A sliver of Christmas comfort for George Osborne

There’s some rare good news for the government in today’s public finance statistics. Public sector net borrowing in November is estimated at £18.1 billion, down from £20.4 billion last year. This means that total borrowing for the first eight months of this financial year is £88.3 billion, down 11 per cent on last year.

That’s lower than expected, and puts us on target to undershoot the OBR’s forecast of £127 billion in 2011-12. That’d be a relief for the coalition, after Labour hit them hard when the OBR upped their borrowing forecasts last month.

But this deficit reduction cannot be put down to spending restraint in Whitehall. In fact, central government is spending around £1 billion a month more than it did last year. This rise can be put down to the rising costs of benefits and debt interest, but even when these are stripped out, we see no overall spending cuts at central government level:

What is helping the deficit come down, though, are local government cuts — as demonstrated by the dramatic cuts in local government employment we highlighted