Rachel Reeves’s tax raid pulled in £300m lower than anticipated throughout its first two months of operation, the Workplace for Finances Accountability (OBR) mentioned.
The Finances watchdog mentioned receipts have been decrease than forecasts in “extremely provisional” figures which confirmed the Treasury borrowed greater than anticipated throughout the month of Might.
Firms have been hit with a 22pc surge in Nationwide Insurance coverage funds final month, the OBR mentioned, after the Chancellor enacted her £25bn Nationwide Insurance coverage hike set out in her October Finances final yr.
The OBR mentioned PAYE revenue tax and money receipts from employer Nationwide Insurance coverage contributions have been £37.2bn in Might, which was £3.2bn greater than final yr, or 9.5pc greater.
Nonetheless, it was £200m under the Finances watchdog’s forecast for the month.
Public sector web borrowing general hit £17.7bn in Might, in line with the Workplace for Nationwide Statistics (ONS), which was £600m greater than the £17.1bn that had been forecast by the OBR.
It was additionally £700m greater than Might final yr regardless of Ms Reeves’s Finances tax raid geared toward shoring up the nation’s funds.
The rise comes regardless of central authorities tax receipts hitting £82.5bn in Might, which was £5.3bn greater than in the identical month final yr.
ONS deputy director for public sector funds Rob Doody mentioned: “Final month noticed the general public sector borrow £700m greater than on the similar time final yr, with solely 2020, affected because it was by Covid-19, seeing greater Might borrowing within the time since month-to-month information started.
“Whereas receipts have been up, thanks partly to greater revenue tax income and Nationwide Insurance coverage contributions, spending was up extra, affected by elevated working prices and inflation-linked uplifts to many advantages.”
Darren Jones, the Chief Secretary to the Treasury, insisted the most recent borrowing figures confirmed the Authorities has “stabilised the financial system and the general public funds”.
Treasury borrowing was greater than OBR forecasts in Might however was higher than anticipated throughout the first two months of the monetary yr.
Public sector borrowing was reached £37.7bn in April and Might, which was £1.6bn greater than the identical interval final yr however £2.9bn lower than the £40.7bn forecast by the OBR.
Mr Jones mentioned: “Since taking workplace, we’ve taken the proper choices to guard working individuals, start repairing the NHS, and repair the foundations to rebuild Britain. We stabilised the financial system and the general public funds; now we have to be certain that the British financial system delivers for working individuals.
“Final week’s Spending Evaluation confirmed how we’re investing within the UK’s safety, well being, and the financial system by means of our Plan for Change, in order that individuals are higher off.”