As Fraser reported at the time, Labour put up a deficit clock on its website last month, claiming that the government was borrowing £277 million more during Tory conference than in the same four days last year. It based this on the borrowing figures available at the time, which were for the period April to August. In that period, the government had borrowed £802 a second more than in the same five months of 2011, so Labour assumed it would continue to do so in October.
But new figures out yesterday show that this was not the case. In fact, looking just at borrowing in October, Labour was lowballing it by about £67 million. The ONS says the government borrowed £8.6 billion in October 2012, £2.7 billion more than the £5.9 billion it borrowed in October 2012. That works out at an extra £996 a second, or £344 million over four days. Remember, though, that the monthly borrowing figures end up being revised by an average of £1.7 billion.
On the other hand, if you take total borrowing in the financial year to date (April to October) — a better way of judging whether the deficit is rising or falling than looking at an individual month — the picture is not quite as bad for George Osborne as Labour made out. In the seven months since April, the government has borrowed £45.3 billion, £23 billion less than in the same period last year. But that includes the distorting effect of the Royal Mail pension transfer, which artificially lowers the deficit by £28 billion. Adding that £28 billion back in puts borrowing so far this year at £73.3 billion — £5 billion higher than last year. That means the government has so far been borrowing an average of £273 a second more than in 2011, which would work out at ‘just’ £94 million over four days. Still, not great for a government that’s supposed to be all about getting the deficit down.
So will this year’s deficit be higher or lower than last year’s? The consensus forecast is that, stripping out the Royal Mail pension effect, it’ll end up slightly above 2011-12’s £122 billion. The average independent forecast for public sector net borrowing in 2012-13 is £100.3 billion — or £128.3 billion with that £28 billion added back in. In March, the OBR forecast that this year’s deficit would be £120 billion, very slightly lower than last year’s. But just three of the 30 independent organisations from whom the Treasury collects PSNB forecasts think it’ll come in lower, suggesting the OBR will have to join the other 27 when it makes its new forecasts in a fortnight.
And after all that borrowing, government debt now stands at £1.069 trillion, or 67.9 per cent of GDP.
Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.