Rachel Reeves suffered another hammer blow today as government borrowing hit a grim new mark despite her huge tax raid.
The embattled Chancellor saw the public sector rack up £20.2billion of borrowing last month, far more than the £17.6billion analysts had expected.
The level was £1billion higher than the same month last year, and a record outside of Covid. There was also a higher figure in April 2012, but that was warped by the effects of Royal Mail privatisation.
Revenues were driven upwards by Labour’s national insurance hike on employers.
However, that was outweighed by a surge in central government departmental spending on goods and services. That rose by £4.2billion year-on-year due to pay increases and inflation.
Rachel Reeves suffered another hammer blow today as government borrowing hit a grim new mark despite her huge tax raid
The embattled Chancellor saw the public sector rack up £20.2billion of borrowing last month, far more than the £17.6billion analysts had expected
ONS Deputy Director for Public Sector Finances Rob Doody said: ‘At £1billion higher than the same time last year, this April’s borrowing was the fourth highest for the start of the financial year since monthly records began more than 30 years ago.
‘Receipts were up on last April, thanks partly to the higher rate of National Insurance contributions. However, this was outweighed by greater spending, due to rising public services’ running costs and increases in many benefits and state pensions.’
Ms Reeves – in Canada for a G7 meeting – is facing increasing questions over whether she can meet her fiscal rule of balancing day-to-day spending with revenues by 2029-30.
Keir Starmer announced yesterday that the massively unpopular winter fuel allowance cuts for millions of pensioners are being rolled back.
However, that could cost billions of pounds and the PM refused to rule out even more tax rises. It has emerged that Angela Rayner urged Ms Reeves to hike the burden on savers and the wealth before the Spring Statement.
The rise in borrowing was largely linked to increases in public sector pay, national insurance payments and higher benefits and state pensions.
Central government departmental spending on goods and services rose by £4.2 billion year-on-year to £37.9 billion due to April pay increases and cost inflation.
Meanwhile, social benefits paid by the state rose £1.3 billion to £26.8 billion after inflation-linked rises in many benefits.
Public sector net debt was estimated at 95.5% of UK GDP (gross domestic product) at the end of April 2025, meaning the proportion of debt was 0.7 percentage points higher than a year earlier and remains at levels last seen in the early 1960s.
Chief Secretary to the Treasury Darren Jones said: ‘After years of economic instability crippling the public purse, we have taken the decisions to stabilise our public finances, which has helped deliver four interest rate cuts since August, cutting the cost of borrowing for businesses and working people.’
But shadow chancellor Mel Stride said: ‘The latest borrowing figures expose the true cost of Labour’s reckless economic policies.
‘Instead of reining in spending, the Labour Chancellor has piled billions onto the national debt by fiddling the fiscal rules and maxing out the national credit card.
‘This follows on from borrowing last financial year coming out billions of pounds higher than the plans Labour inherited, and means wasting billions more pounds of taxpayers’ money on debt interest.’
Debt interest has been creeping up amid global uncertainty
