Labour accuses Government of failing on the economy after Treasury leak


Labour has called on ministers to "come clean" on the state of the public finances after a leaked Treasury document admitted it was "unlikely" to meet its target on deficit reduction.

The briefing paper, issued to officials before the publication last week of public finance figures showing higher than expected borrowing, said the figures continued "a run of disappointing data" on the economy.

The document, obtained by Labour, blamed the problem on the failure of tax returns to come in at the level expected.

While it said receipts were likely to pick up, it would still not be sufficient to cover the shortfall and the figures implied an overshoot of the public sector net borrowing target (PSNB) by almost £16 billion in 2016-17.

"Compared to last year, receipts growth is back-loaded so the rate (all else equal) should pick up. However, this is unlikely to bring deficit reduction entirely back on track," the document said.

"Media commentators are likely to double the effect on borrowing for the year-to-date as we are now halfway through the year, which would imply a severe worsening in the public finances.

"For instance, this would imply overshooting the PSNB forecast for 16-17 by £15.9 billion."

Shadow chancellor John McDonnell said the briefing note confirmed the "Tory failure on the economy".

He said: "Now we've had it from the official civil servants it's time the Tories came clean. They should drop the spin and admit the truth: they are failing on the public finances and working people are paying the price."

A Treasury spokesman said: "The Chancellor has been clear that while the deficit has been cut, it is still too high. The Government is committed to balancing the books over a sensible period of time, in a way that allows space to support the economy."