George Osborne has received a boost as he puts the finishing touches to his autumn statement, as official figures showed stronger tax receipts from the gathering pace of the economic recovery are helping to boost the public finances.
The Office for National Statistics said public sector net borrowing in October, excluding temporary factors such as the transfer of the Royal Mail pension fund, was £8.1bn, down from £8.2bn in the same month last year.
Just over half way through the 2012-13 fiscal year, which started in April, net borrowing on the same basis was running at £64.8bn, compared with £70.6bn in the same period a year ago.
The improvement resulted from a jump in VAT receipts, as consumer spending picked up, and stamp duty, as the housing market improved. In total, tax receipts between April and October were £24.1bn higher than the same period a year ago.
The chancellor will give his latest assessment of the state of the economy and the public finances at his autumn statement in a fortnight's time, on 5 December.
Howard Archer, of consultancy IHS Global Insight, said: "The chancellor must be feeling an awful lot happier about life now than when he was preparing his autumn statement last year. If current trends were continued, the underlying public sector net borrowing requirement (PSNBR) would come in around £105bn in 2013/14 which is well below the target of £120bn."
A Treasury spokesman welcomed the figures, saying: "Britain's hard work is paying off, the government's long-term economic plan is working, and the deficit is down by a third. But today's figures remind us that the job is far from done and a growing economy alone will not be enough to eliminate the deficit. The only way to ensure that the recovery is sustainable and the deficit keeps on coming down is to carry on taking difficult decisions to control government spending."
However, Chris Leslie, Labour's shadow chief secretary to the Treasury, pointed out that the coalition has now borrowed more since 2010 than Labour did during its 13 years in power.
"This is the cost of economic failure and the three damaging years of flatlining and falling living standards we have seen since the election," he said.
Total government spending was actually £0.6bn higher in October than the same month last year, the ONS said, and in the year to date, is running at £7.9bn, or 2.1% higher than in 2012-13.
However, the ONS stressed that changes in the timing of grants to local authorities made year-on-year comparisons difficult.
The ONS also reported that the government has used the £2bn proceeds of last month's Royal Mail auction to pay down government debt, which totalled £1,207.2bn, or 75.4% of GDP.
Thursday's data also included a revised calculation of total net borrowing for the last financial year, which the ONS now believes was £115bn, excluding temporary factors.
That was £3.5bn lower than a year earlier, which will allow the chancellor to insist at next month's autumn statement that his plans for fixing the public finances are on track.
It was also a marginally better outcome than the £120.9bn expected by the independent Office for Budget Responsibility, which will present its latest forecasts alongside the autumn statement.
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