The statistical bulletin on public sector finances is published jointly by Office for National Statistics (ONS) and HM Treasury on a monthly basis and provides the latest available estimates for key public sector finance statistics, such as public sector net borrowing, public sector net debt and public sector current budget deficit/surplus.
The bulletin is structured with the latest headline figures, revisions and information on recent events and/or methodological changes which impact on the statistics, located at the front of the bulletin. Following this there is some contextual information for users and then more detailed information on each of the key aggregates. Historic data on public sector net debt and public sector net borrowing have been included to put the latest figures in context. More detailed notes on the publication are located towards the end of the bulletin.
Table 1 ‘Key Measures of the Public Sector Finances’ presents the latest headline figures for the Public Sector Finances. The table compares the figures for the latest month with the same month a year ago and cumulative figures for the financial year to date compared with the same period in the last financial year. A time series presentation of these same fiscal measures can be found in table PSF1 of this bulletin.
|United Kingdom||£ billion2 (not seasonally adjusted)|
|February||April – February|
|PS Current Budget1||-1.1||-8.1||7.1||-77.1||-82.6||5.5|
|PS Net Investment2||1.7||3.6||-1.9||-10.2||21.6||-31.8|
|PS Net Borrowing (PSNB ex)3||2.8||11.8||-9.0||66.9||104.2||-37.3|
|PS Net Debt (PSND ex)4||1,161.5||1,076.5||85.0||1,161.5||1,076.5||85.0|
|PS Net Debt as a % of annual GDP5||73.5||70.1||3.4||73.5||70.1||3.4|
Reflected in the figures within this month’s bulletin are:
- receipts from the 4G spectrum auction;
- cash transfers in January 2013 and February 2013 from the Bank of England Asset Purchase Facility (APF);
- first estimates of net borrowing and net debt for the public sector banking groups between July and December 2012.
There have been no new classification or methodological changes since the last bulletin, published on 21 February 2013.
As can be seen in Table 1, public sector net borrowing (PSNB ex) for April 2012 to February 2013 is £66.9 billion which is £37.3 billion lower than for the same period the previous year.
However, in April 2012 the historic liabilities and some of the assets of the Royal Mail Pension Plan were transferred to Government which led to a reduction in public sector net investment and PSNB ex of £28 billion. If this one-off effect is removed then PSNB ex for April 2012 to February 2013 is actually £9.3 billion lower than in the same period in the previous year.
In addition, in January 2013 and February 2013 cash was transferred from the Bank of England Asset Purchase Facility (APF) to the Government which led to a reduction in public sector current budget and PSNB ex of £6.4 billion. If this effect is removed in addition to the effect of the Royal Mail Pension Plan transfer then PSNB ex for April 2012 to February 2013 is actually £2.9 billion lower than in the same period the previous year.
There are other events included in the 2012/13 PSNB ex which are unique to this year. These include the £2.3 billion transfer to Government of the final profits of the Special Liquidity Scheme (SLS) and the £2.3 billion receipt from the 4G spectrum auction.
Further details on the events mentioned in this section can be found in the “Recent events and methodological changes” section of this bulletin.
ONS is seeking user views on the relevance of the inclusion in Public Sector Finances of variations on the principal measures of PSNB ex, PSND ex and central government net cash requirement (CGNCR). More information on the consultation can be found in the Background Notes to this bulletin.
The Office for Budget Responsibility (OBR) forecast, published in March 2012, for public sector net borrowing in 2011/12 was £126.0 billion. The latest estimate for public sector net borrowing in 2011/12, as published in this bulletin, is £120.9 billion.
The latest OBR Economic and Fiscal Outlook, published on 20 March 2013, forecasts that public sector net borrowing (PSNB ex) in 2012/13 will be £86.5 billion and public sector net debt (PSND ex) at the end of March 2013 will be £1,189 billion. The first outturn estimate for 2012/13 will be published in next month’s bulletin, but the latest outturn estimate for PSNB ex between April 2012 and February 2013 as published in this bulletin is £66.9 billion. Similarly, the latest estimate for PSND ex at the end of February 2013 is £1,161.5 billion.
The statistical measures in this bulletin are all defined according to concepts set out in European and International statistical accounting frameworks. The Treasury uses the same measures to set budgets and produce fiscal policy, and the Office for Budget Responsibility (OBR) uses them to forecast and evaluate the public finances. This standardisation in data definitions enables much of the outturn data in this bulletin to be compared directly to corresponding figures in OBR forecasts.
Table 2 'Latest Outturn Estimates and OBR Forecasts' calculates the growth rate between 2012/13 data for April to February and the same period in 2011/12. As a comparison the table also shows the forecasted full year growth rate based on the OBR forecast for 2012/13 (published in March 2013) and the latest outturn estimates for 2011/12. As an example, the latest year-to-date public sector current budget deficit is showing a fall of 6.6% compared with the same period last year. The comparable forecast is for a full year increase in public sector current budget deficit of 0.3% between 2011/12 and 2012/13.
|United Kingdom||£ billion2 (not seasonally adjusted)|
|April – February||Forecast vs Outturn|
|Year to date|
|2012/13||2011/12||Increase/Decrease||2012/13 OBR Forecast||2011/12 Outturn||Increase/Decrease|
|PS Current Budget (PSCB)2||-77.1||-82.6||6.6%||-92.5||-92.3||-0.3%|
|PSCB excluding Asset Purchse Facility (APF) Transfers||-83.5||-82.6||-1.2%||-98.9||-92.3||-7.2%|
|PS Net Investment (PSNI)3||-10.2||21.6||-147.2%||-6.0||28.7||-120.9%|
|PSNI excluding Royal Mail Pension Plan (RMPP)||17.8||21.6||-17.7%||22.0||28.7||-23.3%|
|PS Net Borrowing (PSNB ex)4||66.9||104.2||-35.8%||86.5||120.9||-28.5%|
|PSNB ex excluding (RMPP)||94.9||104.2||-8.9%||114.5||120.9||-5.3%|
|PSNB ex excluding RMPP and APF||101.3||104.2||-2.8%||120.9||120.9||0.0%|
|PS Net Debt (PSND ex)5||1,161.5||1,076.5||7.9%||1,189.0||1,103.7||7.7%|
|PS Net Debt as a % of annual GDP||73.5||70.1||4.9%||75.9||71.8||5.7%|
Unless otherwise stated
Current Budget is the difference between current accured receipts and current accrued expenditure
Net Investment is investment less depreciation
Net Borrowing is Current Budget less Net Investment
Net Debt is financial liabilities less liquid assets
GDP = Gross Domestic Product
In their latest Economic and Fiscal Outlook, the OBR shows the impact on public sector net borrowing (PSNB ex) of a range of different events. These events and their impacts are discussed within this statistical bulletin in the “Recent events and methodological changes” section.
Table 2 compares the latest data with the OBR forecast data for public sector surplus on current budget, net investment, net borrowing and net debt. The figures are presented with and without the impact of the transfer of historic liabilities and some of the assets of the Royal Mail Pension Plan (RMPP) and the transfer of cash from the Bank of England Asset Purchase Facility (APF) to HM Treasury.
In addition to the measures included in Table 2, the OBR Economic and Fiscal Outlook includes a PSNB ex variant which excludes the transfer to Government of the final profits of the Special Liquidity Scheme (SLS) – an impact on PSNB ex of £2.3 billion in 2012/13. The measure published by OBR excludes the transfers from the Royal Mail Pension Plan, Asset Purchase Facility and Special Liquidity Scheme and on this measure Public Sector Net Borrowing (PSNB ex) for the year to date is £0.6 billion lower than for the same period last year.
The OBR also published a PSNB ex variant which as well as excluding the impact of the transfers from the Royal Mail Pension Plan and the Asset Purchase Facility removed the effect of the reclassification of Northern Rock Asset Management Ltd and Bradford & Bingley Plc to the central government sector . On this measure Public Sector Net Borrowing (PSNB ex) for the year to date is £2.2 billion lower than for the same period last year.
As mentioned in previous bulletins, caution must still be exercised when interpreting the latest in year data with full year forecasts as some data, such as current receipts, show strong seasonal effects. These seasonal variations within the year mean that you would not necessarily expect growth (or decline) over a portion of the year to reflect the growth (or decline) for the full year.
Clearly, as there is only one month still to be reported in 2012/13 the impact of seasonal effects on projections of what the final end of year public sector fiscal measures will be, is likely to be less marked than at earlier points in the year. However, it is important to remember that outturn estimates for recent periods are provisional and may be subject to sizeable revisions in later months. More information on revisions and their magnitude can be found in the Revisions and Background Notes sections of this bulletin.
To assist interpretation of the statistics, each month, on the day of the release of the Public Sector Finances statistical bulletin, the OBR publishes on its website a commentary on the latest figures and how these reflect on its forecasts. As has been highlighted, there are many reasons why the outturn data in this publication may differ from the OBR forecasts and the OBR commentary provides qualitative information to help users interpret these differences.
The media regulator Ofcom announced on 20 February 2013 that the auction for the use of the 4G spectrum had ended and had raised £2.34bn. The proceeds of the auction have subsequently been received by government and as a sale of an asset are reflected in the central government and public sector net investment figures for February 2013. The cash proceeds have had the effect of reducing both public sector net borrowing and net cash requirement in February.
The Chancellor announced on 9 November 2012 that it had been agreed with the Bank of England to transfer to the Exchequer the excess cash in the Asset Purchase Facility Fund. The announcement stated that the excess cash accumulated by the fund up to the end of 2012/13 would not be transferred in one lump sum but would be transferred in stages over 2012/13 and 2013/14. Excess cash accumulated by the fund in 2013/14 and beyond would be subject to regular quarterly transfers.
ONS announced its classification decision on these cash transfers on 21 February 2013. The classification decision only allows some of the cash transferred to reduce central government net borrowing (and so PSNB ex). An annual limit is applied to the cash transfers and any transfers above this limit do not impact on central government net borrowing, although the cash still impacts on central government net cash requirement and central government net debt (and so PSND ex).
The effect of the classification decision is that in 2012/13 of the £11.3 billion BEAPFF cash transfers taking place (as three equal instalments over January, February and March) only £6.4 billion affects the central government net borrowing.
The classification of these cash transfers under National Accounts rules and in the Public Sector Finances fiscal measures was the subject of consideration by committees who provide advice on classification issues. The recommendations of these committees led to classification decisions which were published in parallel to last month’s PSF bulletin in a classification announcement and a technical note (55.7 Kb Pdf) .
The classification decision applies to all cash transfers from the Bank of England. In addition to the £6.4 billion of BEAPFF cash transfers impacting on public sector net borrowing (PSNB ex) in 2012/13 there is an additional £2.7 billion of other cash transfers from the Bank of England which will impact on 2012/13 PSNB ex.
The Bank of England to government cash flows impacting on PSNB ex in 2012/13 are as follows:
- £3.8 billion transfer in January 2013 from the BEAPFF
- £2.7 billion of the £3.8 billion transfer in February 2013 from the BEAPFF
- £2.3 billion transfer from the final profits of the Special Liquidity Scheme (SLS) in April 2012
- £0.3 billion transferred from the Bank of England Issue Department and Banking Department between April 2012 and January 2013.
None of the £3.8 billion cash transfer from the BEAPFF in March 2013 will impact on the public sector net borrowing. This cash is recorded as an equity withdrawal from the Bank of England and as such does not impact on the net borrowing measure. Similarly, £1.1 billion of the February 2013 transfer is treated as a withdrawal of equity.
For more details on the classification decision, its rationale, impacts and background see the published technical note (55.7 Kb Pdf) .
The Bank of England Special Liquidity Scheme (SLS) officially closed at the end of January 2012. On closure the accumulated net profits of the scheme were transferred to the Treasury in April 2012. The net profits amounted to £2.3 billion. As part of the winding up of the scheme the SLS has reclaimed the corporation tax paid on its operations. This amounted to £0.7 billion and was repaid to the Bank by HMRC in March 2012 depressing recorded tax receipts in that month.
In earlier versions of this statistical bulletin the £2.3 billion payment from the SLS was recorded as a capital transfer to the Government from the Bank of England. Following the classification review of the cash movements from the Bank of England Asset Purchase Facility Fund to Government (see above) it was decided that all cash movements from the Bank of England to Government, such as the transfer of SLS profits, should be subject to the so called “super-dividend” test. This test identifies how much of the cash transfers can be recorded as dividends and so reduce government net borrowing.
The impact of this classification decision is that;
- the recording of the £2.3 billion April 2012 transfer from the final profits of the Special Liquidity Scheme (SLS) has been changed from a capital transfer to a dividend payment
- there is no resulting revision to public sector net borrowing (PSNB ex) as the impact of the SLS classification decision is to move the transaction from the capital account to the current account, leaving net borrowing unaffected.
In last month's PSF bulletin the classification decision bringing Northern Rock Asset Management (NRAM) and Bradford & Bingley (B&B) into central government was implemented.
The headline impacts of the reclassification were to:
- increase central government net debt, and so PSND ex, by £71 billion at the end of 2012.
- reduce central government net borrowing, and so PSNB ex, by £670 million in 2011/12 and £740 million in 2010/11.
As reported in an ONS news release on 28 September 2012, ONS has reclassified NRAM and B&B plc as central government bodies, with effect from January 2010 and July 2010 respectively. These financial corporations came into public ownership in 2008/9 and prior to their classification in central government were classified as public financial corporations.
B&B and NRAM prior to their classification in central government were considered as temporary effects of financial interventions in the public sector finances and so their balance sheets impact on PSND but not on PSND ex. ONS considered whether the reclassification of B&B and NRAM as central government bodies moved them from being temporary effects on the public sector finances to permanent ones and concluded that it did. In the ONS article (166.8 Kb Pdf) on the conceptual boundaries of PSNB ex and PSND ex four key principles are set out by which ex-measures are to be judged. The second of these principles states at its outset: "Permanent effects from financial interventions are those that will ultimately have an effect on central government's net debt or net borrowing". As B&B and NRAM have been reclassified to central government they now impact on central government's net debt and net borrowing and are therefore permanent effects to be recorded as such in PSNB ex and PSND ex.
The implementation of the reclassification of NRAM and B&B has been done on a provisional basis using data sourced from UK Asset Resolution Ltd, the body who manage both NRAM and B&B. The process of implementing the reclassification has led to improved data sources being obtained and the identification of some deficiencies in the data sources previously used when recording NRAM and B&B in the public sector banking sector.
The debt and cash data, previously used to include NRAM and B&B within the public sector banking groups totals, have been removed using data sources equivalent to those used in the original compilation.
The debt and net borrowing impacts of the inclusion of NRAM and B&B within central government have been calculated using improved data sources. As the data removed from the public sector banking group sector is not exactly the same as that incorporated within the central government sector some revisions to PSND and PSNB are observed.
There has been no change to the net borrowing of the public sector banking groups as data for NRAM and B&B net borrowing had been missing in the figures since data collection arrangements for the two institutions changed in 2010. The trigger for the change in data collection requirements was the loss of banking licenses by the organisations.
Revisions to the central government net cash requirement due to the inclusion of NRAM and B&B in the sector have not yet taken place due to some concerns over data quality. Cash data are being sourced and will be included in the central government figures as soon as they are available.
On 11 December 2012, the Economic Secretary to the Treasury announced that Northern Rock Asset Management (NRAM) would be refunding interest payments to some customers. The refunds are being made because of failure by NRAM to comply with all the requirements for loan documentation under the Consumer Credit Act 2008. The UK Asset Resolution (UKAR – the holding company which manages NRAM) has stated that it will be refunding the interest payments made by affected customers over the period that their documentation was not compliant. They estimate that the total cost of this action will be of the order of £270 million. More information can be found on the UKAR website. When the refund payments take place they will be recorded, under National Accounts rules, as current transfers to the private sector, which means that they will increase the public sector current budget deficit and the public sector net borrowing. As most of the payments will be used to reduce the loan balances of NRAM customers there will also be a simultaneous reduction in public sector loan assets.
January is always a month when high taxes on income and wealth are recorded due to self assessment returns and quarterly corporation tax figures. The due date for self assessment is the last day of January and so some self assessment receipts may be recorded in February as well as January. As the percentage of receipts recorded in February and January may vary between years, year on year comparisons of monthly income tax data can be misleading.
HM Treasury has replaced its COINS system for financial reporting with a new Online System for Central Accounting and Reporting (OSCAR) for 2012/13 onwards. This system collects public spending data from central government departments and the devolved administrations. Although the data are for the most part of comparable quality to previous years, there are still some initial data and system issues. Resolving these issues may lead to larger than normal revisions in the central government expenditure data reported during 2012/13.
Following Royal Assent for the Postal Services Act, on 13 June 2011 the Department for Business, Innovation and Skills (BIS) has transferred assets and liabilities from the Royal Mail Pension Plan (RMPP) to a new government run unfunded public sector pension scheme. Under the terms of the Act, the Government assumes both the RMPP pension liabilities, accrued up to March 2012, and the bulk of the RMPP’s assets. These transactions took place in April 2012. More information regarding the transfer can be found on the BIS website.
The value of the RMPP assets transferred was £28.0 billion and the value of the transferred liabilities was approximately £38 billion. Under National Accounts rules, the pension liabilities of unfunded pension plans, like those for the Civil Service, are contingent liabilities and are therefore not recorded as liabilities in the National Accounts or Public Sector Finances. However, the transfer of the assets will provide the government finances with a one off boost in the short term, though government expenditure rises over the longer term as it pays out the pensions to retired Royal Mail workers.
Guidance on how to record the government assumption of pension liabilities in circumstances like this is explicitly set out in the Eurostat Manual on Government Deficit and Debt chapter on "Payments to government from transfer of pension obligations". Following this guidance, the impact of the transfer of assets has been that:
Central government net investment for April 2012 has been reduced by the total value of all the assets (ie £28 billion).
Central government net borrowing for April 2012 has been reduced by the total value of all the assets (ie £28 billion).
Central government net cash requirement, from April 2012 onwards, has been boosted (i.e. reduced) by that element of the total assets that has been realised as cash during the month.
Central government net debt at the end of April 2012 has been reduced by more than £16 billion due to the value of the cash realised in April 2012 plus the uplifted nominal value of government bonds (ie gilts) previously held by the pension fund and transferred to central government. Net debt is reduced by the cash as this is a liquid asset, while the government bonds impact the debt as once they become government assets they are netted off government liabilities.
Other transferred illiquid assets will only impact on net debt and net cash requirement at the point at which they are sold.
On 1 January 2013 an agreement between the UK and the Swiss Confederation on cooperation in the area of taxation came into force. Under the terms of the agreement banking deposits of UK residents held in Swiss banks will become liable for taxation. The details of the agreement can be read on the HMRC website. In January 2013, the Swiss authorities made an initial payment of £342 million to the UK Government which will accrue to May 2013 which is when the final liabilities will be known.
Table PSF12R presents the revisions to the key public sector finance measures since last month’s publication. The largest revisions normally occur in the month following first release, when estimated and provisional data are replaced with firmer information.
Public sector net borrowing excluding the temporary effects of financial interventions (PSNB ex) for the first ten months of 2012/13 has been revised down by £1,658 million. This revision is composed of:
• central government net borrowing revised up by £676 million
• local government net borrowing revised down by £763 million
• public corporations net borrowing revised down by £1,571 million.
The central government revisions are composed of a downward revision of £1,494 million to accrued receipts for 2012/13 and an off-setting £818 million downward revision to current and capital expenditure (including depreciation).
The local government revisions mainly reflect the receipt of provisional quarterly estimates for English local authority current and capital expenditure for the first three quarters of 2012/13. The public corporations revisions mainly reflect later data for the gross trading surplus of the largest public corporations for the final quarter of 2012.
Public sector net borrowing for 2011/12 has been revised down by £46 million. This revision is composed of:
• central government net borrowing revised down by £148 million,
• local government net borrowing revised up by £77 million,
• public corporations net borrowing revised up by £25 million.
The central government net borrowing revisions in 2011/12 largely reflect revised data on receipts, current grants and other current expenditure which have been compiled for this quarter’s National Accounts. The 2011/12 local government net borrowing revision is principally due to a £118 million revision in current expenditure from the inclusion of final data for Wales. There are also some off-setting revisions to local authority subsidy data. Public corporations net borrowing has been revised up by £25m in 2011/12 largely due to later data on interest payments and receipts.
Cash and debt data for the public sector banking groups in the second half of 2012 have been significantly revised. The revision is due to the replacement of initial ONS estimates with the first outturn data from public sector banking groups for the period July 2012 to December 2012. The revisions have led to a reduction in the estimated Public Sector Net Debt including temporary effects of financial interventions (PSND) at the end of December 2012 of nearly £19 billion. There is no impact on either PSNB ex or PSND ex.
In April’s bulletin, the first estimate of public sector borrowing for the 2012/13 financial year will be published. This first estimate will be subsequently revised in later months as improved data are received or provisional data sources are replaced with more final data sources.
In publishing monthly estimates, it is necessary that a range of different types of data sources are used. This section provides a summary of the different sources used and the implications that has for data revisions. More detail of the methodology and sources employed can be found in the Public Sector Finances Methodological Guide (360.3 Kb Pdf) .
- for most Departments, expenditure data are provisional outturn data of what was spent in the most recent month;
- for some Departments, expenditure data are based on their budget estimates (forecasts) of spending in the most recent month. There are adjustments, based on analysis of data from previous periods, to these forecasts for some departments to account for likely under or over spending;
- for income, the data are again a mixture of provisional outturn data and forecasts.
- for all local authorities, while some income data are available monthly, expenditure data and other income data are based on their previously forecasted level of spending and receipts in the most recent quarter. There is an adjustment based on data from previous periods to account for likely under or over spending.
- all data for public corporations for the latest month will be based on ONS forecasts.
- for the 2-3 months prior to the latest month there remains a mixture of outturn data and budget estimates (forecasts) but with more data increasingly being on an outturn basis. After around 3 months the data for outturn months are all on a provisional outturn basis.
- since 2011/12, for English Local Authorities, data from the Quarterly Revenue Outturn and Quarterly Capital Payments and Receipts forms collected by the Department of Communities and Local Government (DCLG) have been used to provide provisional outturn figures. These figures are included within the public sector finance statistics around 3-4 months after the end of the quarter.
- for Local Authorities outside of England and all local authorities prior to 2011/12, in year expenditure data have been generally based on expected level of spending from Local Authority forecasts, including estimates of likely under or over spending. (The only quarterly data related to capital expenditure in England.) A provisional set of outturn data becomes available from around August relating to the previous financial year.
- ONS conducts a quarterly survey of the eight largest public corporations; these figures are taken on around 3-4 months after the end of the quarter. Data for the remaining public corporations are based on ONS estimates until the audited accounts are available.
Over the course of May to July, most English Central Government departments submit their audited accounts and Trust Statements for the previous financial year to Parliament. Revised data feeds through at this stage reflecting the audited position of most Central Government departments, generally in the September bulletin. This can lead to revisions to the provisional data already published. The final audited data for all Central Government bodies, including the Devolved Administrations is not available until at least the following February and the use of these data may also cause revisions when they feed into the statistics.
Over the period from July through to the following February audited data for Local Authority accounts are obtained and these feed through into the statistics replacing previous provisional outturn figures as they become available to be used.
Over the period from July through to the following March audited data for public corporations’ accounts are obtained and fed through into the statistics.
Even after all audited data for the public sector is available, there may still be revisions to reflect for example the implementation of classification decisions and other methodological changes.
Assessing the end year position
The implication is that the earliest estimates of outturn for 2012/13 will be subject to revision as revised data is provided to the Office for National Statistics by data suppliers. Depending upon the timing of the updated data from suppliers, this means some months the revised estimates can be higher than the initial estimate and some months lower.
Taking 2011/12 as an example, the initial estimate of PSNB ex was £126.0 billion published in April 2012. In May 2012 an estimate of £124.4 billion was published followed by £127.6 billion in June and £125.7 billion in July. As you can see from this some estimates of PSNB ex were higher and some were lower than the initial estimate.
In September 2012, provisional spending information from Local Authorities was supplied to ONS which was the main factor in a downward revision of 2011/12 PSNB ex to £119.3 billion in that month. From October 2012 onwards the estimate for 2011/12 has been fairly steady at between £120.9 billion and £121.6 billion. Although, there is the potential for this to still change as a result of methodological revisions arising from the National Accounts
Blue Book 2013 publication (62.7 Kb Pdf)
or future classification decisions.
The introduction of the Quarterly Revenue Outturn for English local authorities in 2011/12 means that estimates of under or over spending by Local Authorities have been incorporated into the estimates during the year as the quarterly data became available. This is unlike the position in earlier years when the first outturn data for current expenditure became available from around five months after the end of the financial year.
The Treaty on the Functioning of the European Union obliges member states to avoid excessive budgetary deficits. The Protocol on the Excessive Deficit Procedure (EDP), annexed to the Maastricht Treaty, defines two criteria and reference values for compliance. These are a deficit to Gross Domestic Product (GDP) ratio of 3%, and a debt to GDP ratio of 60%. EU Member State Governments have to report their actual and planned government deficits, and the levels of their debt, to the European Commission, at the end of March and September each year.
The UK publishes a statistical bulletin, at the same time as its data transmission to the European Commission, which provides a summary of the UK general government deficit and debt as defined by the annex to the Maastricht Treaty. The latest bulletin published on 28 September 2012 reports that in 2011/12 the general government deficit (or net borrowing) was 7.7% of GDP, and at the end of March 2012 the general government gross debt was 85.8% of GDP.
The definition of general government deficit under the Maastricht Treaty has some minor differences to the definition of general government net borrowing published in this Public Sector Finances statistical bulletin. A reconciliation of the two is available within the Government Deficit and Debt under the Maastricht Treaty statistical bulletin.
The definition of debt under the Maastricht Treaty is different to that used in this Public Sector Finances statistical bulletin. The net debt measure reported in this bulletin (and used by the UK Government for budget and forecast purposes) is calculated as the total stock of financial liabilities minus liquid assets. By contrast, the Maastricht debt is a gross debt measure which is calculated as the stock of financial liabilities. The other major difference in the two debt measures is that the Maastricht debt is limited to general government whereas in the public sector finances the principal debt measure is that for the public sector.
The UK figures may be compared with those of other EU Member States on the Government Finance Statistics section of the Eurostat website. A full set of government finance tables provided by the UK to Eurostat as the end of September 2012 were published on the ONS website on 23 October 2012.
The figures in this bulletin will form the basis of the latest calculations for general government deficit and debt under the Maastricht Treaty. The ONS statistical bulletin of the same name will be published on 3 April 2013 and a full set of government finance tables provided by the UK to Eurostat at the end of March 2013 will be published on 19 April 2013.
The Public Sector Finances (PSF) statistical bulletin is published jointly by Office for National Statistics (ONS) and the Treasury. A note that outlines the joint publication arrangement can be found on the ONS website. The bulletin is produced monthly and provides the latest available estimates for key public sector financial statistics, such as Public Sector Net Borrowing and Public Sector Net Debt.
The statistics in this bulletin present the latest figures for what the UK public sector has raised in revenue, spent and invested. The headline statistic is for Public Sector Net Borrowing which is a measure of the amount of money the Government has had to borrow in order to bridge the gap between expenditure and revenue. The other key statistics are Surplus on Current Budget and Public Sector Net Debt.
The Surplus on Current Budget is a measure of the amount by which current receipts are greater than current expenditure after allowing for depreciation.
Public Sector Net Debt is a measure of how much the UK public sector owes (to UK private sector organisations or overseas institutions) at a point in time. When the Government borrows money or in some other way increases its financial liabilities then it adds to its debt.
The statistical measures are all defined according to concepts set out in European and International statistical accounting frameworks. The Treasury uses the same measures to monitor and set fiscal policy, and the OBR uses them to forecast and evaluate the public finances. This standardisation in data definitions enables much of the outturn data in this bulletin to be compared directly to corresponding figures in OBR forecasts. The current government has set targets for fiscal policy based on the Current Budget Surplus and Public Sector Net Debt. These are detailed in the Charter for Budget Responsibility.
When making comparisons with OBR forecasts, or interpreting the data for other uses, allowance should be made for the fact that the outturn estimates for recent periods are provisional and may be subject to sizeable revisions in later months. More information on revisions and their magnitude can be found in the Revisions section of this bulletin.
Throughout the bulletin comparisons are made of the latest data with that of the same period of the previous year. The reason for this is that many of the expenditure and revenue items within the public sector finances have a “seasonal” pattern to them. For instance tax receipts are typically at their highest in January due to higher receipts than normal in this month from income tax self assessment and quarterly corporation tax. Similarly expenditure on social benefits is typically highest in November due to expenditure in this month for the winter fuel allowance.
All monetary values in the bulletin are in terms of ‘current prices’, that is, they represent the price in the period to which the expenditure or revenue relates and are not adjusted for inflation.
This bulletin contains statistics which both exclude and include the temporary effects of the financial interventions. More information on the background to these different measures and how they differ methodologically can be found in the section on ‘Excluding and including financial interventions’.
In February 2013 the public sector net borrowing, excluding the temporary effects of financial interventions (PSNB ex), was £2.8 billion, which was £9.0 billion lower than in February 2012, when PSNB ex was £11.8 billion.
For the period April 2012 to February 2013, the public sector net borrowing, excluding the temporary effects of financial interventions (PSNB ex), was £66.9 billion, which was £37.3 billion lower than in the same period of the previous year, when PSNB ex was £104.2 billion.
For the impact on public sector net borrowing (PSNB ex) of events such as the transfer of the historic liabilities and some of the assets of the Royal Mail Pension Plan and the transfer of cash from the Bank of England Asset Purchase Facility (APF) see the “Key measures” section in this bulletin.
In 2011/12 the public sector net borrowing, excluding the temporary effects of the financial interventions (PSNB ex), was £120.9 billion, which was £20.0 billion lower than in 2010/11, when PSNB ex was £140.9 billion. The £20.0 billion drop in PSNB ex between 2010/11 and 2011/12 is composed of a £9.8 billion reduction in net investment and £10.2 billion reduction in the current budget deficit.
Public sector net borrowing data can be found in the following tables in this bulletin:
PSF1 provides time series data for net borrowing measures,
PSF2 provides public sector net borrowing by sector,
PSF7 provides cumulative public sector net borrowing by month back to 2000/01,
PSF9 provides net borrowing measures as a percentage of GDP by financial year back to 1974/75,
PSF10A shows how the public sector net cash requirement reconciles with the public sector net borrowing.
Net borrowing can be defined as the difference between total accrued revenue (or receipts) and total accrued expenditure (both current and capital). Net borrowing is an accrued measure which is consolidated (ie intra sector transactions are not recorded).
During periods when the public sector revenue exceeds its expenditure then the public sector is able to repay some of its debt rather than borrow further. When there is a repayment the public sector net borrowing is shown as a negative.
In the UK the public sector consists of four sub-sectors; central government, local government, non-financial public corporations and financial public corporations (ie public sector banking groups). As can be seen in Table 3 ‘Sectoral Breakdown of Public Sector Net Borrowing’, much the largest share of the public sector net borrowing relates to central government transactions. A time series presentation of these same data can be found in table PSF2 of this bulletin.
|United Kingdom||£ billion1 (not seasonally adjusted)|
|February||April – February|
|Non-Financial Public Corporations2||-0.2||-0.2||0.0||-2.7||-0.7||-2.0|
|PS Net Borrowing (PSNB ex)||2.8||11.8||-9.0||66.9||104.2||-37.3|
|Public Sector Banking Groups||1.6||-2.1||3.7||-13.5||-25.4||11.9|
|PS Net Borrowing (PSNB)||4.4||9.7||-5.3||53.4||78.8||-25.4|
Unless otherwise stated
At the end of February 2013 the public sector net debt excluding the temporary effects of financial interventions (PSND ex) was £1,161.5 billion (73.5% of GDP). This compares to a PSND ex of £1,076.5 billion (70.1% of GDP) at the end of February 2012.
Public sector net debt data can be found in the following tables in this bulletin:
PSF1 provides time series data for net debt measures,
PSF6A shows how public sector consolidated gross debt is derived,
PSF6B shows how public sector net debt is derived,
PSF8 net debt (excluding temporary effects of financial interventions) by month back to 1993/94,
PSF9 provides net debt measures by financial year back to 1974/75.
Net debt, for the purposes of UK fiscal policy, is defined as total gross financial liabilities less liquid financial assets, where liquid assets are cash and short term assets which can be realised for cash at short notice and without significant loss. These liquid assets mainly comprise foreign exchange reserves and bank deposits. The net debt is a cash measure which is priced at nominal value (i.e. the cost to the issuer at redemption) and consolidated (i.e. intra sector holdings of liabilities/assets are removed). The net cash requirement is, approximately, the flows equivalent of net debt.
The central government accrued data are shown in two tables of this bulletin:
PSF3A which compares central government data with that of previous periods,
PSF3B which provides detailed time series data for central government.
As public sector net borrowing is largely driven by the central government accounts (see ‘Sectoral Breakdown of Public Sector Net Borrowing’ table) it can be informative to look at the detail of these central government accounts.
In February 2013, central government accrued current receipts were £47.2 billion, which was £3.8 billion, or 8.7%, higher than in February 2012, when central government current receipts were £43.4 billion.
February 2013 includes £2.7 billion of dividend receipts relating to cash flows from the Bank of England Asset Purchase Facility (BEAPFF) to Government. If these transactions are excluded then accrued current receipts in February 2013 are £1.1 billion higher than in February 2012.
For the period April 2012 to February 2013, central government accrued current receipts were £498.7 billion, which was £10.7 billion, or 2.2%, higher than in the same period of the previous year, when central government current receipts were £488.0 billion.
In earlier public sector finances statistical bulletins, the £2.3 billion transfer in April 2012 from the Special Liquidity Scheme (SLS) was included within central government net investment. Following review of the correct classification for the transfers from the Bank of England Asset Purchase Facility to the Government it has been decided that the £2.3 billion SLS transfer should be recorded as a dividend in the central government current receipts and not as a capital transfer in central government net investment. For further details see the ‘Recent events and methodological changes’ section.
If the effect of the April 2012 SLS transaction and the January and February 2013 BEAPFF transactions were to be removed from central government current receipts, central government current receipts would be £490.0 billion for the period April 2012 to February 2013. This would be £2.0 billion, or 0.4%, higher than in April 2011 to February 2012.
As cash receipts are generally accrued back to earlier periods, the first estimate for receipts in a month is by nature provisional, including, as it must, a significant amount of forecast data. Therefore, care must be taken when making inferences based on receipts data for the latest months.
In 2011/12, the central government accrued current receipts were £535.7 billion, which was £22.3 billion, or 4.3%, higher than 2010/11, when central government current receipts were £513.4 billion.
A large part of the rise in receipts between 2010/11 and 2011/12 was attributable to a rise in VAT receipts of £12.5 billion. This rise, in large part, reflects the change in the rate from 17.5% to 20%. The 2011/12 combined receipts of income tax and national insurance contributions (recorded as income and capital gains tax and compulsory social contributions) rose by £4.9 billion, or 2.0%, compared with 2010/11.
Central Government receipts follow a strong cyclical pattern over the year, with high receipts in April, July, October and January due to quarterly Corporation Tax returns being accrued to these months. This can be seen in Graph 2. January accrued receipts are particularly high due to receipts from quarterly corporation tax combining with those from income tax self assessment. The revenue raised through income tax self assessment, as well as affecting January receipts, also tends to lead to high receipts in February and, to a lesser degree, March.
In February 2013, central government accrued current expenditure was £50.2 billion, which was £0.8 billion, or 1.5%, lower than February 2012, when central government current expenditure was £50.9 billion.
For the period April 2012 to February 2013, central government accrued current expenditure was £575.6 billion, which was £13.1 billion, or 2.3%, higher than in the same period of the previous year, when central government current expenditure was £562.5 billion.
In 2011/12, the central government accrued current expenditure was £618.2 billion, which was £11.2 billion, or 1.9%, higher than in 2010/11, when central government current expenditure was £607.0 billion.
The rise of £11.2 billion was due to a rise in debt interest payments of £2.5 billion, a rise of net social benefits of £8.2 billion and a rise in other expenditure of £0.5 billion.
The accrued debt interest payment rise between 2010/11 and 2011/12 reflected two factors. Firstly, the increase in the number of gilts in issue, as a means to finance the government debt, has increased government interest payments to gilt holders. Secondly, movements in the Retail Prices Index produced increases in the interest paid by government on index linked gilts.
As changes in debt interest payments can have a significant effect on government current expenditure trends it can be informative to consider the total central government current expenditure excluding debt interest payments. Changes in this measure largely reflect changes in the total outlay of departments and the devolved administrations. On this basis, the total accrued current expenditure excluding debt interest for 2011/12 was £570.5 billion, which was £8.7 billion, or 1.5%, higher than in 2010/11.
The profile of total accrued Central Government expenditure is broadly flat through the year, as can be seen in Graph 3 and 4. However, one observable cyclical pattern is that Net Social Benefits in November is higher than in other months due to payments in this month for the winter fuel allowance. A further cyclical trend is that “other” current expenditure tends to be highest at the end of the financial year in March.
In February 2013, central government net investment was £0.4 billion, which was £2.2 billion, or 83.8%, lower than in February 2012, when central government net investment was £2.6 billion.
The February 2013 central government net investment includes the proceeds from the auction of the 4G Spectrum. This auction raised £2.34 billion, so if these proceeds are excluded then Central government net investment in February 2013 was £2.7 billion, which was £0.1 billion, or 5.6%, higher than in February 2012.
For the period April 2012 to February 2013, central government net investment was -£6.5 billion, which was £30.5 billion lower than in the same period of the previous year, when central government net investment was £23.9 billion.
The April 2012 central government net investment includes a £28 billion one-off transaction which relates to the transfer of the Royal Mail Pension Plan to the Government . For details of this one-off event see the ‘Recent events and methodological changes’ section. If the effect of this transaction were to be removed from central government net investment then for the period April 2012 to February 2013 the central government net investment would be £21.5 billion, which would be £2.5 billion lower than in April 2011 to February 2012. If the proceeds from the 4G Spectrum auction were also removed then central government net investment would be £23.8 billion, which would be £0.1 billion lower than in the same period the previous year.
In earlier public sector finances statistical bulletins, the £2.3 billion transfer in April 2012 from the Special Liquidity Scheme (SLS) was included within central government net investment. Following review of the correct classification for the transfers from the Bank of England Asset Purchase Facility to the Government it has been decided that the £2.3 billion SLS transfer should be recorded as a dividend in the central government current receipts and not as a capital transfer in central government net investment. This reclassification of the SLS transfer has been implemented for the first time in this statistical bulletin. For further details see the ‘Recent events and methodological changes’ section.
In 2011/12, central government net investment was £23.1 billion, which was £14.8 billion, or 39.1%, lower than in 2010/11, when central government net investment was £37.9 billion.
The 2011/12 central government net investment is impacted by the transactions that took place in March 2012 around the abolishment of the Housing Revenue Account. For details of these transactions see the ‘Recent events and methodological changes’ section in the April 2012 statistical bulletin. If the effects of the Housing Revenue Account changes were to be removed from central government net investment then in 2011/12 the net investment would be £31.2 billion, which would be £6.7 billion lower than in 2010/11.
Central government net investment not only includes the direct acquisition minus disposal of capital assets (such as buildings, vehicles, computing infrastructure) by central government, but it also includes capital grants to and from the private sector and other parts of the public sector. Capital grants are varied in nature and cover payments made to assist in the acquisition of a capital asset, payments made as a result of the disposal of a capital asset, transfers in ownership of a capital asset and the unreciprocated cancellation of a liability.
Central government net investment is difficult to predict in terms of its monthly profile as it includes some large capital grants (such as those to local authorities and education institutions), and can include some large capital acquisitions or disposals, all of which do vary from year to year. One observable trend in the data, however, is that net investment in the last quarter of the financial year is usually markedly higher than that in the previous three quarters.
In February 2013, central government net cash requirement (CGNCR) was -£0.8 billion (a surplus), which was £6.5 billion, or 115.0%, lower than in February 2012, when there was a CGNCR of £5.6 billion.
The February 2013 CGNCR includes the proceeds from the auction of the 4G Spectrum and the cash transferred from the Bank of England Asset Purchase Facility. If these transactions are excluded then CGNCR in February 2013 was £5.2 billion, which was £0.4 billion, or 7.0%, lower than in February 2012.
For the period April 2012 to February 2013, CGNCR was £74.7 billion, which was £19.0 billion, or 20.3%, lower than in the same period of the previous year, when there was a CGNCR of £93.8 billion.
If the effects of the auction of the 4G Spectrum and the cash transferred from the Bank of England Asset Purchase Facility are excluded then CGNCR for the period April 2012 to February 2013 was £84.6 billion, which was £9.2 billion, or 9.8%, lower than in the same period the previous year.
A significant part of the remaining fall in CGNCR between April 2012 to February 2013 and the same period in the previous year can be attributed to the cash realised in 2012/13 from sales of the assets of the transferred Royal Mail Pension Plan.
In 2011/12, the central government net cash requirement (CGNCR) was £126.5 billion, which was £13.1 billion, or 9.4%, lower than in 2010/11, when there was a CGNCR of £139.6 billion.
Net cash requirement data can be found in the following tables in this bulletin:
PSF4 provides net cash requirement by sector,
PSF5 provides a detailed breakdown of the central government net cash requirement and the cash expenditure and receipts data from which it is derived,
PSF7 provides central government net cash requirement by month back to 2000/01,
PSF10A shows how the public sector net cash requirement reconciles with the public sector net borrowing,
PSF10B shows how the central government net cash requirement reconciles with the central government net borrowing.
The net cash requirement is a measure of how much cash in a period the government (or public sector) needs to borrow (or lend) so as to balance its accounts. Historically, when the UK government fiscal policy was on a cash basis rather than the current accruals basis, the net cash requirement was known as the borrowing requirement. Although in UK fiscal policy the net cash requirement has been replaced by the accruals measure of net borrowing, it is still an important measure.
The net cash requirement is in essence the flows equivalent of net debt, which is also a cash measure. This means that the changes in net debt between two points in time are (close to being) equal to the net cash requirement for the intervening period. The relationship is not an exact one because the net cash requirement reflects actual prices paid while the net debt is at nominal prices.
Although the central government net cash requirement is the largest part of the general government net cash requirement, the public sector net cash requirement can be very different. The reason for this is that the public sector net cash requirement includes the net cash requirement of the public sector banking groups. In recent years, the public sector banking groups have recorded large cash surpluses which have had a substantial impact on the public sector net cash requirement.
Since 2001/02 public sector net debt has been increasing. At the end of March 2002, net debt was 30% of GDP then over the next six years, up until 2007/08, the average rate of increase was just over 1% of GDP a year. From 2008 public sector net debt increased sharply, rising from 36% of GDP at the end of March 2008 to 72% of GDP at the end of March 2012.
Public sector net debt figures are available back to 1974/75. Historically, public sector net debt has not been constant. As can be seen in Graph 6, it fell from a debt level, pre-1977/78, that was above 50% of GDP to a low of 26% at the end of 1990/91. The public sector net debt then grew again from 1990/91 until it reached a peak of 42% of GDP at the end of 1996/97, before falling back to 30% of GDP by the end of 2001/02.
Given the close relationship between net borrowing (a flow measure) and net debt (a stock measure) it is unsurprising to see a historical pattern to public sector net borrowing which complements that of public sector net debt. Monthly public sector net borrowing figures are available back to 1993, as shown in Graph 7. Between 1998/99 and 2000/01, when public sector net debt was falling, net borrowing cumulatively over the year was negative (ie, there was a surplus), but before and after this period the net borrowing was positive (ie, there was a deficit). Between 2003/04 and 2007/08 net borrowing was fairly static, varying between £33 billion and £41 billion, but with the onset of the financial crisis in late 2007 net borrowing rose sharply to a peak of £159 billion in 2009/10 before falling a little to £141 billion in 2010/11 and then further to £121 billion in 2011/12.
Since 2007/08 the Government has made several direct interventions in the UK financial sector as a response to the global financial crisis. As a result of those government interventions some banks and other financial institutions which were previously designated within National Accounts as private companies have been reclassified as public financial corporations. The government interventions and the inclusion of banking groups, such as Royal Bank of Scotland and Lloyds, within the public sector have had a marked impact on the public sector finances. In recognition of this the 2008 Budget introduced a measure of public sector debt excluding the temporary effects of financial interventions (referred to here as PSND ex). A parallel measure of public sector net borrowing (referred to as PSNB ex) was then introduced in the 2009 Pre-Budget Report.
The measures excluding the temporary effects of financial interventions are intended to show the underlying state of the public sector finances without temporary distortions caused by financial interventions, but including any permanent effects from these interventions. The government bases its fiscal policy on these measures. Therefore, the main statistics in this bulletin also follow this approach and exclude the temporary effects of financial interventions.
The public sector net debt and net borrowing excluding the temporary effects of financial interventions (PSND ex and PSNB ex respectively) exclude the debt and borrowing of the public sector banking groups as well as that related to schemes such as the Asset Purchase Facility, but include public sector bank transactions with government and government interventions where the money spent is not expected to be recouped.
So as to provide a full picture of the public sector finances this bulletin does not limit itself to measures excluding the temporary effects of financial interventions but also contains figures that take account of all the effects of the government financial interventions, including the liabilities and transactions of the public sector banking groups. Table PSF12 of this bulletin provides a reconciliation showing how these measures of Public Sector Net Borrowing (PSNB) and Public Sector Net Debt (PSND) relate to their corresponding ex measures (ie, PSNB ex and PSND ex).
For more detail on the methodological differences between those statistics that exclude and include the temporary effects of the financial interventions a paper entitled Public sector finances excluding financial interventions (166.8 Kb Pdf) is available on the ONS website.
The UK Government measures fiscal policy on the basis of public sector finance measures which exclude the temporary effects of financial interventions made by the Government. These interventions began in 2007/08, as a response to the financial crisis and have resulted in a number of banking groups being brought temporarily into the public sector.
This section of the bulletin provides statistics which include the temporary effects of the financial interventions, so as to allow the temporary impact of financial interventions to be monitored and to provide context to the measures which exclude the temporary effects of financial interventions. More information on the background to these different measures and how they methodologically differ can be found in the section on ‘Excluding and including financial interventions’.
In 2011/12 public sector net borrowing including the temporary effects of financial interventions was £93.4 billion which is £27.6 billion lower than the equivalent figure excluding the temporary effects of the financial interventions. The lower net borrowing for the measure including the temporary effects of the financial interventions is in large part due to the public sector banking groups, collectively, having a significant current budget surplus rather than a deficit. That is to say, under National Accounts recording rules, the public sector banking groups have an income in current receipts which is greater than their current expenditure.
|United Kingdom||£ billion2 (not seasonally adjusted)|
|February||April – February|
|PS Current Budget2||-2.7||-6.0||3.4||-63.5||-56.7||-6.8|
|PS Net Investment3||1.7||3.6||-1.9||-10.1||22.1||-32.2|
|PS Net Borrowing (PSNB)4||4.4||9.7||-5.3||53.4||78.8||-25.4|
|PS Net Debt (PSND)5||2174.4||2163.9||10.5||2174.4||2163.9||10.5|
|PS Net Debt as a % of annual GDP||137.6||141.0||-3.4||137.6||141.0||-3.4|
Net Investment is investment less depreciation
GDP = Gross Domestic Product
Including the temporary effects of the financial interventions has a large impact on public sector net debt. The public sector net debt including the temporary effects of the financial interventions, at the end of January 2013 was £2,174.4 billion (137.6% of GDP), this compares to a public sector net debt excluding the temporary effects of financial interventions of £1,161.5 billion (73.5% of GDP).
The net debt for the measure including any temporary effects of the financial interventions is so much higher than PSND ex as it includes the net debt of the public sector banking groups. Net debt is defined as all financial liabilities minus liquid assets (see ‘Net debt’ section for more background).
The public sector banking groups, like most banks, have a significantly greater amount of liabilities than they do liquid assets, and so a high net debt. The net debt for the public sector banking groups (including the debt of the Bank of England schemes, such as the asset purchase facility fund) was estimated to be £957 billion at the end of December 2012. This is not to say that the public sector banking groups have this amount of liabilities without any offsetting assets. Banks by the nature of their business have a large amount of their assets in the form of loans which, are recorded as illiquid assets and so, have no impact on the net debt measure.
Between February 2012 and February 2013 the public sector net debt increased by £10.5 billion and fell from 141.0% of GDP to 137.6% of GDP. The reason for this is that the growth in net debt was outstripped by the growth in GDP (as a rolling 12 month average) over the same period.
PSF1 Public Sector Summary Balances,
PSF2 Public Sector Net Borrowing: by sector,
PSF3A Central Government Account: 2012/13,
PSF3B Central Government Account: time series,
PSF4 Public Sector Net Cash Requirement,
PSF5 Central Government Net Cash Requirement on own account (receipts and outlays on a cash basis),
PSF6A Public Sector Consolidated Gross Debt (nominal values at end of period),
PSF6B Public Sector Net Debt (nominal values at end of period),
PSF7 Public Sector Finances: Current Budget, Net Borrowing and Net Cash Requirement,
PSF8 Public Sector Finances: Net debt (excluding the temporary effects of financial interventions),
PSF9 Long Run of Fiscal Indicators as a percentage of GDP,
PSF10A Reconciliation of Public Sector Net Borrowing and Net Cash Requirement,
PSF10B Reconciliation of Central Government Net Borrowing and Net Cash Requirement,
PSF11A Reconciliation of PSNB and PSNB ex,
PSF11B Reconciliation of PSND and PSND ex,
PSF12R Public Sector Statistics: revisions since last publication
A summary quality report (201.4 Kb Pdf) for the public sector finances is available on the ONS website. This report describes in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.
An overview note on the data sources used within public sector finances and the quality assurance processes that are undertaken in compiling the statistical release was published on the ONS website on 19 October 2012.
Publication of data for all public sector banking groups and the Bank of England
Data for the Royal Bank of Scotland and Lloyds Banking Group were fully incorporated into the public sector finances for the first time in the statistical bulletin published on 25 January 2011.
Prior to this data for public sector banking groups related only to Northern Rock plc, Northern Rock (Asset Management) plc, and Bradford and Bingley plc. An article providing commentary on inputs to the public sector banks series, the sources of the data, processing methodologies, and the impacts on key aggregates is available from the ONS website (166.8 Kb Pdf) .
Following the sale of Northern Rock plc to Virgin Money Holdings (UK) Ltd on 1 January 2012, Northern Rock plc has moved out of the public sector. Therefore, Northern Rock plc is not included in the data for public sector banking groups from January 2012 onwards.
Northern Rock (Asset Management) plc and Bradford & Bingley have been reclassified from public financial corporations to central government with effect from January 2010 and July 2010 respectively.
The Bank of England is also classified to the public sector. Data for the Bank have been presented separately in the PSF statistical bulletin (see tables PSF2 and PSF4) commencing with the publication dated 25 January 2011. The data are ONS estimates derived from the Bank's published accounts. Prior to the January 2011 publication, data for the Bank were included within series for public corporations in the public sector finances.
Classification issues concerning financial interventions
There have been numerous financial interventions in recent years. These are described in an article that was published on 6 November 2009.
The article also explains the classification of the institutions and transactions associated with these measures in the UK's National Accounts and Public Sector Finances. This follows consultation with Eurostat, the Statistical Office of the European Union, to ensure consistent interpretation of the international guidance.
A methodology guide (360.3 Kb Pdf) to monthly public sector finance statistics is available on the ONS website. It explains the concepts and measurement of the monthly data, plus those previously published, and gives some long runs of historical data. The following background notes provide further information regarding the monthly data.
The current budget is defined as net saving plus receipts of capital taxes, using National Accounts concepts as set out in the European System of Accounts 1995 (ESA95). For central and local government, monthly estimates of the current budget are obtained directly from data on transactions in current receipts and expenditures. For public corporations, the current budget is obtained by subtracting net borrowing from an estimate of net investment. Net borrowing is consistent with the definitions in ESA95; procedures for calculating it are discussed in the methodological guide. Net investment is defined as investment less depreciation. Investment is capital formation (acquisition of fixed assets, stocks and valuables net of any sales) plus net payments of capital grants.
Public sector net debt (PSND) is calculated as financial liabilities less liquid assets with both scored at face value. Liquid assets mainly comprise foreign exchange reserves and bank deposits. Public sector holdings of public sector debt are consolidated out. The public sector net cash requirement is, approximately, the flows equivalent of PSND.
The GDP figure used in the denominator for the calculation of fiscal aggregates as a percentage of GDP is the ‘not seasonally adjusted’ current price version. For the net debt ratio, the GDP denominator covers the 12 months centred around the observation, for example six months before and six months after it. For the current budget and net borrowing financial year ratios, the GDP denominator covers the financial year. These calculations require estimates or forecasts of GDP to be available for up to six months in the future.
This estimation procedure is explained in detail in an article, The use of GDP in fiscal ratio statistics (70.8 Kb Pdf) . The use of GDP in fiscal ratio statistics, available from the ONS website. As a result of this estimation procedure the debt ratio is provisional when first published and subject to later revision when outturn GDP first becomes available, and again when more refined estimates of GDP are published.
Relevance to users
Forecasts of The Office for Budget Responsibility (OBR) are quoted within this statistical bulletin. The OBR was established in May 2010, and placed on a permanent, statutory footing in March 2011. As set out in the Budget Responsibility and National Audit Act 2011, the OBR has a duty to prepare fiscal and economic forecasts twice each year. The Government has adopted the OBR’s forecasts as official forecasts used to inform policy decisions. The Charter for Budget Responsibility sets out the Government’s intention to continue this practice.
The UK Statistics Authority (UKSA) conducted an assessment of the Public Sector Finances Statistical Bulletin in 2011 to ensure that the bulletin and its compilation methods fully comply with all requirements of the National Statistics Code of Practice. A report of their findings was published on 3 November 2011. Following work to comply with the requirements itemised in the UKSA report, the Public Sector Finances has had designation as National Statistics confirmed.
The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.
Designation can be broadly interpreted to mean that the statistics:
- meet identified user needs;
- are well explained and readily accessible;
- are produced according to sound methods; and
- are managed impartially and objectively in the public interest.
Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.
A brief paper explaining the roles and responsibilities of ONS and HM Treasury when producing and publishing the public sector finances statistical release was published on the ONS website on 26 June 2012.
A note on the main uses and users of the public sector finances statistics was published on the ONS website on 21 September 2012.
As part of a continuous engagement strategy, comments are welcomed on ways in which the Public Sector Finances Statistical Bulletin might be improved.
Recommendations for the improvement of the Public Sector Finances Statistical Bulletin may be emailed to firstname.lastname@example.org. Full contact details are available at the end of the bulletin.
Range of measures published
In this bulletin we publish in tables the headline measures of borrowing and debt (PSNB ex and PSND ex) as well as the wider measures of borrowing and deficit which include temporary impacts of financial interventions.
In undertaking this work, we will also be considering best practice in presentation of statistics with a view towards limiting any additional information to a small number of useful statistical measures over and above PSNB ex and PSND ex which meet user needs.
We would welcome users' views on the range of measures published. Please email email@example.com with your comments by 21st April 2013, explaining what supporting measures or information you would like to see and why these would be useful.
Forthcoming work on the Public Sector Finance Statistics
In November 2011 the European Union brought into legislation five new fiscal regulations and a directive. Collectively these are commonly known as the 6-pack agreement they include new duties on Member States to:
- publish more monthly information on expenditure and revenue of central government
- publish more quarterly information on expenditure and revenue of local government
- publish more annual information on government contingent liabilities and involvement in corporations.
In addition, the new European System of Accounts 2010 (ESA 2010) is due for adoption for Gross Domestic Product (GDP) and Maastricht Debt and Deficit Returns from September 2014. Eurostat is currently finalising its Manual on Government Deficit and Debt based on ESA 2010 and as this is being finalised ONS will be assessing the impacts on the Public Sector Finance Statistics. We expect to be in a position to inform users later in 2013 of the main changes and the impacts from moving from the current European System of Accounts 1995 (ESA 1995) to ESA 2010.
The Public Sector Finances (PSF) differ from other National Accounts data in that they have a more flexible revisions policy. This means that the PSF data may be inconsistent with the published GDP data and sector and financial accounts, as a revision may not be incorporated into the main National Accounts data set until a later date due to the more restrictive revisions policy.
General government net borrowing reported in this bulletin forms the basis of the reports of Government Deficit under the Maastricht Treaty. This was most recently reported on 28 September 2012. The next bulletin will be published on 3 April 2013.
The definition of general government net borrowing to be reported for the European Excessive Deficit Procedure (EDP) is slightly different to that used for National Accounts. ONS publishes a biannual bulletin which presents the general government net borrowing and general government gross debt data as required by the EDP.
This bulletin on General Government Debt and Deficit under the Maastricht Treaty includes a table which reconciles the EDP defined general government net borrowing and that published here in the Public Sector Finances Statistical Bulletin.
Tax receipts data published in this bulletin are presented in terms of broad tax categories (e.g. Income Tax, VAT). For more details on individual taxes, users can go to the HM Revenue & Customs website and access a monthly publication which provides cash tax receipts data which are entirely consistent with the data published in Table PSF5 of the bulletin.
Data from HM Treasury’s COINS database underlie the Central Government expenditure figures provided in this publication up to March 2012 and those from April 2012 onwards are, sourced from the OSCAR database. In June 2010, HM Treasury released into the public domain, as part of the Government transparency agenda, raw data from the COINS database for the years 2005/06 to 2009/10. It was subsequently announced that annual updates to this raw data would be released in September.
The latest outturn data for 2011/12 and updates to the four preceding years were released on 21 September 2012. In-year quarterly data are also published by HM Treasury, with the latest quarterly release, the third quarterly data set from OSCAR, published on 21 March 2013. The data are accessible from HM Treasury's website.
The public sector finances bulletin is produced in partnership with HM Treasury (HMT). Further supporting information on public sector finances can be found on HMT's website. In addition, a range of public finance data are available from HMT’s Public Finances Databank.
Central government departmental expenditure data are subject to various validation processes and improve over time. They go through four main stages:
Stage 1: Initially, they are estimated using in-year reported data,
Stage 2: in the July following the completion of the financial year, departments update their full financial year estimates (but with no in-year profile), for publication in the Treasury’s Public Spending National Statistics annual publication. These estimates will be in line with the audited resource accounts for most departments,
Stage 3: for the autumn update of the Treasury’s Public Spending National Statistics these financial year estimates are updated,
Stage 4: in February the following year the winter update of the Treasury’s Public Spending National Statistics is published and the financial year estimates are further improved. All departments’ and devolved administrations’ accounts will have been audited and finalised by this stage.
Data for 2009/10 and 2010/11 are at stage 4.
Data for 2011/12 are at stage 3 and 2012/13 are at stage 1.
The local government data for 2009/10 and 2010/11 for local authorities are based on final outturns for receipts and expenditure. Data for 2011/12 and 2012/13 are based on either provisional estimates or forecasts and are subject to revisions when final outturn data become available.
Currently data for the public sector banking groups are only available for periods up to December 2012. Values for months from January 2013 onwards are ONS estimates. Consequently these, and the aggregates which include the impacts of financial interventions, may be revised substantially when actual data become available.
The public sector finances revisions’ policy was reviewed at the end of 2012 and subsequently updated to more fully reflect compilation processes. The public sector revisions’ policy (59.3 Kb Pdf) is available on the ONS website.
Historically, local government and public corporation net borrowing in the bulletin were historically derived in two different ways depending on the month to which the net borrowing related. Net borrowing for the most recent month (or months) was estimated from information on cash deposits and loans. Net borrowing for earlier months was calculated from estimates of accrued current expenditure, revenue and net investment in a manner consistent with National Accounts.
On occasions, these two approaches led to significant revisions (upwards and downwards) in the net borrowing when estimates originally arrived at through financial loans / deposit data were updated quarterly to reflect the latest information on accrued expenditure and revenue. Since January 2012 for local government and October 2012 for public corporations the methodology used to calculate quarterly net borrowing estimates has been modified to always use accrued current expenditure, revenue and net investment data. The cash deposits and loans data are only used to profile the monthly net borrowing within the quarterly estimates. It is expected that over time this approach will lead to less revisions to local government and public corporations net borrowing.
A further recent development which is expected to reduce the size of local government data revisions and improve the reliability of in-year local government data is the introduction of the Quarterly Revenue Outturn data collection by the Department for Communities and Local Government. These data, first collected during 2011/12, provide quarterly updates for the main aspects of local government accrued current expenditure. The Public Sector Finances bulletin has used these data in its estimates of in-year local government net borrowing since January 2012.
One indication of the reliability of the key indicators in this bulletin can be obtained by monitoring the size of revisions. Previously, analyses of revisions to the wider measures of public sector current budget, net borrowing, and net debt that include the impacts of financial interventions were presented in this bulletin. The sizeable revisions resulting from the replacement of imputed data by hard data for the public sector banking groups has meant that these revisions have become more prone to be statistically significant when tested. Given that the primary focus of users is on the ex-measures, it would be preferable to analyse and present revisions of these in the bulletin. As yet sufficiently long monthly time series are not available for the ex-measures to enable standard revisions analysis to be conducted on them.
|Revisions between first publication and estimate twelve months later|
|Latest monthly value||Average over the last five years||Average over the last five years (average absolute revision)|
|General Government Net borrowing, £m (-NNBK)||2,968||-808||1,571|
As general government net borrowing is quite close in terms of coverage to PSNB ex, it will in the interim be the subject of revisions analysis. The table shows summary information on the size and direction of revisions from first publication to one year later. The average of five years worth of such revisions is shown; for example – from those first published in June 2006 (for May 2006 to May 2011) first estimates. Please note that these indicators only report summary measures for revisions, the revised data may still be subject to measurement error.
A statistical test is applied to the average revision to determine whether it is statistically significantly different from zero. An asterisk (*) is used to indicate if a mean revision has been found to be statistically significant. A spreadsheet giving these estimates and the calculations behind the averages in the tables is available on the ONS website in the data section for this statistical bulletin.
Complete runs of series in this bulletin are available to download free of charge here. An electronic dataset is made available one working day after publication of the Public Sector Finances Statistical Bulletin. The dataset contains quarterly data consistent with the latest Public Sector Finances Statistical Bulletin, analysed by economic category and sub-sector.
Special arrangements apply to the Public Sector Finances, which is produced jointly with HM Treasury. A list of ministers and officials with pre publication access to the contents of this bulletin is available on request. In addition some members of the Treasury’s Fiscal Statistics and Policy (FSP) team will have access to them at all stages, because they are involved in the compilation or quality assurance of the data, and some members of the Treasury’s Communications team will see the bulletin, but only within the 24 hour pre-release period, because they place the data on the website.
Public sector finances data which supplement and extend the data provided in this bulletin have been available via the ONS Financial Statistics publication. However, publication of the Financial Statistics publication has ceased, with the last edition published on 12 July 2011.
Some public sector finance data series previously published in Financial Statistics are not available elsewhere. Data series in this category are found in the Financial Statistics tables 1.2A, 1.3A, 1.3B, 1.3C, 1.3D and 1.4A. Therefore, these tables will continue to be made available for download on the Public Sector Finances web page.
Tables 1.2A, 1.3A and 1.4A which are updated monthly will continue to be available monthly, published concurrently with the PSF Supplementary data, while Tables 1.3B, 1.3C and 1.3D will be available quarterly.
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: firstname.lastname@example.org
These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.
|David Bailey||+44 (0)1633 455668||Public Sector Financesemail@example.com|