The deficit in the first 10 months of this year has ballooned to €340 million, despite government savings through the elimination of a range of subsidies, the Labour Party said this afternoon.

Finance spokesman Charles Mangion said the current deficit was almost €100 million higher than in 2008, which was the election year, and €11 million more than last year.

The deficit had grown despite the austerity measures imposed by the government through the utility tariffs, he said.

The deficit had increased even though the government this year saved the €55 million it would have spent on subsidies on the water and electricity bills, the €40 million spent annually on the dockyard, the €5 million it used to give Mepa and the €5 million on LPG gas.

Furthermore, the government this year had revenue of €40 million from the amnesty on tax penalties.

All these should have improved the government's financial position by €145 million compared to 2008, yet it had actually gone back by €100m.

Dr Mangion observed that one of the main contributors of growing government recurrent spending was an increase of €27 million in the salaries bill.

Dr Mangion asked the government to explain how its salaries bill had risen by 11% in the first 10 months when, in terms of the civil service collective agreement, salaries between 2009 and 2010 were to have risen by between 3% and 4%.

Such an excessive increase, he said, could mean an increase in the number of employees or the replacement of retiring workers with better-paid consultants.

Dr Mangion also noted that while capital spending had increased, it was still some 60% of what had been projected by the government,.

Clearly, Dr Mangion said, the government's attempts to control public financing were failing.