Brown under fire over public spending

Opposition parties have accused Gordon Brown of making a “mess” of the UK finances after new figures show borrowing reached a record £7.3 billion in June.

This is up from £6.2 billion in June last year, while Office for National Statistics (ONS) figures also reveal a public sector deficit of £6.4 billion, up £1.7 billion from a year ago.

They come as a select committee report warns that Treasury’s claims to have made £4.7 billion of efficiency savings should be taken “with a large pinch of salt”.

In his Budget in March, the chancellor predicted a total budget deficit of £7 billion, but after viewing today’s figures, the Liberal Democrats asked if this was possible.

“The extent to which Gordon Brown is mismanaging the public finances is becoming increasingly apparent,” said Treasury spokesman Vince Cable.

“These estimates, while notoriously erratic, do not bode well for the chancellor’s own prediction of a budget deficit of £7 billion in 2006-07.”

There are also concerns that Mr Brown is close to breaching his second fiscal rule, to limit net debt to 40 per cent of national income (GDP).

Public sector net debt made up 37.6 per cent of GDP at the end of June, compared with 35.4 per cent at the same time last year.

“It’s not only the weather that’s breaking records this week. These June debt figures are the worst on record, and they confirm that Gordon Brown’s public finances are in a mess,” said shadow chancellor George Osborne.

“This is what happens when you fail to reform public services or deliver value for money in government spending.”

However, a Treasury spokesman insisted the “bump” in spending at the beginning of this financial year was due to the health and education grants given to local authorities being paid out earlier than they normally are.

Public sector spending would be roughly the same as last year by April next year, he said, adding: “We are meeting our fixed fiscal rules and will continue to do so.”

Meanwhile, the public accounts committee has today raised serious doubts about Mr Brown’s claim to be well on the way to meeting the £21.5 billion of savings recommended in the Gershon review in 2004.

Chairman Edward Leigh warns the chancellor’s apparent gains “have at present precious little evidence to back them up”, saying there are no agreed baselines against which to compare progress and no robust measurement systems.

The Treasury insisted it was “on track” to deliver its target, and said many changes had been made since the committee took evidence for its report.

But Mr Osborne warned: “Gordon Brown’s claim that he’s getting value for taxpayers’ money and cutting out waste is today exposed as hollow boast. He fought the election on a false prospectus and much of what he said since doesn’t stack up.”