Following the Government’s frequent warnings about the dire state of public finances, as well as the “worst economic inheritance since the Second World War”, households are fully primed for a series of tax raids in next week’s Budget.

However, despite the Chancellor’s drastic need for cash, what might surprise voters is that tax revenues flowing into the Treasury are already at a record high.

Since the start of the financial year in April, the Exchequer has raked in £490.6bn in so-called current receipts, which include headline tax revenues.

That is £16bn more than the Treasury raised in the same period in 2023, driven by households paying more in income tax, VAT, stamp duty and a range of other levies, according to the Office for National Statistics.

However, the £22bn black hole that Rachel Reeves claims to have found has been created not by too little money coming in, but by too much going out.

The latest figures show that current spending has increased to £510.6bn so far this financial year, which has led to the Government borrowing £79.6bn since April.

Worryingly for the Chancellor, that is significantly more than the £73bn the Office for Budget Responsibility predicted back in March, at the time of the last Conservative Budget.

When explaining the increase on Tuesday, the ONS pinned the blame largely on rising public sector pay costs, as the total wage bill for central Government hit a fresh monthly high of £17.8bn in September.

That is alongside a rise in public sector headcount, which stood at 5.94m in June.

That figure, which was recorded before Labour won the election, represents an increase of more than half a million public sector workers compared to before the pandemic.

Then there are public sector pay settlements to contend with, as Reeves has agreed to increase salaries for various groups of public sector workers, including a 22.3pc uplift for junior doctors announced in July.

While some of that cash has already fed through, Alex Kerr, of Capital Economics, says the wage bill will only grow further in the coming months.

“The ONS cited that this was driven by public sector pay rises and inflation,” he says. “But it is worth noting that this is unlikely to be because of the public sector pay deals announced by the Chancellor in July as they are likely to come into effect from October.”

In its defence, the Government has said it is better to pay higher wages than endure more damaging strikes across public services.

Darren Jones, the chief secretary to the Treasury, said: “We have inherited a £22bn black hole in the country’s public finances, including no plan to fund pay deals for millions of public sector workers.

“Strikes cost at least £3bn last year, so it was the right thing to do to end those damaging disputes. Resolving this black hole at the Budget next week will require difficult decisions to fix the foundations of our economy and begin delivering on the promise of change.”

However, it is not only the public sector wage bill putting pressure on public finances, as spending on benefits also hit a record high in the latest quarter, and in the quarter before that.

Benefits spending boom

So far this financial year, the Government has spent £154.2bn on benefits, up from £146.4bn in the same period a year ago, an increase of more than 5pc.

Much of this is because some benefits are tied to the previous year’s inflation, which locks in increases the following year.

The most notable example is the state pension, which rises not only in line with inflation, but by average wages or 2.5pc under the triple lock.

Combined with the rising number of people above the state pension age, as well as growing fears over long-term sickness, it raises the prospect of an ever-growing benefits bill that the Government will struggle to control.

The only relief, from the point of view of the public finances, is Reeves’s move to limit £300 winter fuel payments to millions of households.

That policy decision, along with the absence of one-off cost of living payments, contributed to a drop in benefit spending in September compared to the same month of last year, the ONS said.

However, the intense political backlash over the winter fuel decision shows how hard it will be for Reeves to pursue other options to reduce government spending.

This means it is unlikely the Government will be able to radically reduce its £2.8 trillion debt pile any time soon, which already serves as a huge burden in terms of finance costs.

The recent spike in interest rates meant the Government’s spending on interest rates hit £5.3bn in September, up from £4.2bn a year ago and £3.3bn 12 months before that.

This means a staggering 7.1pc of government revenues are spent on debt interest payments alone.

While that is down from the peak of more than 10pc in the cost of living crisis, it is still well above the 4pc typically seen before Covid.

This demonstrates how a sustained spell of high interest rates will maintain pressure on the public finances – even without taking into account the rising cost of pension payments and the NHS.

So while Reeves is laying the groundwork for a series of tax rises next week, it will do little to stop the Government’s ever-growing spending bill.