The PSF Statistical Bulletin, is published jointly by ONS and HM Treasury on a monthly basis, and provides the latest available measures for key public sector financial statistics such as Public Sector Current Budget (PSCB), Net Borrowing (PSNB), Net Debt (PSND) and PSND as a percentage of GDP. These key indicators are provided on two bases. One set includes the temporary effects of financial interventions made in response to the financial crisis that began in 2007, such as the establishment of public ownership/control of several major banking groups. An alternative set of indicators, the so-called ‘ex-measures’, excludes the temporary effects of financial interventions.
ONS and HM Treasury will be holding a public workshop on Public Sector Finance statistics on the afternoon of the 22 February 2012. The workshop will be held at HM Treasury in central London and will cover data interpretation and uses of existing data outputs as well as consultation on plans for future outputs. If you are interested in attending then please email email@example.com for more information.
|January||April – January||Difference|
|Not seasonally adjusted: £ billion1|
|Net debt (% annual GDP)2||63.0||58.3||4.7|
Net debt at the end of the period
Source: Office for National Statistics
|January||April – January||Difference|
|Not seasonally adjusted: £ billion|
|Public sector net investment||4.0||4.0||18.6||25.9||-7.3|
|Public sector current budget||11.8||9.2||-74.9||-83.2||8.4|
|Public sector net borrowing||-7.8||-5.2||93.5||109.1||-15.7|
|Not seasonally adjusted: £billion|
|Excluding financial sector interventions||Including financial sector interventions|
|current||sector net||at end of||current||sector net||at end of|
Fiscal indicators PSNB and PSND are the same including and excluding financial interventions before 2007/08.
Source: Office for National Statistics
the public sector current budget was in surplus by £11.8 billion; this is a £2.5 billion higher than in January 2011, when there was a surplus of £9.2 billion;
public sector net borrowing was -£7.8 billion; this is £2.5 billion lower net borrowing than in January 2011, when net borrowing was -£5.2 billion;
public sector net debt at the end of January 2012 was £988.7 billion (63.0 per cent of GDP). This compares to £869.1 billion (58.3 per cent of GDP) at the end of January 2011;
The central government net cash requirement was -£16.3 billion, a £0.8 billion higher net cash requirement than in January 2011, when there was a net cash requirement of -£15.5 billion.
the public sector current budget was in surplus by £14.7 billion; this is £2.7 billion higher than in January 2011, when there was a surplus of £12.0 billion;
public sector net borrowing was -£10.7 billion; this is £2.7 billion lower net borrowing than in January 2011, when net borrowing was -£8.0 billion;
public sector net debt at the end of January 2012 was £2311.6 billion (147.3 per cent of GDP). This compares to £2234.2 billion (150.0 per cent of GDP) as at the end of January 2011.
Monthly data can be volatile, so it can be misleading to read too much into one month’s data. The following paragraphs give information on the financial year to date and comparisons with the corresponding period of the previous financial year.
the public sector current budget was in deficit by £74.9 billion; this is £8.4 billion lower deficit than in the same period of 2010/11, when there was a deficit of £83.2 billion;
public sector net borrowing was £93.5 billion; this is £15.7 billion lower net borrowing than in the same period of 2010/11, when net borrowing was £109.1 billion;
The central government net cash requirement was £88.4 billion, a £20.4 billion lower net cash requirement than in the same period of 2010/11, when there was a net cash requirement of £108.8 billion.
the public sector current budget was in deficit by £46.7 billion; this is a £16.0 billion lower deficit than in the same period of 2010/11, when there was a deficit of £62.7 billion;
public sector net borrowing was £65.3 billion; this is £23.0 billion lower net borrowing than in the same period of 2010/11, when net borrowing was £88.3 billion.
The sale of Northern Rock plc to Virgin Money Holdings (UK) Ltd took place on 1 January 2012. The impact of this sale is to move Northern Rock plc outside of the public sector from this date. The £747 million that the government received in January for Northern Rock has reduced the central government net cash requirement by this amount and can be seen in Table PSF6 as a negative value in the “net acquisition of company security” line. Although cash has been received the impact on PSND ex is actually to increase it by £653 million. This is due to the different ways permanent and temporary effects of financial interventions are treated in PSND ex. A capital transfer of £1.4 billion made from government to Northern Rock in 2009 was treated prior to the sale of Northern Rock as a temporary effect of the financial interventions and so excluded from PSND ex. Following the sale the permanent effect on the public sector finances has become known and this permanent effect on public sector net debt is recorded as the difference between the sale value and the original capital transfer. It should be noted that the terms of the sale include some deferred payment elements and when these are received the proceeds will reduce the amount of this permanent effect on net debt.
Historically, January is always a month when high tax receipts are recorded due to self assessment returns and quarterly corporation tax figures driving up the total government revenue.
Following Royal Assent for the Localism Bill, on 21 November 2011 the Department for Communities and Local government (CLG) has consulted on the payments that will be required between central and local government for the implementation of self-financing for council housing. Self-financing will commence in April 2012 following the abolition of the Housing Revenue Account subsidy system. These transactions are due to take place in March 2012. Details can be found at CLG's website
ONS will make a classification decision on any effects of these transactions within the public sector on public sector net borrowing and its components in due course.
The transactions will involve large movements in financial assets which, as they are all within the public sector, will not affect the public sector net cash requirement. However, there are likely to be significant but uncertain sectoral effects, in particular on the central government net cash requirement (CGNCR). CLG estimates that Local Authorities will transfer £13.7bn to Central
Government and Central Government will reduce Local Authority borrowing by £5.2bn. This could produce a net reduction of the CGNCR by £8.5bn. However, Local Authorities may borrow some or all of their side of the transactions from the Public Works Loans Board (PWLB). If all £13.7bn were borrowed from the PWLB then the CGNCR would increase by £5.2bn.
In September 2011, Government announced that PWLB rates for transactions related to self-financing of council housing would be set at a reduced rate.
The one-off Bank Payroll Tax boosted accrued receipts of taxes on production by £3.5 billion in April 2010. The new Bank Levy is expected to boost accrued receipts of 'other taxes' by £2.4 billion in the 2011/12 financial year, £0.7 billion of this has been accrued to receipts in July 2011 and £0.2 billion accrued to each subsequent month. Both these taxes should be taken into account when making comparisons between the year to date positions of 2011/12 and 2010/11 for central government receipts and for aggregates which include receipts such as current budget and net borrowing.
As explained in background note 17, a review has been undertaken of the correct treatment in National Accounts of government receipts following the sale of licenses in 2000 which granted mobile phone companies exclusive use of parts of the spectrum for third generation mobile phone services. The review concluded that the UK should record these receipts as a sale of an asset rather than as rental payments and this decision will be reflected in the next Public Sector Finances bulletin to be released on 21 March 2012. There will be no impact on public sector net debt, but public sector borrowing will increase by approximately £1billion for every year since 2000/01, and public sector borrowing in 2000/01 will reduce by approximately £21 billion.
ONS are aware that the current methodology for accruing the cash paid by government for gilt coupons is an overly simplistic one and not fully in line with international National Accounts guidance. ONS and HMT are currently looking at introducing an improved methodology of accruing these gilt coupon payments. When this is done it will have no impact on public sector net debt or net cash requirement but will impact on central government accrued current expenditure and therefore public sector net borrowing. The impacts from this methodological improvement on public sector net borrowing could be both positive and negative. More information on this development will be provided once it is available.
Table PSF10R presents the latest revisions to key aggregates. 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 financial interventions (PSNB ex) has been revised down by £2.1 billion for the period April to December 2011. This net revision comprises of a downward revision to local government net borrowing of £2.2 billion and an upward revision to central government net borrowing of £0.1 billion.
The local government revisions are mainly due to significantly reduced estimates for the net investment made in 2011/12 by local authorities following the latest information from the Quarterly Capital Payments Return. These reductions in net investment estimates have been offset to a small degree by new estimates for local authority expenditure on goods and services from the Quarterly Revenue Outturn which have led to a modest upward revision in current expenditure.
Public sector net borrowing in 2010/11 has been revised downward by £346 million due to a correction that has been made to previously recorded data on accrued interest for student loans.
A summary quality report 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.
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.
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, from this date Northern Rock plc is no longer included in the data for the public sector banking groups within this bulletin. Further information on the impact of the sale can be found in the Special Factors section of this bulletin. It should be noted that Northern Rock (Asset Management) plc is still within the public sector and continues to be included within the data of this bulletin.
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.
Impact of financial interventions
A measure of public sector borrowing that excludes the effect of temporary financial interventions, PSNB ex, was announced in the 2009 Pre Budget Report. The definition of the parallel measure of net debt, PSND ex, was also aligned. The impact of financial interventions on public sector net borrowing (PSNB) and public sector net debt (PSND) over quarterly periods is summarised in Appendix C data table. Monthly series for PSNB ex and PSND ex and the public sector current budget on an excluding basis are also provided in this bulletin (see Table PSF1). As part of the process of full inclusion of data for the public sector banking groups the methodology for accounting for depositor compensation was reassessed in January 2011. The convention on the treatment of the HM Treasury component of the compensation for Bradford and Bingley depositors as discussed on page 3 of the methodology article (166.8 Kb Pdf) was changed, so that this compensation no longer adds to PSNDex.
A guide 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 government, monthly estimates of the current budget are obtained directly from data on transactions in current receipts and expenditures. For local government and 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, e.g. 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 (113 Kb Pdf) , 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
The Office for Budget Responsibility (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 OBR’s Economic and Fiscal Outlook of 29 November 2011, updated its previous forecasts of March 2011. The latest OBR forecasts (excluding temporary effects of financial sector interventions) for the financial year 2011/12 are:
• public sector current budget: a deficit of £99 billion;
• public sector net borrowing of £127 billion; and
• public sector net debt: 67.5 per cent of GDP at end March 2012.
The OBR’s Forecast Evaluation Report (13 October 2011) compared OBR’s forecasts for 2010/11 with the provisional outturn figures as published in the Public Sector Finances bulletin of 21 September 2011.
The UK Statistics Authority (UKSA) recently conducted an assessment of the Public Sector Finances Statistical Bulletin to ensure that the Bulletin and its compilation methods fully comply with all the requirements of the National Statistics Code of Practice. A report of their findings was published on 3 November.
ONS is grateful to users who provided views on the structure, content and format of this statistical bulletin in a recent survey. A summary of the responses is available.
The Public Sector Finances 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 in September 2011.
The definition of general government net borrowing to be reported for the Excessive Deficit Procedure (EDP) is different to that used for the National Accounts. A regulation requires that payments on swaps are treated as interest payments; for all other purposes, including the National Accounts and the Public Sector Finances Statistical Bulletin, such payments are shown as financing items, consistent with ESA95.
The definitions of the deficit also differ in the treatment of the government’s receipts from the sale of licences which granted mobile phone companies exclusive use of parts of the spectrum for third generation mobile phone services. UK interpretation of ESA95 has been to treat these receipts as rental payments for use of an asset. ONS has recently reviewed the UK treatment in the context of the Eurostat decision of 2010 that the government is actually selling an asset and should record the receipts as negative capital in the year of sale. The review decided that it was appropriate for the UK to amend its treatment of the spectrum receipts to align with the international consensus. This decision has now been implemented in the September report on Government Deficit under the Maastricht Treaty. Implementation in the Public Sector Finances will follow later in 2011/12.
Since April 2011, Eurostat has amended the UK estimates of EDP deficit and debt to reflect an alternative treatment of data for Northern Rock Asset Management plc and Bradford and Bingley plc. ONS classifies these as financial corporations within the public sector, but Eurostat's view is that they are defeasance structures and should be classified to the central government sector. The appropriate classification for these entities is currently under review.
Tax receipts data published in this bulletin are presented in terms of broad tax categories (e.g. Income Tax, VAT). For more detail 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 PSF6 of the bulletin.
Data from HM Treasury’s COINS database underlie the Central Government expenditure figures provided in this publication. 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. Subsequently, updated COINS data for 2006/7 to 2009/10 and latest outturn data for 2010/11 were released in September 2011. In-year quarterly COINS data are also published by HM Treasury, with the latest quarterly release made on 21 December 2011. 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, and 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 the Public Expenditure Outturn White Paper is published, which gives department’s updates of full financial year estimates, but no in-year profile and will be based on audited resource accounts for most departments;
stage 3 – following the autumn publication of OBR’s Economic and Fiscal Outlook these financial year estimates are updated;
stage 4 – in February the following year the Public Expenditure Statistical Analyses National Statistics Outturn updates are 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 2008/09 and 2009/10 are at stage 4
Data for 2010/11 are at stage 4 and 2011/12 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 are based on either provisional estimates or forecasts and are subject to revisions when final outturn data become available.
Previously to the bulletin of 24 January 2012, local government net borrowing in the bulletin was derived in two different ways depending on the month to which the net borrowing related. Local government net borrowing for the most recent month (or months) was estimated from information on local government cash deposits and loans. Local government 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, the two methodology approach led to significant revisions (upwards and downwards) in local government data when estimates originally arrived at through financial loans / deposit data were updated quarterly to reflect the latest information on accrued expenditure and revenue.
These revisions in local government data were unhelpful when trying to capture the latest position of public sector borrowing. A development which is expected to reduce the size of these data revisions and improve the reliability of in-year local government data is the new quarterly data being collected by the Department for Communities and Local Government via their Quarterly Revenue Outturn. 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, since January 2012, to estimate the local government net borrowing consistently for all time periods from accrued current expenditure, revenue and net investment data.
Table PSF10R presents the latest revisions to key aggregates. The largest revisions normally occur in the month following the first release, when estimated and provisional data are replaced with firmer information. Currently data for the public sector banking groups are only available for periods up to December 2011. Values for months from January 2012 onwards are imputed ONS estimates. Consequently these, and the aggregates which include the impacts of financial interventions, may be revised substantially when new data become available.
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.
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 below 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 December 2005 (for November 2005 to November 2010) first estimates. Please note that these indicators only report summary measures for revisions, the revised data may still be subject to measurement error.
|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)||-7348||-608||1,476|
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. Alternatively, for low-cost tailored data call Online Services on 01329 444366 or email firstname.lastname@example.org. Data underlying the graphs in the Statistical Bulletin are available on request.
An electronic dataset is normally 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.
Details of the policy governing the release of new data are available from the Media Relations Office. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
You may use or re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence, or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: email@example.com
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 recently 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 1.1D, 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 1.1D, 1.2A, 1.3A and 1.4A which are updated monthly will continue to be available monthly, published concurrently with the PSF Supplementary data, whilst Tables 1.3B, 1.3C and 1.3D will be available quarterly.
Tel David Bailey 01633 455668
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
|David Bailey||+44 (0)1633 455668||Public Sector Financesemail@example.com|