Borrowing hits a four-year high for December
The Treasury borrowed more than expected last month to record the highest December sum for four years, official figures have shown, with higher debt interest payments adding to the bill.
The Office for National Statistics (ONS) reported a net borrowing figure for December of £17.8bn when a sum just above £14bn had been expected by economists.
It left public sector net borrowing £10.1bn up on the same month last year and £8.9bn higher than at the same point in the last financial year but still within the range expected by the Office for Budget Responsibility.
Borrowing is on the up amid a budget-led drive for public sector investment, but the ONS data showed an £8.3bn debt interest bill – the third-highest December total on record.
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The report said that higher bill was mainly explained by shifts in the rate of inflation linked to the borrowing.
A £1.7bn payment for the repurchase of military dwellings added to the total December figure.
The data was revealed as Chancellor Rachel Reeves attends the World Economic Forum in Davos for a series of meetings with global business leaders in a bid to showcase the UK.
There is a chill, however, around the UK’s immediate economic prospects with investors recently piling pressure on her stewardship of the public finances by demanding higher risk premiums to hold UK government debt in the form of bonds, known as gilts.
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Long-term borrowing costs hit highs not seen since 1998 earlier this month, with the 30-year UK gilt yield still above 5%.
It ticked up by eight basis points in the wake of the ONS report being released.
The first six months in charge of the public finances have proved a baptism of fire for the chancellor, who promised during the election campaign to make economic growth her top priority.
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‘We need to grow our economy’
But she and the prime minister have been subsequently accused of shattering confidence through warnings of a “tough” budget ahead due to an alleged black hole in the public finances inherited from the Tories.
It was measured at £22bn and her fiscal statement on 30 October put business mainly on the hook for £40bn of tax increases announced.
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The economy is estimated to have largely flatlined during the second half of last year, with major employers warning that investment, jobs and pay growth ahead are under threat to help offset the impact of the additional costs due from April when tax hikes, including from employer national insurance contributions, take effect.
They have also stated that higher prices for consumers will also form part of the mix.
Employment figures released on Tuesday suggested that firms were already taking action.
Data from HM Revenue & Customs showed the number of payrolled employees was estimated to have fallen by 47,000 during the 12 months to December – the biggest drop since November 2020.
Economists see economic growth being supported this year by public sector investment announced in the budget.
The big question mark is over the contribution from the private sector.
Jessica Barnaby, deputy director for public sector finances at the ONS, said: “At almost £18bn, borrowing last month was the third highest in any December on record.
“Compared with December 2023, spending on public services, benefits, debt interest and capital transfers were all up, while an increase in tax receipts was partially offset by a reduction in national insurance contributions, following the rate cuts earlier in 2024.”
Chief Secretary to the Treasury Darren Jones said of the data: “Economic stability is vital for our number one mission of delivering growth, that’s why our fiscal rules are non-negotiable and why we will have an iron grip on the public finances.
“Through our spending review we will interrogate every line of government spending for the first time in 17 years. We’ll root out waste to ensure every penny of taxpayer’s money is spent productively and helps deliver our Plan for Change.”
The first-ever Capture case has been delayed at the Court of Appeal as the Post Office asks for an extension to respond, Sky News has learned.
Pat Owen, a former sub postmistress who has since passed away, was convicted of stealing in 1998 based on evidence from computer software.
The system, known as Capture, was used in up to 2,500 branches in the 1990s, before the infamous Horizon system was introduced.
Hundreds of sub-postmasters were wrongfully convicted between 1999 and 2015 as part of the Horizon scandal.
Earlier this year, Sky News unearthed a 1998 report showing the Capture software was also faulty.
That report, commissioned by the solicitors acting for Mrs Owen in 1998, was served on the Post Office and may never have been seen by the jury in her case.
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‘All we want is her name cleared’
Ms Owen was given a suspended prison sentence and fought to clear her name subsequently – but died in 2003.
Her case was referred by the Criminal Cases Review Commission (CCRC) to the Court of Appeal in October.
The Post Office had until 5 December to respond to papers put forward by Mrs Owen’s defence team but they have now asked for an extension until 30 January.
Ms Owen’s daughter, Juliet Shardlow, described the family’s suffering at the lengthening wait.
“I need to emphasise the profound impact the ongoing delay is having on our family,” she said.
“The continuous uncertainty only compounds our heartache, stress, and anxiety.
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“It has become the last thing I think about before I go to sleep and the first thing when I wake up.
“We have waited 27 years for justice, and this additional wait feels never-ending.”
Ms Owen’s case is the first time a conviction based on Capture has reached the Court of Appeal since the scandal was exposed.
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Lawyers have said that if Ms Owen is exonerated posthumously, it may “speed up” the handling of others.
CCRC chair Dame Vera Baird also told Sky News in the summer it could be a “touchstone case” for other victims.
The CCRC is also continuing to investigate around 30 other “pre-Horizon” convictions.
A Post Office spokesperson said: “We have sought an extension of time to fully consider and respond to the CCRC’s Statement of Reasons in Ms Owen’s case.
“We deeply regret the impact our request for further time will have on Ms Owen’s family.
“We have a duty to carefully consider the evidence presented in the Statement of Reasons submitted by the CCRC and do everything we can to fully assist the Court when it considers this conviction.”
Meanwhile, the first-ever redress scheme for victims of the Post Office Capture IT scandal was launched this autumn.
The Capture Redress Scheme will provide payments of up to £300,000, and more in “exceptional” cases, to former postmasters who suffered financial losses.
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