Budget headache for Sajid Javid as Government borrowing surges

Government borrowing surged in September for the first time in five years in a setback for Chancellor Sajid Javid ahead of his first Budget next month.

The state needed an extra £9.4 billion to cover the gap between tax receipts and spending, £600 million more than in September 2018.

It brings the total borrowed in the current financial year since April to £40.3 billion, or £7.2 billion more than the same period last year. It was the first April-to-September borrowing increase for five years.

The figure was boosted by a change in how student loans are treated, adding £12.4 billion to the budget deficit.

The extra lending means total government debt — excluding banks part-owned by taxpayers — of £1.79 trillion at the end of September. It was the fifth time in the first six months of this fiscal year that public finances were weaker year-on-year.

The Government looks set to miss its target of keeping borrowing below two per cent of GDP in 2020-21.