Chief Secretary to the Treasury responds to September's Public Sector Finance stats + response

Darren Jones, Chief Secretary to the Treasury responds to Public Sector Finance stats for September 2024.

Darren Jones, Chief Secretary to the Treasury said:

“We have inherited a £22 billion black hole in the country's public finances, including no plan to fund pay deals for millions of public sector workers. Strikes cost at least £3 billion last year, so it was the right thing to do to end those damaging disputes. Resolving this blackhole at the Budget next week will require difficult decisions to fix the foundations of our economy and begin delivering on the promise of change.”

New ONS data confirms £11.5 billion government overspending during first half of the year - Resolution Foundation

Central government spending is already £11.5 billion above the OBR's March forecast, six months into the fiscal year, highlighting the scale of the public finances challenge facing the Chancellor ahead of her first Budget next week, the Resolution Foundation said today (Tuesday).

The vast majority (£9.7 billion) of central government overspending in the current financial year comes from spending on good and services, typical higher pay and running costs. The scale of this overspend tallies with the £22 billion ‘black hole' identified by the Treasury back in July.

But while those day-to-day spending pressures continue to build, the impact on borrowing was partly offset by lower benefit payments reflecting cuts to Winter Fuel Payments which are recorded in September, when eligibility is determined, rather than in November when they're paid.

Tax receipts have also come in £4.9 billion above the OBR's in the six months to September. Along with higher than expected debt interest, overall public sector borrowing was £6.7 billion higher than the OBR's forecast at the time of the Budget in March.

Cara Pacitti, Senior Economist at the Resolution Foundation, said:

“Six months into the financial year, Britain is borrowing £6.7 billion more than expected at the time of the Budget in March. This reflects central government spending which is £11.5 billion higher than anticipated, largely due to public sector pay rises and higher running costs.

“Today's data highlights the scale of the public finances challenges facing the Chancellor as she grapples with overspending today, the need to avoid austerity in the future, and having to fund extra public service spending through tax rises.”