A TAX bonanza from the soaring value of North Sea oil fuelled bumper revenues from British companies for Gordon Brown last month, helping him to register a record monthly surplus on the public finances.

Corporation tax receipts surged by more than 50 per cent, thanks to a change in the timing of oil groups’ tax payments from April to January, which the Chancellor announced in his last Budget.

Combined with the effects of high oil prices, a bumper round of City bonuses and the timing of income tax receipts, the switch boosted overall revenues for the month to £54 billion, up 14.4 per cent from a year earlier.

Spending also rose, by 7.5 per cent compared with a year ago, to £37.2 billion. But the overall effect was to take the surplus on the Treasury’s main gauge of the Government’s finances, public sector net borrowing, to £12.6 billion, its highest since monthly records began in 1993.

On the Chancellor’s current budget measure, which excludes investment spending, the surplus was an even higher £15.3 billion, another record.

The figures came as a welcome present to Mr Brown on his 55th birthday, offsetting the more depressing news from the Office for National Statistics (ONS) that the £4.3 billion debts of London & Continental Railways (LCR) would be added to the national accounts.

Analysts agreed that the data strengthened the health of the public finances, but questioned whether they would do enough to allow Mr Brown to meet his long-term forecasts.

John Butler, of HSBC, said that the Government was now on track to meet or exceed its cumulative public sector net borrowing requirement forecast of £39.9 billion in the current financial year, Peter Spencer, chief economic adviser to the Ernst & Young Item Club, which monitors the public finances, said: “All in all, it looks like the Chancellor will achieve his Pre-Budget Report forecast of £10.6 billion for the current deficit (in 2005-06). This will be the first time he has hit his fiscal target since Budget 2000.

“However, the Chancellor is not out of the fiscal woods by any means. VAT receipts have hardly grown at all this year, reflecting the slowdown on the high street. The slowdown is now beginning to subdue the growth in employment and earnings, which does not bode well for next year’s receipts.”

John Hawksworth, of PricewaterhouseCoopers, said he believed that Mr Brown’s revenue growth forecasts for the coming financial year remained “relatively optimistic”.

The overall National Debt fell to £442.7 billion, equivalent to 35.6 per cent of GDP. The ONS said that the changes to the classification of LCR had added 0.4 of a percentage point to net debt as a proportion of GDP, raising it closer to the Chancellor’s 40 per cent maximum as set out in his fiscal rules.

The reclassification of LCR also had a minor negative effect on the Chancellor’s “golden rule” — that the Government may only borrow to invest over the course of an economic cycle — although most of the company’s spending scores as investment.

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