LABOUR’S massive public sector pay hikes led to a record-busting September of borrowing.
The Office of National Statistics say the government has borrowed £6.7 billion more than planned this year after the third highest September on record.
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It came despite an increase in tax take due to fiscal drag meaning more workers were stung on their wages.
The stats bosses said: “While tax revenue increased, this was outweighed by increased spending, partly due to higher debt interest and public sector pay rises.”
Government borrowing rose to £16.6billion in September – £2.1billion more than a year earlier.
Borrowing for the year stood at £79.6billion, £1.2billion more than a year earlier and £6.7 billion more than forecast.
This came despite the first fall in central government benefit payments since early 2022, in part due to Labour’s decision to test the winter fuel allowance, which is paid out in November and last year cost around £2 billion.
Treasury Chief Secretary Darren Jones said the state of the public finances meant there would be “difficult decisions” in the October 30 Budget.
City firm Blick Rothenberg said “Income Tax annual receipts were “up 8.6% in the last 12 months, equating to £22.6bn more in the Treasury’s coffers.
“The main cause of the income tax increase is fiscal drag which continues to bring more people into higher rates of tax.
“This has been created by wage rises over the past 12 months and the freezing of the personal allowances and tax bands.”
