Fastest rise in spending since Wilson era puts Brown's golden rule at risk

Government spending is rising at the fastest rate since Harold Wilson was Labour prime minister almost 30 years ago, figures showed yesterday.

Government spending is rising at the fastest rate since Harold Wilson was Labour prime minister almost 30 years ago, figures showed yesterday.

The surge in Whitehall expenditure helped push economic growth to a four year-high but put Gordon Brown in greater danger of breaking his "golden rule" on balancing the public finances. Day-to-day spending by government departments grew at an annual rate of 5.7 per cent in the first quarter of the year, the fastest rate of increase since the first three months of 1975.

The increase contributed to a £4bn higher public sector deficit for the fiscal year to March than the one announced by the Chancellor in the Budget. The shortfall hit a nine-year high of £37.2bn rather than the £33bn Mr Brown announced in March.

The Office for National Statistics said the Government's surplus on current budget average over the economic cycle - the key test for the golden rule - had fallen to £2.3bn from its first estimate of £8.9bn. According to the rule that the Chancellor set when Labour won power in 1997, the Government must not borrow to pay for non-investment spending.

Meanwhile, the results of a review of the way public sector output is measured found that the output of the NHS was higher in every year since 1999. It found growth was above 4 per cent a year between 2001 and 2003 compared with estimates of between 1.9 and 2.6 per cent. The ONS said it had changed the way it calculated the contribution the NHS makes to economic output to give greater weighting to more complex medical procedures.

The Government received a separate boost from a revision to the latest estimate of growth. GDP growth in the first quarter of this year was revised up to 0.7 per cent from 0.6 per cent. This took the annual rate to 3.4 per cent, the strongest rate since spring 2000. Analysts said the revision would add to calls for another rise in interest rates.

The ONS also said Britons saved less for their retirement last year than previously thought. It slashed estimates of contributions to funded occupational pensions in 2003 from £39bn to £27bn.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?