Government borrowing jumps despite boost from national insurance hike

The Office for National Statistics (ONS) said so-called compulsory social contributions, largely made up of national insurance contributions (NICs), jumped by £3.9 billion or 14.7% to a record £30.2 billion in April and May combined.
It followed the move by Rachel Reeves in April to increase NICs for employers, which has seen wage costs soar for firms across the UK as they also faced a rise in the minimum wage in the same month.
In spite of this, borrowing still surged to £17.7 billion last month, the second highest figure on record for May, surpassed only at the height of Covid.
Public sector net borrowing excluding public sector banks was £17.7 billion in May 2025. This was £0.7 billion more than in May 2024 and the second-highest May borrowing since monthly records began in 1993.
➡️ https://t.co/I4cI5aiUZ4 pic.twitter.com/LxKyTrmoh6
— Office for National Statistics (ONS) (@ONS) June 20, 2025
The ONS said May borrowing was £700 million higher than a year earlier, though it was slightly less than the £18 billion most economists had been expecting.
Borrowing for the first two months of the financial year to date was £37.7 billion, £1.6 billion more than the same two-month period in 2024.
Rob Doody, deputy director for public sector finances, said: 'Last month saw the public sector borrow £0.7 billion more than at the same time last year, with only 2020, affected as it was by Covid-19, seeing higher May borrowing in the time since monthly records began.
'While receipts were up, thanks partly to higher income tax revenue and national insurance contributions, spending was up more, affected by increased running costs and inflation-linked uplifts to many benefits.'
While May's borrowing out-turn was lower than economists were expecting, it was more than the £17.1 billion pencilled in by the UK's independent fiscal watchdog, the Office for Budget Responsibility (OBR) in March.
Public sector net financial liabilities excluding public sector banks were provisionally estimated at 83.9% of GDP at the end of May 2025. This was 2.5 percentage points more than at the end of April 2024, but 12.5 percentage points less than for public sector net debt. pic.twitter.com/wcjZOnXOTx
— Office for National Statistics (ONS) (@ONS) June 20, 2025
But the figures showed that central government tax receipts in May increased by £3.5 billion to £61.7 billion, while higher NICs saw social contributions rise by £1.8 billion to £15.1 billion last month alone.
Public sector net debt, excluding public sector banks, stood at £2.87 trillion at the end of May and was estimated at 96.4% of gross domestic product (GDP), which was 0.5 percentage points higher than a year earlier and remains at levels last seen in the early 1960s.
The ONS said the sale of NatWest, formerly Royal Bank of Scotland, cut net debt by £800 million last month, but did not have an impact on borrowing in the month.
Interest payments on debt, which is linked to inflation, fell £700 million to £7.6 million due to previous falls in the Retail Prices Index.
Interest payments depend on inflation from two months earlier.
But recent rises in RPI are expected to see debt interest payments race higher in June.
Thomas Pugh, economist at audit and consulting firm RSM UK, warned that despite the NICs increase, Ms Reeves is still likely to have to announce further tax increases in the autumn budget.
Commenting on today's public sector finances figures for May 2025, ONS Deputy Director for Public Sector Finances Rob Doody said: (quote 1 of 2) pic.twitter.com/A6p9MsvZcF
— Office for National Statistics (ONS) (@ONS) June 20, 2025
He said: 'The under-performance of the economy and higher borrowing costs mean the Chancellor may already have lost the £9.9 billion of fiscal headroom that she clawed back in March.
'Throw in the tough outlook for many Government departments announced in the spending review and U-turns on welfare spending and the Chancellor will probably have to announce some top-up tax increases after the summer.
'We are pencilling in tax increases of £10 billion to £20 billion.'
Darren Jones, chief secretary to the Treasury, insisted the Government had 'stabilised the economy and the public finances'.
'Since taking office, we have taken the right decisions to protect working people, begin repairing the NHS, and fix the foundations to rebuild Britain.'

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Scottish Sun

2 hours ago

• Scottish Sun

I sold my £140k flat and started renting in my sixties – I save £12,000 a year and don't pay energy bills

We explain how to become a property guardian HOUSE THAT I sold my £140k flat and started renting in my sixties – I save £12,000 a year and don't pay energy bills Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) HANDING the final paperwork to the conveyancing solicitor completing the sale of his £140,000 two-bedroom flat Ian Horton, feels a wave of relief. After months of stress, Ian is swapping home ownership for renting as a property guardian at the age of 61 to beat the high cost of living and save for his impending retirement. Sign up for Scottish Sun newsletter Sign up 6 Ian Horton sold his flat at the age of 61 to beat the high cost of living Credit: Ian Horton 6 He now rents a room in a pub Credit: Ian Horton 6 It's allowed him to cut his bills and save for retirement Credit: Ian Horton 6 The pub is awaiting redevelopment and is located within London's commuter belt Credit: Ian Horton 'I sold my flat due to Covid and skyrocketing energy costs,' Ian said. 'If I kept the flat, I'd face a debt crisis caused by rising electricity, fuel, and household bills.' Now Ian is renting as a property guardian living in a pub in London's commuter belt. He pays just £350 a month including electricity, water and council tax, saving £1,000 a month, or £12,000 a year compared to owning his own home. 'It's a miracle cure for OAPs battling the cost of living,' Ian said. 'I could never have done that if I hadn't sold my two-bed flat in my sixties. 'It may sound bonkers but becoming a property guardian is the best financial decision I ever made.' Self-employed courier Ian lives behind the bar in the former hotel in Bedford, Bedfordshire - an hour and a half outside of London with his partner Maureen, 61. The retired admin staffer and Ian pay £350 each as part of their property guardian rent. The German village where yearly rent costs less than £1 They're among 10,000 people in Britain who have become property guardians due to the rising cost of living, the rental crisis and property shortages. Property guardians live in an empty building or part of a building that would otherwise be empty to ensure it is not broken into and safeguarded. In return, guardians like Ian get to rent the property at up to 70% below its market value often with the cost of gas, electric, water and council tax included. When Ian first heard about the scheme through a friend, he knew it was the 'miracle cure' he needed to be able to cut costs and save for retirement. Ian said: 'I know people will say selling a property at my age to start renting again is crazy at my age. 'I discovered it's not bonkers but bankable because being a property guardian actually covers your costs and allows you to rent amazing properties at a tiny fraction of market value. 'It made the decision to sell my two-bed first floor flat so much easier,' he said. The self-employed courier and former postie bought his two-bedroom leasehold flat in Dunstable, Bedfordshire, in 2006 for £100,000. 'Like most people my age I was told buying was critical to retirement. 'But when the lockdown hit and energy prices and food costs started skyrocketing, I knew I had to find a solution to making the money I earned stretch further if I ever was to retire.' Ian admits he was terrified about skyrocketing gas and electric prices. As a courier Ian was also hit with escalating fuel costs. How Ian's costs changed after becoming a guardian WHEN Ian sold his flat in 2022, he was paying £300 a month for his mortgage, £50 for electricity, £30 for water and his council tax was £100 with a single person's discount. Ian also had to stump up £100 a month leasehold fee for his flat and budget another £50 a month for extra leasehold fees including roofing and emergency funds. His other monthly fees include Wi-Fi at £25 a month, phone bill of £30, groceries cost £150 and fuel was more than £300. Plus, he was paying property and vehicle insurance costs of over £200 a month, £100 for repairs and £100 in parking costs. In total, Ian was faced with monthly costs of almost £1,900 a month. After moving to the pub, he pays £900 a month including all living costs, fuel, insurance on his van and accommodation. Ian's new home As Ian completed the £140,000 sale of his two-bedroom flat in 2022, he also applied to be a property guardian. He signed up with Live in Guardians, which works with property owners and potential guardians to find the right property for the right person. 'I filled out a questionnaire, provided my renting history, exchanged questions and was acccepted,' Ian said. 'It was like applying to rent a property. I didn't need any special skills. 'The fact I was older, had owned property and was dependable was a big bonus for me. 'Once I was approved to be a guardian on their books, I got to apply for the range of properties they had on offer,' he says. His new home is a pub earmarked for redevelopment, but Ian can live there until redevelopment begins which isn't expected for at least two years. Ian said: 'Live in Guardians can find me a new property whenever I want. 'They have properties all over the country from old fire stations to former nursing homes, pubs, posh houses and form office blocks available as a place to call home.' The traditional British pub with the familiar white facade, dark brick tints and red door has leaded glass windows, an original bar, wood floors and fireplaces. There are four rooms available to rent, but Ian said they don't always see the other guardians. Included in Ian's rent is the gas, electric, heating, water, council tax, insurances, parking costs and hotel repairs. Ian and Maureen have got their own Wi-Fi for £35 a month, but they share a big kitchen and bathroom and separate toilets. In return for the cheap rent, Ian keeps Live in Guardians informed of any repairs which need doing until developers begin their work. Ian said: 'The energy bills are thrown in. I can enjoy a long shower and turn on the food whenever I want. 'It's a huge relief to not worry about the electric or gas bill. 'Before I was a property guardian, the cost of living meant I had to stop making monthly private pension payments so that on top of my government pension means I can have a little extra. 'It's not a huge amount but just being able to make monthly payments means I can breathe again. 'The fear of monthly bills has gone, and I can budget sensibly. 'I don't know when I will retire. I know it's years off. 'I do know when I finally stop working it will be possible thanks to living locally at 'my local.' Live in Guardians says it has 700 guardians currently in properties, although it has 32,500 in its database alongside £500million worth of property. Property terms can range from three months to seven years. Arthur Duke, its managing director, said: 'People are seeking out new and affordable places to live. 'We also have more companies than ever before wanting us to provide live in property guardians to stop their empty properties being scattered in, vandalised or not properly being cared for, Property guardianship agencies say the scheme allows businesspeople to pay reduced insurance and maintenance costs, generate an income on the empty premises, diversify its portfolio, and ensure the properties are well cared for. How to become a property guardian First research the different property guardian agencies. It's also important to know you're not a tenant. Instead you're a licensee which can mean fewer rights, and that it's easier to be evicted. You'll need to be over 18 years old, while some agencies prefer over 21. You'll need to be employed, self-employed or a student with income. Families are not suitable but single people or couples are accepted - but in some cases guests or pets aren't allowed. Then simply apply online via the guardian agency website - you'll need to provide ID documents, proof of income/employment and sometimes references. You might also need to attend an interview or information session. If accepted, you'll be offered viewings of available properties - most are advertised on the agency's websites. You should be prepared to move quickly if a place becomes available — unusual properties go fast. Once moved in, simply keep the agency updated on any concerns and issues with the building. How to choose a guardian agency Make sure the company is a member of the Property Guardian Providers Association (PGPA) or has good reviews. Here are some of the more established agencies: Live-in Guardians - Property Guardian Protection - Dot Dot Dot - Global Guardians - Lowe - Blue Door Property Guardians - Ad Hoc - 6 Ian and the other property guardians share a kitchen Credit: Ian Horton 6 They also have a communal bathroom but have individual toilets Credit: Ian Horton Do you have a money problem that needs sorting? Get in touch by emailing money-sm@ Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

Telegraph

5 hours ago

• Telegraph

Rachel Reeves's plan is unravelling. She could be gone before the next Budget

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On top of that, there were the tax rises we always knew were likely because Labour had refused to rule them out – the increases in capital gains tax and stamp duty, and the removal of incentives to entrepreneurs. It has maybe taken longer than some of us expected, but the bad news for the Chancellor – and us – now seems to be arriving like buses. I've imagined what it's like to be at the end of that constant deluge of bad numbers. 'Incoming!' The annual estimate for public sector borrowing for year ending March 2025 is £148.3bn – £17.2bn more than last year and £11bn more than the OBR forecast. Reeves carries on with her Sudoku. 'Incoming!' Oh no! The latest inflation figures for April have surged to 3.4pc, trending towards double the Bank of England's target of 2pc. Reeves stares out the window. 'Incoming!' The unemployment rate is up 0.2pc to 4.6pc – the highest since 2021. The unemployed claimant count is up 107,000 year-on-year to 1.73 million. 'Incoming!' Monthly GDP is down -0.3pc, three times worse than the -0.1pc consensus prediction. Reeves purses her lips. Looking forward, we can imagine over the months of July, August and September an unrelenting series of indicators breaking bad. 'Incoming!' The latest tax receipts are below estimates. The latest borrowing numbers are up again. Finally, the markets are beginning to react. 'Incoming!' The pound has fallen to $1.20, the lowest since 2023. Gilts are moving too. 'Incoming!' Ten-year gilt yields are over 5pc. The Bank of England reverses course and puts rates up to 4.5pc. 'Incoming!' The team from the IMF has arrived. 'Incoming!' Prime Minister! I have the Chancellor's letter of resignation. That type of scenario might seem far-fetched, but it is the trajectory the country is travelling. Unemployment is already up 10pc since Labour came to power, and sadly there's no reason to believe this trend will be reversed. Since 'modern' records began, in 1971, every Labour government has left office with unemployment higher in percentage and absolute numbers than when it took power. Reeves is continuing that tragic tradition. The spending statement from Rachel Reeves was not so much a review as a litany of unfunded spending commitments aimed not at reassuring the markets, but at reassuring Labour backbenchers. The brighter among them will not buy it. They will soon notice the important numbers getting worse every month as the full effect of the employers' National Insurance increase, the lowering of the threshold to start paying it and the increase in the minimum pay rates costs jobs and halts hiring. What does this all mean for people trying to get by: the savers, pensioners and those running their own businesses? It means that tax rises are not just inevitable in October's Budget, they will become a must-do if an embarrassing bail out is to be avoided. Labour likes to talk of having ended austerity – something that Philip Hammond, former Conservative chancellor, first claimed back in 2017. The truth of it is the UK has never had real austerity this century. The direction of travel of our public spending has always been up. When you hear of spending cuts, what you are being told about is cuts to the rate of increase in government spending, not a cut in the total amount of spending, which continues to rise year-on-year. Increasing taxes means an attack on our pensions, our savings and our properties. The tax hikes will be passed off as necessary to save the NHS when the NHS really requires an overhaul that boosts its productivity. The much hyped increases for the NHS of £29bn each year over the next three years is most likely to be eaten up by rising pay awards. The NHS is one of the world's largest employers, with around 1.3 million full-time equivalent staff in England (as of February 2024). Consequently, the wage bill for the NHS makes up a substantial proportion of its budget. Nurses are already being balloted about strike action over an 3.6pc inflation-busting pay offer – junior doctors are also wanting more again. In 2022-23, the total cost of employing the staff in the NHS was £71bn – 45.6pc of the NHS budget. These statistics don't include salaries for GPs (who are not directly employed by the NHS), nor employees in the Department of Health and Social Care and other national bodies, such as NHS England. GPs and GP practice staff are indirectly funded by the NHS through a complex system of contracts. The Resolution Foundation think tank estimates that, by the end of the decade, half of all public spending will be going to the NHS – and continuing to rise. So optimistic has Reeves been about 'fixing the foundations' and 'delivering growth' while 'making the right choices', that there will be no way back for the Chancellor when the next crisis begins. The next time someone shouts 'incoming!' in the Treasury, everyone had better duck under their desks. It will be to announce a new Chancellor.

The Guardian

5 hours ago

• The Guardian

Investing apps: which offer the most for beginners?

Rachel Reeves and her government colleagues are keen to get more Britons investing in the stock market. She said recently that a lot of money was being put into cash savings accounts 'when it could be invested in equities, in stock markets, and earn a better return'. The good news is that the rise of DIY tools and mobile apps means it is now easier than ever to get investing. However, the vast array of options can make it daunting to know where to start. For new investors who don't have the time or confidence to manage a portfolio, 'robo-advisers' can be a good option. They might sound like something out of a sci-fi movie but are basically online investment platforms that use technology to help automate the process. Most are app-based and typically offer a range of ready-made investment portfolios tailored to your individual preferences. You usually fill in a short questionnaire to determine your goals, how long you want to invest for, and how much risk you want to take. Typically, the longer you are investing for, the more risk you can afford to take. But you need to factor in your personal attitude to risk, too. Stocks and shares have historically delivered better returns than savings accounts, but there is also a chance you could lose money – and there will be ups and downs along the way – so you need to feel comfortable about this before taking the leap. The ready-made portfolios typically invest in a selection of exchange traded funds (ETFs). These are low-cost funds that track a chosen index such as a UK or US stock market, government bonds (such as UK gilts or US Treasury bills) or the price of a commodity such as gold. The apps put a selection of these funds together to create a balanced portfolio which spreads your money across different assets. So which of the apps – if any – is right for you? We looked at some of the most popular ones to see how they stack up. Who? One of the first robo-advisers to hit the market, Nutmeg launched in 2012, and in 2021 it was bought by the investment company JPMorgan Chase. It has more than 200,000 users in the UK, with more than £4.5bn invested through the app. Minimum investment: £500 for Isas and pensions, £100 for lifetime Isas and junior Isas. Investment choice: Nutmeg has different tiers of service, which will affect costs. With its fully managed option, you choose a risk level from one to 10, and a team monitors the portfolio and makes regular adjustments. With the fixed allocation option, there are five risk levels and the portfolio is set by the investment team once a year. Fees: Nutmeg says the total charge for the fully managed option is 0.98%. Someone investing £3,000 would pay about £29.40 a year. For fixed allocation, it is 0.65% – about £19.60 a year for that example. We like: Nutmeg is transparent about performance, and you can see how its fully managed portfolios have done over the past decade. For example, the 6/10 risk portfolio has returned 43.4% over 10 years, compared with 36.7% on average for comparable funds. The 5/10 portfolio is up 31.9% over that time, compared with 36.7% for its peers. Anything else? For those who want more support, Nutmeg offers free guidance to help with general questions, and full financial advice starting from £900. Who? Launched in 2016, Moneybox specialises in savings and investments and is reported to now have more than 1.5 million customers and in excess of £10bn of assets under management. Minimum investment: You can open an account with as little as £1. Investment choice: There are just three core options: cautious, balanced and adventurous. The cautious option has just 15% in company shares, with 40% in bonds and 40% in cash, which makes it less risky but means your returns may not be as impressive as with other options. The adventurous option has 80% in shares, 15% in property and 5% in bonds. Fees: A £1-a-month subscription fee covers trading costs. Then there's a 0.45% platform fee, plus the cost of your actual investments – 0.17% for the core funds. Moneybox says someone with £3,000 invested in its balanced fund would pay total charges of 0.85% – about £25.60 a year. We like: The round-ups feature. Link your bank account or credit card to the app, and it will round your spending to the nearest pound and automatically invest the difference. For example, if you spent £1.87, it would be rounded to £2, with 13p invested – a handy way to boost your contributions. Anything else? Those who feel more confident can pick their own ETFs to invest in rather than the ready-made portfolios. Or, if you want to cherrypick specific companies, there is a limited range of stocks to select – though currently only US stocks are available. Who? Dodl is the newest of this cohort, launched only in 2022, but it is owned by the wealth management giant AJ Bell, which has been around since 1995. Dodl offers a simpler process and lower minimum investment level than its parent company, and a more limited choice of investments. Minimum investment: £100, or set up a direct debit from £25 a month. Fees: 0.15% a year, with a minimum of £1 a month, plus the cost of your investments – 0.31% for the core range. Someone with £3,000 invested would pay about £19.30 a year. Investment choice: The range of ready-made funds, run by AJ Bell, are labelled by risk level – from cautious to global growth. You can also choose individual shares, with the ability to browse by region (either the UK or US) and sector (such as finance, health or technology). We like: The option to invest by theme, which directs you to a relevant ETF for your trend of choice. For example, the 'On top of the world' theme invests in the HSBC FTSE All-World, an index of some of the biggest companies around the globe, which charges 0.13%. Other options include 'the home team' for UK-focused investments, and 'robo revolution' for a fund investing in robotics companies. Anything else? It pays a competitive 4.25% (variable) on cash you have not yet invested. Who? Founded in 2014, Wealthify is now owned by the insurance giant Aviva and has about 100,000 customers. It has a big focus on keeping things simple and jargon-free. Minimum investment: Currently £1 for Isas and £50 for pensions, though from Wednesday 25 June the minimums will be £1 for junior Isas, and £500 for stocks and shares Isas and pensions. Investment choice: There are five risk levels: cautious, tentative, confident, ambitious and adventurous. The cautious portfolio has 85% of its assets in government bonds and just 5% in company shares. The adventurous option has 74% in shares and 14% in government bonds, and also invests in property and infrastructure. Fees: The platform fee is 0.6%, which includes the cost of managing your portfolio. The cost of your investment on top is 0.16% for a general portfolio, and 0.7% for the ethical option. That adds up to £22.80 a year, or £39 for the ethical option, for someone with £3,000 invested. There is no minimum fee. We like: Its outlook page, which offers a short overview of the prospects for different investment regions and assets. It's a handy way for investors to learn a bit more without hours of research. Anything else? Wealthify boasts of various customer service awards on its website – a good reminder to consider factors aside from fees and the investment range. Always be sure to do your own research and read independent reviews before choosing a provider. Who? Moneyfarm originated in Italy and launched in the UK in 2016. It now has about 160,000 active users and more than £5bn in assets under management. The firm has backing from big investment groups such as M&G and Allianz. Minimum investment: £500. Investment choice: There are seven risk levels for its managed funds, which are regularly rebalanced by the investment team. For example, the 6/7 risk option has 72% of its assets in developed market companies and 10% in emerging markets companies, while the 2/7 risk option invests predominantly in bonds. Fees: Someone with £3,000 in the actively managed option would pay management fees of 0.75%, plus 0.3% for their investments – equivalent to about £31.56 a year. For the fixed allocation options, which are adjusted just once a year, the management fee is 0.45% plus 0.17% for the investments – a total of 0.62%, or about £18.60 a year for that example. We like: It is easy to see a breakdown of each portfolio on the website to understand how it is invested. You can see how it invests by asset type, region and sector – and there's a simple explanation of each, too. Anything else? As with most of these apps, there is an option to apply environmental, social and governance (ESG) criteria to your investments, which is good for any investor worried about where their money is going. This will screen out certain investments – for example, heavy polluters or companies with a poor human rights record. Selecting this option typically increases the costs. Before choosing a robo-advice app or service, make sure the company is regulated by UK watchdog the Financial Conduct Authority (FCA). It should also be a member of the Financial Services Compensation Scheme (FSCS), the UK's official consumer 'lifeboat' scheme which protects up to £85,000 of your money if your provider collapses. Most apps offer a variety of accounts, but a stocks and shares Isa is usually the best choice. You can put up to £20,000 a year into an Isa, and any interest or growth is sheltered from HMRC, meaning you get to keep all of your gains. When it comes to fees, you are usually charged a percentage of the amount you invest – for example, if you invested £1,000 and the fee was 1%, you would pay £10 a year. However, sometimes there is a minimum charge, so check carefully what you would pay.