Treasury cheers bumper haul in January tax receipts
The Treasury benefited from the second highest surplus since records began in April 1993
Chancellor Philip Hammond’s efforts to balance the books have been given a boost after the Treasury enjoyed a bumper haul of tax receipts last month.
Figures from the Office for National Statistics (ONS) show public sector net borrowing, excluding state-owned banks, was in surplus of £10 billion in January, better than economist expectations for a surplus of £9.6 billion.
It is the second highest surplus since records began in April 1993, but is £1.6 billion lower than the figure logged in January 2017.
Government coffers were bolstered by receipts on self-assessed income tax and capital gains tax, which totalled £18.4 billion in January, but marked a £900 million drop from a year earlier.
The deficit excluding banks for the current financial year – April 2017 to January 2018 – dropped by £7.2 billion to £37.7 billion.
It puts the Government on track to beat full-year targets, with the Office for Budget Responsibility (OBR) forecasting in November that public sector net borrowing would reach £49.9 billion in the year to the end of March.
The ONS added that public sector net debt, excluding state-owned banks, increased by £55.7 billion to £1,736.8 billion in December, equivalent to 84.1% of gross domestic product (GDP).
Ross Campbell, public sector director of the Institute of Chartered Accountants in England and Wales (ICAEW), said: “Despite the headline figures, public finances are still in deficit with no immediate prospect of a return to surplus.
“At nearly £1.7 trillion, national debt has reached its highest ever level other than in the aftermath of a major war. The macro economy is starting to change, which means government is vulnerable to increasing inflation and interest rates.”
The figures come weeks before Mr Hammond delivers the spring statement on March 13, though the Treasury has said that the Chancellor will only provide an update on economic forecasts and stop short of delivering any major policy changes.
Mr Campbell said a “prudent” Government would continue to keep a tight rein on borrowing and spending but noted that the decision may be more difficult as Britons grow weary of austerity-driven policies.
Borrowing has fallen by £107 billion since 2010 – reducing the burden on future generations. pic.twitter.com/rGgvU7rSow— HM Treasury (@hmtreasury) February 21, 2018
“While monetary policy decisions rest with the Bank of England, a decision to put up interest rates too soon to counter rising inflation could trigger a credit crisis and a fall in taxation, Mr Campbell said.
“With the upcoming spring statement, the Chancellor has a careful balancing act to perform.”
Chief Secretary to the Treasury Elizabeth Truss cheered the January surplus.
“These are strong borrowing figures, which is proof that we are fixing our nation’s finances and reducing the burden on future generations,” said Ms Truss.
“Our balanced approach means we have committed billions of extra funding to the NHS and cut taxes for working people and companies across the UK, while reducing the deficit and building an economy fit for the future.”