UK public sector borrowing widens

Despite a rise in borrowing, Mr Brown could still hit his fiscal targets

UK public finances worsened in August, with borrowing at its highest level for August since 1993, Office for National Statistics (ONS) figures have shown.

Public sector net borrowing rose to £7.6bn last month against £5.5bn last year, as spending exceeded receipts.

Receipts for August came in at £31.7bn, while £36.7bn was paid out.

One factor to blame was that the deadline for self-assessment tax forms was Monday, 31 July, meaning fewer late receipts than in 2005, the ONS said.

The ONS warned against concentrating too much on the monthly figure as this can give a "distorted picture".

Over the current financial year to date - April to August - the public sector recorded a deficit of £8.9bn compared with £10.3bn in the 2005/06 financial year.

Calculation change

The ONS also announced changes to the way the figures will be calculated in future.

The ONS calculations will now include liabilities which arise from Private Finance Initiatives (PFI) and Public Private Partnerships (PPP), which it estimates at more than £46bn.

Out of that total, £23bn refers to projects that will revert to public ownership.

Experts had previously been concerned that no figure for the amount the government contributed to such projects, which include hospitals and schools, had been set out.

The ONS estimated that the liability under these leases would be £4.5bn at the end of March, a move that would increase public debt as a proportion of gross domestic product (GDP) by 0.1%.

Analysts had feared the improved measure would mean that Chancellor Gordon Brown would break his fiscal rule of keeping overall public debt below 40% of GDP.

But despite the increase the figure for August stood at 36.7%.