Government borrowing in the UK surged to £20.2 billion in April, exceeding forecasts and intensifying pressure on Chancellor Rachel Reeves as she seeks to balance public service investment, economic growth, and her fiscal rules.
Figures from the Office for National Statistics (ONS) revealed that borrowing last month was £1 billion higher than in April 2023 and significantly above City economists’ expectations of £17.9 billion. This marks the fourth-highest April borrowing figure since records began in 1993, trailing only behind April 2020 and 2021 during the COVID-19 crisis, and April 2012, which was affected by Royal Mail privatisation costs.
The data offers an early snapshot of the financial year, highlighting the challenges facing the new Labour government. The increase follows the rise in employer National Insurance contributions (NICs) announced by Reeves in her autumn budget and introduced last month.
Rob Doody, ONS deputy director for public sector finances, noted that while tax receipts rose—partly due to the higher NICs rate—this increase was outweighed by rising government spending. Pressures came from higher operational costs in public services and increases in welfare benefits and state pensions.
Reeves is preparing for a comprehensive spending review next month, which will set departmental budgets until 2029. She is also under scrutiny following reports that Deputy Prime Minister Angela Rayner had urged her to introduce wealth taxes in March’s spring statement to raise revenue and avoid deep welfare cuts.
Last month, Reeves announced cuts to sickness and disability benefits alongside reduced public spending, aiming to rebuild a £9.9 billion buffer against her primary fiscal target.
Tax revenues received a boost from a £1.7 billion rise in compulsory social security contributions, reflecting the NICs increase. Additional income came from VAT, income tax, stamp duty, corporation tax, and tobacco duties. However, government expenditure grew even faster, rising by £4.2 billion to £93.3 billion year-on-year. Increased costs stemmed from pay rises, inflation, and the ongoing impact of the state pension triple lock.
Shadow Chancellor Mel Stride criticised the government’s approach, claiming that Labour was adding billions to the national debt through relaxed fiscal rules and excessive borrowing.
In response, Chief Secretary to the Treasury Darren Jones said the government is focused on restoring stability after years of economic uncertainty under the Conservatives. He pointed out that the previous administration pursued tax cuts while borrowing increased, backed by pledges to reduce welfare and public service spending.
Jones emphasised Labour’s priorities: reducing NHS waiting times with 3 million more appointments, driving housing and infrastructure reforms, and tightening border security. He stated these efforts are key components of Labour’s broader plan to rebuild the country.
