By Lucy Phillips
22 February 2011
The UK’s public finances recorded a surplus of £3.7bn in January after a rise in tax receipts, according to official figures published today.
The figures, from the Officefor National Statistics, showed the greatest surplus in the public sector net borrowing measure since July 2008. It compares with a shortfall of £1.3bn a year ago.
January usually records a surplus because of the annual income tax payment deadline. This year’s extra cash was also attributed to the rise in VAT, which went up from 17.5% to 20% at the beginning of the year.
The surplus leaves the deficit for the first ten months of
the fiscal year at £113bn, placing the coalition well on course to meet its
borrowing target for the current financial year of £148.5bn.
Rowena Crawford, research economist
at the Institute for Fiscal Studies, said: 'Today's figures show that last
month's receipts of taxes on income and profits were sharply up from the low
level received in January 2010. This was more than sufficient to offset the
continued weaker-than-expected growth in VAT receipts that were perhaps
depressed by December's snow. Spending grew in line with the Office for Budget
Responsibility's latest forecast, with high growth in central government
spending on the delivery of public services being offset by low growth in
benefit spending.’
She agreed that borrowing was 'on course to come in at around £139bn', but
added: ‘It is important to bear in mind that borrowing over the next two months
might not follow the pattern seen over the previous ten.
'Were borrowing to come in lower than the Office for Budget Responsibility
forecast – which it might not - the chancellor would no doubt be pleased. But
the level of borrowing seen in 2010/11 would still be the second highest since
the Second World War surpassed only by the amount borrowed in 2009/10.
‘Given the uncertainty over borrowing going forwards, and the store that George
Osborne has set by his fiscal consolidation plan, he might best be advised to
bank any improvement in the public finances in next month’s Budget rather than
engage in significant net giveaways.’
