. “In these highly uncertain times, there are merits to stimulating the economy through a variety of different channels,” he said.

This was rapidly used up, so he signed off more. By the end of the year QE reached £200bn.

This scale creep was a sign of things to come.

Initially seen as a short-term emergency response, it became a regular tool of monetary policy, under Mark Carney and then Andrew Bailey at the Bank. Successive chancellors signed off the moves and underwrote the QE expansions, including Osborne, Phillip Hammond and Rishi Sunak.

As it became clear QE was becoming permanent, an opportunity arose.

In 2012, Osborne, in the midst of his drive to bring the deficit down, spotted a giant pile of cash building up at the Bank of England.

The bonds it had bought – amounting to £375bn by the end of that year – were generating a significant income.

The government gilts it bought paid interest into the APF’s coffers. The Bank only paid out the base rate of 0.5pc on the money it had created to buy them. The margin between the two was profit, and the chancellor wanted it for the public finances.

“As the scale and likely duration of the scheme has increased significantly since its inception, it makes sense to normalise the cash management arrangements,” Osborne wrote to King in 2012.

“Holding large amounts of cash in the APF is inefficient.”