Treasury coffers are healthiest on record

The public finances are in their healthiest state since records began despite a larger than expected deficit for November, new figures showed yesterday. Independent analysts said the Government was still on course to overshoot its targets for the 2000/01 financial year and would face growing pressure to deliver tax cuts in the March Budget.

The public finances are in their healthiest state since records began despite a larger than expected deficit for November, new figures showed yesterday. Independent analysts said the Government was still on course to overshoot its targets for the 2000/01 financial year and would face growing pressure to deliver tax cuts in the March Budget.

The UK posted a deficit of £2.3bn in November, its first budget shortfall for five months. This compares with forecasts of a £2bn cash requirement and contrasts with a surplus of £7.2bn in October. It takes the public sector net cash requirement (PSNCR) so far this year to £33bn, an all-time record. This includes £23bn of receipts from the auction of third-generation mobile phone licenses. Even the Government's preferred measure, the public sector net debt, showed the Treasury in credit with the private sector by £7.8bn, the highest figure since monthly data started in 1993.

In last month's pre-Budget report Gordon Brown, the Chancellor, revised up his estimate for the PSNB for this year to £10bn from the £6bn he forecast in the March Budget.

Ross Walker, at Royal Bank of Scotland, said: "The Chancellor can rest assured that his election war chest will offer ample scope for tax cuts."

The main factors behind the monthly deficit were a sharp fall of almost £9bn in corporation tax receipts and an increase in central government spending, which surged by 10 per cent to £27bn compared with a year ago. The rise in spending was partly due to higher winter fuel payments, which accounted for £700m of the £2.5bn increase between 1999 and 2000. A Treasury spokesman said much of the extra spending went on health, education and the Home Office.