Flow of tax cash into Treasury drops by £32 billion

The perilous state of the national finances was made public as it was disclosed that the National Audit Office has refused to sign off part of the Treasury’s accounts. The decline in government revenue for the 2008-09 financial year – the steepest since the 1920s – included a £6.4 billion drop in VAT income following Chancellor Alistair Darling’s decision to cut the rate to 15 per cent last November, according to the HM Revenue and Customs annual report. The Treasury was shown to have overspent by £24 billion on last autumn’s banking rescue. Its accounts were rejected by the official auditor because the insurance the Government granted to the troubled banks Lloyds and Royal Bank of Scotland was not approved by parliament.