Increased rate of local government’s borrowing causing ‘considerable uncertainty’

The data has found that although the public sector’s net borrowing was down £1.6 billion in the previous year, this was counteracted by the increase in local government borrowing.

The Office for Budget Responsibility (OBR) has said the drop in borrowing was mainly due to a 3.9 per cent increase in central government accrued receipts from increased taxes. The OBR warned the increase in local government borrowing would lead to ‘considerable uncertainty’ as it initially forecasted a £0.7 billion full-year drop in July.

The OBR added: “Provisional local authorities’ estimates are often subject to significant revision, but this clearly represents a source of considerable uncertainty for our November forecast.”

Trade Union Congress (TUC) General Secretary Frances O’Grady said: “Instead of clearing the deficit, severe public spending cuts have slowed down the recovery and held back wage growth, leaving income tax revenues and national insurance receipts much lower than expected.

“The chancellor is in danger of repeating the mistakes of the last parliament with further public spending cuts that put the recovery at risk. This would damage the tax base and leave the public finances in a mess for even longer.”

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