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| Treasury faces £16bn financial black hole, leaked document reveals | Treasury faces £16bn financial black hole, leaked document reveals |
| (about 5 hours later) | |
| The Treasury faces a black hole of up to £16bn in its finances this year, a leaked document has revealed. | The Treasury faces a black hole of up to £16bn in its finances this year, a leaked document has revealed. |
| The briefing – which was marked “sensitive” – also showed an extra £700m bill from a 25.9 per cent hike to Britain’s contribution to the EU. | |
| Obtained by Labour, it blamed a “severe worsening in the public finances” on the failure of tax returns to come in at the level expected. | Obtained by Labour, it blamed a “severe worsening in the public finances” on the failure of tax returns to come in at the level expected. |
| It was seized on by shadow Chancellor John McDonnell as evidence of the “Tory failure on the economy”, ahead of a crucial autumn statement to “reset” policy next month. | |
| Mr McDonnell said: “It refers to a run of disappointing data and the unlikelihood of getting deficit reduction back on track, officially confirming the Tory failure on the economy. | Mr McDonnell said: “It refers to a run of disappointing data and the unlikelihood of getting deficit reduction back on track, officially confirming the Tory failure on the economy. |
| “Now we’ve had it from the official civil servants, it’s time the Tories came clean. | |
| “They should drop the spin and admit the truth – they are failing on the public finances and working people are paying the price.” | |
| In George Osborne’s March 2016 Budget, he pencilled in a £20bn fall in borrowing to £55bn in the current financial year – after repeatedly failing on his borrowing targets in the last Parliament. | |
| But the document says borrowing has been higher than expected, stating: “Six months in, the deficit is only £2bn lower than in the same period a year ago.” | |
| Borrowing was actually higher year-on-year in September, part of a “continuing a run of disappointing data”. | Borrowing was actually higher year-on-year in September, part of a “continuing a run of disappointing data”. |
| “For the year to date, the deficit is £2.3bn lower than last year; at a fall of 4.8 per cent, well behind the 27.0 per cent reduction forecast,” the document said. | “For the year to date, the deficit is £2.3bn lower than last year; at a fall of 4.8 per cent, well behind the 27.0 per cent reduction forecast,” the document said. |
| Tax receipts are “back-loaded”, so should pick up as the year progresses, but are “unlikely to bring deficit reduction entirely back on track”. | Tax receipts are “back-loaded”, so should pick up as the year progresses, but are “unlikely to bring deficit reduction entirely back on track”. |
| It added: “Media commentators are likely to double the effect on borrowing for the year-to-date as we are now halfway through the year, which would imply a severe worsening in the public finances. | It added: “Media commentators are likely to double the effect on borrowing for the year-to-date as we are now halfway through the year, which would imply a severe worsening in the public finances. |
| “For instance, this would imply overshooting the PSNB forecast for 16-17 by £15.9bn.” | |
| Chancellor Philip Hammond has insisted that, although the Government will not now seek a Budget surplus by 2020, it remains “committed to fiscal discipline”. | Chancellor Philip Hammond has insisted that, although the Government will not now seek a Budget surplus by 2020, it remains “committed to fiscal discipline”. |
| The document was issued to officials but apparently posted on the Government’s website in error. | The document was issued to officials but apparently posted on the Government’s website in error. |
| A Treasury spokesman said: “The Chancellor has been clear that, while the deficit has been cut, it is still too high. | A Treasury spokesman said: “The Chancellor has been clear that, while the deficit has been cut, it is still too high. |
| “The Government is committed to balancing the books over a sensible period of time, in a way that allows space to support the economy.” | “The Government is committed to balancing the books over a sensible period of time, in a way that allows space to support the economy.” |
| The Treasury also flatly denied EU budget increases in the leaked document were related to the referendum result. | The Treasury also flatly denied EU budget increases in the leaked document were related to the referendum result. |
| A spokesman said: “The EU asked for a smaller share of our total 2016 contributions in the first three months of the year than in previous years. | A spokesman said: “The EU asked for a smaller share of our total 2016 contributions in the first three months of the year than in previous years. |
| “Our total contribution for the year is not affected, as the OBR [Office for Budget Responsibility] set out in their March forecast.” | “Our total contribution for the year is not affected, as the OBR [Office for Budget Responsibility] set out in their March forecast.” |