Public sector accounts for December showed net debt of a record £504.1 billion. As a proportion of GDP, the national debt was 38.1 per cent, the highest for seven years and a step closer to the Treasury’s 40 per cent maximum.

Borrowing to pay for investment projects rose by a strong £2.5 billion, the data showed, while borrowing against the current budget was £4.7 billion over the month.

However, that figure was lower than a £6.1 billion current budget deficit chalked up in the same month a year ago. The Office for National Statistics said that government spending had risen by just 4.8 per cent year on year, compared with a 9.1 per cent rise in revenues.

Stamp duty revenues alone in December were a record £1.3 billion, the ONS said, for a tax that was introduced more than three centuries ago.

Both stamp duty on land transfers and shares were strong, with the duty on house purchases boosted by healthy trade in properties at the top end of the London market.

Gordon Brown forecast in his Pre-Budget Report that the cumulative current budget deficit would narrow to £7.9 billion by the end of the current financial year in March. That would require the Treasury to take in £13.5 billion more in tax receipts in the next three months than the Government spends. Tax returns mean that January is usually a strong month for Treasury revenues.

Howard Archer, of Global Insight, said: “Government receipts are broadly on target, as relatively healthy growth supports the tax take, but public spending growth remains clearly above target for the current fiscal year.”

Geoffrey Dicks, of RBS Financial Markets, said that the public finances were following the track of the previous year quite closely.

A Treasury spokesman said: “The Government is meeting its strict fiscal rules and will continue to do so.”

CHANCELLOR’S RECKONING

“From the unacceptable level of debt we inherited — debt at 44 per cent of national income — I forecast debt in the coming year will fall to 30.3 per cent and in the following years I project 29.6, 29.7, 29.9 and 30 per cent successively. . . putting Britain in a far stronger position to deal with the ups and downs of the economic cycle”

— Gordon Brown, March 2001

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