Ben Chu: So the deficit did rise last year after all

Outlook The Treasury this week hailed the fact that data from the Office for National Statistics showed that "underlying borrowing" is now falling. But did it? If you strip out factors such as gilt coupon payments from the Bank of England and transfers from the Royal Mail pension fund, borrowing in April 2013 was £10.2bn, up £1.3bn on the £8.9bn borrowed in April 2012. Ah, but what about the £2.3bn profits from the Bank of England's wound-down Special Liquidity Scheme (SLS)? They were paid over to the Treasury in April 2012 and thus flattered that month's borrowing figures. So disregard those profits for April 2012 and the comparison with April 2013 looks better, showing a £1bn fall in borrowing.

But what's sauce for the goose is sauce for the gander. The ONS says the 2011-12 deficit was £120.9bn. Excluding the Royal Mail and gilts the 2012-13 deficit was £119.5bn. A minor fall. But extract those SLS profits from the 2012-13 deficit, as the Treasury now says we should, and you have an "underlying" deficit of £121.9bn. A rise. So it would appear that Mr Osborne has presided over an increase in the deficit after all. All those desperate last-minute departmental cuts imposed by the Treasury were thus in vain.

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