UK government finances £8.8bn surplus in January

UK government finances showed a surplus of £8.8bn in January, the Office for National Statistics (ONS) has said.

It is the highest surplus for seven years and higher than the revised £6.5bn reported for January 2014.

A better than expected rise in tax receipts means the government is on course to meet its borrowing target for this year.

The surplus means borrowing has fallen to £74bn in the financial year to date, a fall of £6bn compared with last year.

The government's borrowing target for the 2015 financial year is £91.3bn.

January's public sector finance data traditionally shows a surplus, as it includes tax receipts from those who submit self-assessment forms.

Treasury officials had expected the rise in the number of people working for themselves would mean a bigger surplus this January. 

They said that, as a result, the government would meet its borrowing target this year, despite appearing to be on course to overshoot that target for most of 2014.

'Milestones'UK finances show £8.8bn surplus

BBC political correspondent Ross Hawkins said the figures were "pretty much where the Treasury might have expected to be".

He said for the government, "It's pretty positive, good news - but Labour will point out it's miles away from where the chancellor hoped to be when he first walked into Number 11 Downing Street."

Chancellor George Osborne said: "In a week of economic milestones, today we learn that January saw the largest monthly surplus in the public finances since the crisis, putting us on track to meet our borrowing forecasts and halve the deficit as a share of GDP this year."

Labour said the figures were distorted by bonuses at the top which were delayed from last year to this year to take advantage of the top rate tax cut.

"These figures show George Osborne has broken his promise to balance the books by this year. This government is now set to have borrowed over £200bn more than planned, said Chris Leslie, shadow chief secretary to the Treasury.

Tax receipts

The ONS said self-assessed income tax receipts were £12.3bn in January, an increase of £1.7bn, or 15.6%, compared with January 2014.

Meanwhile, Treasury revisions to government spending showed departments spent £1.5bn less in the year to date.

And other revisions, which showed an increase of £0.5bn in VAT receipts and £0.4bn in other tax receipts, all helped to reduce government borrowing.

A £2.9bn payment to the European Commission budget, which skewed last month's borrowing figures, was reduced by £1.2bn in January to £1.7bn as part of an accounting procedure agreed with the Europe Union (EU).

That agreement means the £2.9bn will eventually be reduced by existing refunds and rebates from the EU down to about £850m. 

Tax receipts and spending both grew in line with expectations. In the year to date, total current receipts grew by 3.1%, as against the full-year forecast of 3%.

The figures come in the same week that official figures showed Consumer Price Index (CPI) inflation fell to a record low of 0.3% in January, while annual wage rises excluding bonuses grew 1.7% in the three months to December as unemployment fell to 1.86 milion.

Elsewhere, the ONS said UK retail sales fell 0.3% in January from the previous month. UK High Street shops have been reducing their prices in an effort to attract customers, the figures indicate.

Average store prices were 3.1% cheaper than last January. This was the largest year-on-year fall since consistent records began in 1997, the ONS added.