By Richard Johnstone | 22 May 2013
The Office for National Statistics has revised down its estimate for UK public sector net borrowing in 2012/13 by more than £1bn, due to higher than expected tax income.
In the latest analysis of the public finances, the ONS said the fall to £119.5bn was the result of Whitehall borrowing £1.2bn less than predicted in last month's forecast of £120.6bn. This was due to the Treasury receiving £1.8bn more in income tax and National Insurance Contributions than initially forecast.
As a result, borrowing in the financial year, excluding one-off asset transfers, has fallen by £1.4bn from £120.9bn borrowed in 2011/12. In total, £34.4bn of transfers were made from two public bodies to the Treasury in 2012/13. The first was £28bn from the Royal Mail Pension Plan as central government took responsibility for the company’s pension scheme liabilities; the second was £6.4bn moved from the Bank of England’s £375bn quantitative easing programme.
Analysing the figures, the Office for Budget Responsibility said the increase in tax revenues was in part due to bank bonuses being higher than the 10% fall assumed in its March forecast. It could also mean that fewer high-income taxpayers than expected deferred earnings into 2013/14 to take advantage of the introduction of the cut in the top rate of income tax from 50p to 45p.
Also today, the ONS announced that public sector net borrowing in April was £6.3bn. This is £25.4bn higher than the £19.1bn surplus in the same month in 2012. However, the figure for last year was also boosted by the asset transfer from the Royal Mail pension scheme. If this is removed, the underlying year-on-year increase was only £1.3bn.
