Highest ever October state borrowing costs, official figures show

Published

10 months ago

November 21, 2023

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Public sector borrowing reached the second highest level for any October since records began, according to official figures, casting doubt on the prime minister’s pledge to cut debt and the chancellor’s capacity to cut taxes.

Public sector net borrowing was £14.9bn last month, £4.4bn more than the same point last year and the second highest since monthly records began in 1993, the Office for National Statistic (ONS) said.

Only once before, in the pandemic year of 2020, was a higher amount borrowed in October.

High borrowing costs, thanks to high interest rates and bond yields having neared a 15-year high, are part of the reason.

The interest payable was the highest on record for any October since such figures began being collated by the ONS.

Interest payments were £1.1bn more expensive than October last year, reaching £7.5bn. It is an even greater amount than the Office of Budget Responsibility’s (OBR) forecast of £4.9bn.

One of Prime Minister Rishi Sunak’s five promises is to reduce government debt, which arises when the state spends more money than it takes in from taxes.

Across the seven months to October 2023 debt was up £21.9bn compared with the same seven months in 2022, totalling £98.3bn.

But the sum was £16.9bn less than the £115.2bn forecast by the OBR in March.

The ONS data is the last set before the mini-budget speech to be delivered by Chancellor Jeremy Hunt in the Commons on Wednesday.

He had signalled months ago that the prospects for a series of giveaways was not in his immediate plans, despite pressure from Tory MPs for sweeteners to bolster the party’s fortunes in the polls.

However, the tune from Downing Street has changed significantly over the past few days, with Mr Sunak saying on Monday it was time for the government to “begin the next phase” of its plan and “turn our attention to cutting tax”.

It is believed some personal taxes could be cut to help boost growth and help working families with the cost of living.

At the weekend Mr Hunt also pledged to “remove the barriers that stop businesses growing”.

The chancellor had told Sky News in October that OBR’s new economic forecasts, to be revealed alongside the autumn statement, would be considerably worse than at the time of the spring budget.

Efforts to cut benefit bills and get 1.1 million classed as economically inactive into employment were revealed on Thursday last week as part of the chancellor’s Back to Work Plan.

It was the first pre-announcement of the autumn statement.

The run-up to a major fiscal event is often littered with such things – and leaks.

Mr Hunt is facing a clamour of demands for aid – not least from charities which warn that millions of families need additional support to get them through another tough winter for household budgets.

Inflation figures last week may have shown that the pace of price increases has more than halved this year, meeting the government’s target, but bills for energy remain £1,000 above pre-pandemic levels and other essentials such as food are still rising in double-digits.

Key announcements are due on Wednesday over the government’s commitment to the pensions triple lock and whether working age benefits will rise in line with September’s inflation figure.

Business aid may come in the form of tax relief.

A coalition of hospitality businesses called on the chancellor last week to freeze business rates and extend reliefs.

They argued that a fresh tax burden would force up costs and spark a flood of closures.

In response to Tuesday’s figures, Mr Hunt said: “We met our pledge to halve inflation, but we must keep on supporting the Bank of England to drive inflation down to 2%. That means being responsible with the nation’s finances.

“At my autumn statement tomorrow, I will focus on how we boost business investment and get people back into work to deliver the growth our country needs.”

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African economies show high potential for digital asset adoption

Published

13 hours ago

September 22, 2024

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African economies show high potential for digital asset adoption

South Africa emerges as a leading digital asset hub, driving growth in crypto with proactive regulations and expanding platforms like VALR.

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Angela Rayner promises flagship workers’ law next month as she pledges ‘things can get better’

Published

14 hours ago

September 22, 2024

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Angela Rayner promises flagship workers' law next month as she pledges 'things can get better'

Angela Rayner has promised to bring Labour’s flagship workers’ rights bill to parliament next month as she told her party’s conference: “Things can get better if we make the right choices.”

The government has faced criticism in recent weeks over its pessimistic messaging around the economy, with Prime Minister Sir Keir Starmer warning October’s Budget would be “painful” in order to deal with the £22bn “black hole” he claims was left by the Conservatives.

But while his deputy said the party “can’t wish our problems away”, she said “hope won” when Labour achieved its landslide at the last election, adding: “Change has begun.”

Politics live: Rayner speaks at Labour conference

Speaking on the conference floor on the first full day of Labour’s annual gathering, Ms Rayner said: “Let me be blunt. We can’t wish our problems away. We have to face them. That’s the difference between opposition and government.

“But… things can get better if we make the right choices. Sustained economic growth is the only way to improve the lives of working people, and we’re fixing the foundations to put Britain back on the path to growth. No more talking, but doing.”

The deputy prime minister reiterated her party’s plans to improve renters’ rights, including ending no-fault evictions “for good”, as well as promising a “devolution revolution” in the north of England, and the “biggest boost to social and affordable housing in a generation”.

But some of the biggest cheers from delegates came over her long-trailed plan to increase workers’ rights across the country, with her promising to bring the Employment Rights Bill to the Commons in October.

Concerns have been raised over the legislation by some in the business community, with an Institute of Directors’ survey earlier this month citing the bill as a reason for pessimism among firms who fear the impact on their operations.

But the government has sought to play down any divide, and held several roundtables with company leaders in recent weeks to allay their fears.

Championing the bill, Ms Rayner said: “They said we couldn’t do it. Some tried to stop it in its tracks. But after years of opposition, we are on the verge of historic legislation to make work more secure, make it more family friendly, go further and faster to close the gender pay gap, ensure rights are enforced and trade unions are strengthened.

“That means repealing the Tories’ anti-worker laws and new rights for union reps too. A genuine living wage and sick pay for the lowest earners, banning exploitative zero-hour contracts and unpaid internships, ending fire and rehire. And we will bring in basic rights from day one on the job.

“This is our plan to make work pay, and it’s coming to a workplace near you.”

Concluding her speech, the deputy prime minister said: “On 4 July, the people entrusted us with the task of change and hope won. Now is our moment, not just to say, but to do.

“Labour governments of the past took on this same challenge at a time when Britain desperately needed change. They delivered a better Britain when the odds were stacked against them.

“And that is exactly what this Labour government must deliver once again. So conference, let’s get on with it.”

Politics

Angela Rayner to announce renters’ protections at opening of Labour Party conference

Published

15 hours ago

September 22, 2024

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Angela Rayner to announce renters' protections at opening of Labour Party conference

Angela Rayner will set out measures to protect renters from fire safety defects, damp and mould in her speech at the Labour Party conference.

The deputy prime minister, who is also the housing secretary, will commit to “building homes fit for the future” when she opens the party’s first annual gathering since winning the general election.

The package will include bringing forward a Remediation Acceleration Plan this autumn to speed up the removal of unsafe cladding on high-rise buildings.

Deadly cladding remains on more than half of all residential blocks of flats identified as at risk since the Grenfell fire in 2017.

The issue has come back into the spotlight following the conclusion of the inquiry into the tragedy, which found that “systematic dishonesty” contributed to the blaze that killed 72 people.

The announcement of the acceleration plan was thin on detail, but the government said it would go “further and faster to fix unsafe cladding and make existing homes safe”.

Other measures Ms Rayner will announce on Sunday include consulting on a new “decent homes standard” for the social and private rented sectors, and a new law to make landlords respond to complaints about disrepair within legally binding timescales.

These have already been announced as part of Labour’s Renters’ Rights Bill, which builds on long-awaited legislation that was promised by the Tories but ultimately shelved ahead of the general election.

The law regarding repairs will be named after two-year-old Awaab Ishak, who died as a direct result of exposure to mould in the social home his family rented in Rochdale, Greater Manchester.

The Conservatives first proposed Awaab’s Law to cover the social rented sector, but Labour will extend it to cover the private sector in a move they say will help tenants in 746,000 homes with reported serious hazards secure faster repairs.

Commenting ahead of her speech, Ms Rayner, who has also pledged to build 1.5 million homes over the next five years, said: “Just because Britain isn’t working at the moment, it doesn’t mean it can’t be fixed.

“We will deliver for working people and, in doing so, show that politics can change lives.

“This Labour government is taking a wave of bold action to not only build the housing our country needs and boost social and affordable housing, but to ensure all homes are decent, safe, and warm.”

The speech comes as a donations row threatens to overshadow the optimistic mood of the party’s first conference while in government for 15 years.

The prime minister has come under scrutiny over the past week for the more than £100,000 worth of gifts he has accepted, including tickets to football matches, concerts and luxury clothes.

Following days of press coverage on the issue, it emerged on Friday that Sir Keir and his most senior ministers – Ms Rayner and Chancellor Rachel Reeves – will no longer accept donations to pay for clothes.

On Saturday, Culture Secretary Lisa Nandy told Sky News that there had not been an undue influence in gifts accepted by her colleagues but “we don’t want the news and the commentary to be dominated by conversations about clothes”.

She defended the prime minister’s actions as being within the rules, saying that the taxpayer doesn’t fund these things “so MPs will always take donations, will always take gifts in kind”.

She added: “We expect our politicians to be well turned out, we expect them to be people who go out and represent us at different events and represent the country at different events and are clothed appropriately.

“But the point is that when we accept donations for that or for anything else, that we declare them and we’re open and transparent about them.”