Chancellor's superfast 4G airwaves auction leaves £1.2bn black hole in public finances By Jason Groves And Hugo Duncan George Osborne suffered an embarrassing setback yesterday after the sale of the 4G mobile phone network delivered £1.2 billion less than he predicted just two months ago. In a highly controversial move in December the Chancellor plugged a black hole in the public finances by confidently pencilling in a £3.5 billion profit from the sale of the 4G network, which will bring faster mobile broadband services to Britain. The move helped ensure that Mr Osborne narrowly met his self-imposed rules on public borrowing when he delivered his autumn statement on the economy in December. But the telecoms watchdog Ofcom announced yesterday that the sale had raised just £2.3 billion - just two-thirds of the amount predicted by Mr Osborne, and barely a tenth of the £22.5 billion raised by the auction of the 3G network in the year 2000. The Treasury last night insisted it was content with the sale, pointing out that the £1.2 billion shortfall was only a tiny fraction of total tax receipts. Sources said Mr Osborne will announce in next month's budget how the hole in the public finances will be filled. But Labour seized on the development as another blow for Mr Osborne's economic strategy. Shadow Treasury chief secretary Rachel Reeves said: "It shows how foolish and short-termist the Chancellor was to bank this cash in the autumn statement to make his borrowing figures look less bad. He couldn't bring himself to admit that borrowing was up so far this year but his trickery has now badly backfired. The 4G sale is also embarrassing for the independent Office for Budget Responsibility, which made the £3.5 billion forecast, and which has repeatedly got its growth predictions wrong since it was set up in 2010. Former Tory Cabinet minister John Redwood said it was unfair to blame the Chancellor, adding: "He has made an independent budget office who are meant to know about these things, and I am afraid they have been consistently wrong. They have consistently overestimated the growth in the economy and they have consistently overestimated the revenues. Culture Secretary Maria Miller said the completion of the 4G auction six months early would produce a "significant economic boost" for the country. "The benefits will be seen in the UK from the summer onwards as mobile operators deliver competitive high speed mobile broadband services," she said. Ofcom said that by 2030 demand for the mobile data could be 80 times higher than today and it was planning for a further spectrum for possible future 5G mobile services. Meanwhile, Britain's coveted AAA credit rating could come under yet more pressure today as the Chancellor struggles to get the country's ballooning debts back under control. The government borrowed £106.5billion in the first nine months of the financial year, which runs from April 2012 to the end of March 2013. That is £7.2billion or 7.3 per cent more than at the same stage of the previous year.The Office for National Statistics will today reveal how the exchequer fared in January - with many analysts fearing the worst. January is a crucial month for the public finances and has recorded a surplus in every year but one since the monthly borrowing records began in 1993. It is usually boosted by the payment of corporation tax, capital gains tax and self-assessment income tax but with the economy struggling to recovery revenues are dwindling. The surge in borrowing has fuelled fears that Britain will be stripped of its gold-plated credit rating in a crushing setback for George Osborne. Martin Beck, an economist at Capital Economics, said: "If the figures for January are bad, the chance of a downgrade will increase, although the rating agencies would probably wait to hear what the Chancellor announced in the Budget before doing anything."