Brown's war chest hits new record

Gordon Brown: helped Treasury coffers swell to record levels

Record tax receipts have filled Treasury coffers to record levels, official figures have revealed.

Tax takings of £10.5bn helped public sector accounts hit a surplus of £37bn in the year to the end of March, the Office for National Statistics said.

The surplus, which comes as the UK is gearing up for a general election, was boosted by £9.8bn in income tax receipts, and lower than expected state outgoings.

While government departments spent £304bn last year, compared with £286bn in the year to April 2000, Chancellor Gordon Brown had budgeted for a higher figure.

Conservatives have countered government claims

But although the figures give the Labour Party a new opportunity to boast of a strong economic record while in government, Monday's data also hands ammunition to opposition MPs.

The Conservative Party has accused Labour of raising taxes without delivering service improvements.

Under Mr Brown's spending plans, extra outlay on public services would return public finances to a small deficit in the 2002/03 financial year.

Lagging indicator

The level of Treasury receipts represents a lagging reaction to the relative strength of the UK economy until recent months, said Stephen Hannah, economist at National Australia Bank.

The strength of the accounts "may start to change over the next year" or so as the economy slows and the government boosts spending, Mr Hannah said.

"But the public finances are in generally good health," he added.

Treasury coffers last recorded large surpluses in the late 1980s, under a Conservative government which included Nigel Lawson as chancellor.

But public accounts then swung to a record deficit of £50bn by the early 1990s as the effects of tax cuts and economic recession hit balances.