Tax receipts tick up as Chancellor pledges to ‘boost business investment’

Central government’s receipts were £76.9bn last month, according to the Office for National Statistics, £2.5bn more than in October 2022 and £1.5bn more than the £75.4bn forecast by the OBR in March 2023.  

Of this £76.9bn, tax receipts were £57.9bn, £2.7bn more than in October 2022, with VAT receipts increasing by £1.2bn and income tax receipts increasing by £1.1bn.

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Commenting on the figures, Hunt said: “We met our pledge to halve inflation, but we must keep on supporting the Bank of England to drive inflation down to 2%. That means being responsible with the nation’s finances. 

“At my Autumn Statement tomorrow, I will focus on how we boost business investment and get people back into work to deliver the growth our country needs.”  

The better-than-expected figures have given the chancellor more headroom to announce changes in the Autumn Statement, with cuts to income tax and National Insurance floated this week, as well as potential cuts to inheritance tax.

However, the government’s debt servicing costs rose more than expected in October, due to volatility in the monthly RPI figure, which impacts the way they are accounted for, keeping pressure on any spending plans.

The interest payable on central government debt last month was £7.5bn, £1.1bn more than in October 2022, and £2.6bn more than the OBR’s March 2023 forecast of £4.9bn. This was the highest interest payable in any October since monthly records began in April 1997.

Total public sector net borrowing excluding public sector banks in October was £14.9bn, £4.4bn more than in October 2022. 

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Public sector net debt is estimated at around 97.8% of the UK’s annual GDP; which is 2.3 percentage points higher than in October 2022 and remains at levels last seen in the early 1960s.

Lindsay James, investment strategist from Quilter Investors, said: “Despite the debt-to-GDP ratio hovering near the 100% mark, this set of figures still does fan the flames of speculation about potential tax cuts tomorrow.

“Historically, managing a debt load of this magnitude has been a delicate balancing act. Yet, in the context of this fiscal tightrope, the government’s newfound slack is something they will want to take advantage of, hence the change of rhetoric from one of absolutely no tax cuts to potential changes to income tax or national insurance contributions. 

“Tomorrow’s Autumn Statement is poised to be a pivotal moment, with the government facing mounting pressure to ease the tax burden.”

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