OUT of control government spending drove the public deficit to a record high for November, it was revealed yesterday.
Despite rising tax revenues, government borrowing shot up to £23.3bn, almost £6bn higher than the same time last year, the Office for National Statistics (ONS) showed.
The news piles pressure on chancellor George Osborne to get the public finances under control.
“On this trend, borrowing will hit £155bn, some £7bn above the Office for Budget Responsibility’s (OBR) latest forecast,” said Jonathan Loynes of Capital Economics.
Yesterday’s figures “pretty much wipe out all of this year’s reduction in borrowing in one fell swoop,” said Andrew Goodwin, economist at the Ernst and Young Item Club.
“We should be starting to see the impact of the coalition’s £6bn ‘efficiency savings’ yet spending continues to grow strongly,” he added.
“Central government spending was up almost 11 per cent over the year to November.”
Spending increases in the departments of health (£0.9bn) and defence (£0.4bn) contributed to the spiralling costs, the ONS reported. Health service inefficiency is the third worst among peer countries, the Organisation for Economic Co-operation and Development said recently.
The government is at risk of becoming “a very large bank attached to a hospital,” warned Andrew Lilico of the Policy Exchange think tank.
And interest payments on the government’s debt increased to £4.5bn in November from £3bn a year earlier.
Overall public sector debt at the end of November reached £863.1bn, excluding financial interventions, some 58 per cent of GDP – up from 57.1 per cent of GDP in October.
Last month the OBR forecast debts to reach a peak of 69.7 per cent of GDP in 2013-14.
“The size of the state needs to reduce far beyond the 40 per cent figure desired by government,” commented Philip Booth of the Institute for Economic Affairs.