• 'Terrible' tax returns for January • Government likely to miss borrowing target • Public net debt hits record 47.8% of GDP - set to rise to 100%

The government's rescue of some of Britain's biggest banks will more than double the national debt at a stroke after government statisticians decided to classify Lloyds and Royal Bank of Scotland as public corporations. Their liabilities – up to £1.5tn – will be added to the taxpayer's balance sheet.

That could push the country's debt levels up to 150% of national income, from a three-decade high of 48% now. The public sector net debt has already been swollen by £90bn of Northern Rock liabilities and, as of yesterday, £50bn of Bradford & Bingley's liabilities. But the two latest additions, which the ONS estimates could total between £1tn and £1.5tn, would dwarf those.

It was already widely expected that RBS's liabilities would come onto the public balance sheet since it is now 70% owned by the taxpayer but it is a surprise that Lloyds, which recently swallowed Halifax Bank of Scotland, has been classified as a public corporation given that it is only 43% owned by the state.

ONS statisticians said, though, that it was not ownership that mattered but "ability to control" a company, and for that reason it had decided Lloyds should join RBS in the public sector.

They said the ONS had taken the decision "based on a judgment that government has the ability to control the respective banks' general corporate policy through the conditions associated with the agreements signed relating to recapitalisation".

They added they would continue to publish two measures of the national debt – one including the various banks' liabilities and one excluding them – as it does now.

The ONS said it did not yet have accurate numbers for the true extent of the banks' liabilities since they were such complex instititutions and said it would take months to work out a true figure. But the hit to the public finances will be back-dated to last October when the recapitalisations were announced.

RBS owns Dutch bank ABN Amro, Natwest, several insurers and rolling stock companies. The ONS will exclude an overseas liabilities that the banks may have. Importantly, it will also exclude the banks' assets, other than very short term ones like government bonds or cash holdings. This is because of international statistical rules which insist full liabilities be counted for public corporations but only short-term assets.

Shadow chief secretary to the Treasury, Philip Hammond, said: "This is just the beginning of Gordon Brown's debt crisis. Even on his own figures our national debt is set to double to more than one trillion pounds. This is the true legacy of the government's economic failures, and our children will be paying it off for a generation."

"Once the liabilities of the bailed out banks are included, our true national debt is now significantly larger than our national income, adding to the risks facing the economy and the burden on future generations."

Liberal Democrat shadow chancellor Vince Cable urged the government to use the banks to increase the flow of money to the economy.

"The ONS has confirmed what we already knew. The government has in effect nationalised RBS and has a substantial stake in Lloyds.

"Ministers must now accept the reality that they effectively own two large banks and use them to ensure the flow of much needed credit into the economy."

He also criticised the fact that statistical conventions mean the public accounts would only include the liabilities of the banks, not the assets, thus distorting the picture.

Gemma Tetlow, senior economist at the Institute for Fiscal Studies, agreed: "This overstates the deterioration in the public sector balance sheet, because the government is not credited with the long-term assets of the banks."

Tax take falls sharply

The other piece of bad news was that tumbling income tax, corporation tax and VAT revenues in January caused the public deficit for the first 10 months of the fiscal year 2008/09 to blow out to £67bn from £23bn a year ago.

The IFS said that meant the public deficit for this year to April could run up to £87bn. Just over two months ago, in the pre-budget report, the chancellor, Alistair Darling, estimated a shortfall of £78bn for this year.

Public net debt has already hit a record 47.8% of GDP, today's figures showed. The ONS also reported that the government finances worsened dramatically in January – the biggest tax-raising month of the year.

City bonuses and corporation tax receipts usually swell the national purse at the start of the calendar year, but the tax take fell sharply last month as the recession took its toll. As a result, public sector net borrowing, the government's preferred measure, recorded a surplus of only £3.34bn, some £10bn less than a year ago and the lowest January surplus since 1995.

"The public finances continue to deteriorate at an alarming rate," said Andrew Goodwin, senior economic advisor to the Ernst & Young Item Club.

"January is an important month for tax receipts so to record a surplus which was just a quarter of that achieved last January highlights the severity of the situation."

Overall government receipts were down by 11% in January. The finances were also hurt by increases in government spending, up nearly 9%, and strong public investment.

Howard Archer of IHS Global Insight called the figures "terrible". "January is a bumper month for tax receipts. Unfortunately, though, bumper hardly describes the tax receipts for this January as they have been decimated by sharply contracting economic activity, declining profitability, rising unemployment, reduced bonus payments, December's VAT cut and substantially weakened housing market activity and prices."

Over the tax year so far, government borrowing has reached £67.2bn – almost three times higher than this time last year.

Some economists warned that there could be a shortfall of close to £100bn rather than Darling's predicted £78bn borrowing forecast.

However, TUC general secretary Brendan Barber said: "A steep fall in the tax take in the middle of a recession will surprise no one. But it is absolutely right to let the deficit grow. When companies and consumers stop spending, the public sector must fill the gap."