Government support for households and businesses with energy bills, and higher interest payments pushed UK public borrowing to a record £22bn in November, the highest level for the month since records began.
The Office for National Statistics (ONS) said the state spent more than it received in taxes and other income, meaning it had to borrow £13.9bn more in November than a year earlier, taking borrowing to its highest level for the period since monthly data started being issued in 1993.
government borrowing
Public sector borrowing was also higher last month than during the depths of the coronavirus pandemic, when the government launched huge spending schemes to support consumers and businesses during successive lockdowns.
Cost of living payments to help people and businesses with soaring energy bills were largely responsible for increasing assistance payments to £13.2bn, which was £3.3bn higher than a year earlier.
The impact of inflation is also making itself felt in the government’s finances. Since mid-2021 it has had to pay more interest on its debt, the ONS said, mostly as a result of higher inflation.
The interest payable on UK government bonds – known as gilts – is linked to the higher retail prices index level of inflation.
The interest that had to be paid on central government debt was £7.3bn in November, of which an underlying £4.3bn reflected the impact of inflation. The interest payable was £2.4bn more than in November 2021 and the highest since the monthly index of that measure began in 1997.
The government’s energy bills support scheme – which provides households with £400 towards the cost of the their energy bills paid out in six evenly spread instalments between October and March – cost the government £1.9bn in November.
The ONS said it could not yet fully calculate the monthly cost of additional government spending to help with energy bills, under the energy price guarantee scheme, which caps the average bills for households and the energy bill relief scheme for businesses, which began in October.
Governments across Europe are facing a sharp rise in spending to fund emergency support schemes after Russia’s invasion of Ukraine fuelled a dramatic rise in gas and electricity bills for households and businesses.
The chancellor, Jeremy Hunt, said: “Faced with the twin global emergencies of a pandemic and Putin’s war in Ukraine, we have taken significant action to support millions of businesses and families here in the UK.
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“We have a clear plan to help halve inflation next year but that requires some tough decisions to put our public finances back on a sustainable footing.”
The figures come as ministers consider options for extending energy support for businesses beyond April. Hunt has confirmed he will make an announcement early in the new year, although there are expectations the chancellor will scale back the generosity of the scheme. Reflecting high wholesale energy prices, it has been estimated a six-month scheme could cost as much as £48bn.
Overall government borrowing for the first eight months of the 2022-23 financial year was £105.4bn, which was the fourth highest financial year in the period to November since records began 1993, and £50.8bn higher than November 2019, before the pandemic.
The national debt – the sum total of every annual budget deficit – was 98.7% of GDP in November, a slight decrease of 0.3 percentage points when compared with the same month a year earlier.
Divya Sridhar, an economist at the accountancy firm PwC, said energy support, high inflation and weaker economic growth would maintain pressure on the public finances. She added: “Continued energy bills support and the ninth consecutive rise in interest rates announced by the Bank of England last week will continue to squeeze public finances.”
