The Public Sector Finances statistical bulletin 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.
On 12 June 2013, the UK Statistics Authority published its report on the statistical treatment of the cash transfers from the Bank of England Asset Purchase Facility Fund. The main recommendation of the review is that “any change to the PSF statistics should be preceded by a wider review of the statistical definition of PSNB ex and PSND ex to ensure that the treatment of the various financial interventions is as coherent and reasonable as possible in the short term, and that the longer term viability and relevance of the ‘ex’ measures is taken into account”. However, in line with the report this month’s release does provide more equal prominence to the measure of PSNB ex which excludes the impacts of the transfers from the Asset Purchase Facility and the transfer of the Royal Mail Pension Plan.
ONS announced a wide-ranging review of the Public Sector Finance statistics in last month’s bulletin and this review will take account of the concerns raised in the UKSA report. Details of proposed improvements to the Public Sector Finances statistical bulletin, and an implementation timetable for those implementations, will be a key output of the review, which is expected to conclude in Autumn 2013. Further details of the review can be found towards the end of this bulletin.
Figure 1a illustrates the cumulative monthly public sector net borrowing excluding the temporary effects of financial interventions and Figure 1b shows the same data but with the effects of the transfer from the Royal Mail Pension Plan (in April 2012) and the transfers from the BEAPFF (in January 2013 to March 2013) removed.
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||£ billion1(not seasonally adjusted)|
|May||April to May|
|PS Current Budget2||-7.4||-14.2||6.8||-10.9||-22.1||11.2|
|PS Current Budget ex APF 2,6||-11.3||-14.2||3.0||-18.7||-22.1||3.4|
|PS Net Investment3||1.4||1.4||0.0||2.7||-25.2||27.9|
|PS Net Investment ex RM3,5||1.4||1.4||0.0||2.7||2.2||0.5|
|PS Net Borrowing (PSNB ex)4||8.8||15.6||-6.9||13.6||-3.0||16.7|
|PS Net Borrowing (PSNB ex) ex RM and APF4,5,6||12.7||15.6||-3.0||21.4||24.3||-2.9|
|PS Net Debt (PSND ex)7||1,189.2||1,095.4||93.8||1,189.2||1,095.4||93.8|
|PS Net Debt as a % of annual GDP8||75.2||71.1||4.1||75.2||71.1||4.1|
As can be seen in Table 1, public sector net borrowing (PSNB ex) in May 2013 was £8.8 billion. This was benefited by £3.9 billion of cash transfers from the Asset Purchase Facility to Government. If these cash transfers are excluded then public sector net borrowing in May 2013 was £12.7 billion, which is £3.0 billion lower than public sector net borrowing in May 2012.
For the period April 2013 to May 2013, public sector net borrowing (PSNB ex) was £13.6 billion. If the Asset Purchase Facility cash transfers in April and May 2013 are excluded then public sector net borrowing for the period was £21.4 billion. This compares to a public sector net borrowing of £24.3 billion for the same period last year, excluding the effect of the Royal Mail Pension Plan transfer in April 2012.
May 2013 net borrowing includes an estimate of the one-off tax payments due to be received from Swiss banks. These payments are due to be made under a new tax cooperation agreement between the UK government and the Swiss authorities. The payments are currently estimated by the Office for Budget Responsibility (OBR) to be £3.2 billion and although the cash is anticipated to arrive over the coming year, under National Accounts rules the full cash amount is being accrued to May 2013 when the liability fell due. It should be noted that the £3.2 billion is the latest estimate and the final value of receipts may differ. Clearer information on the tax payments due to be revised should be available in Autumn 2013. Further details are available in the “Recent events and methodological changes” section.
It can be seen from the above paragraphs that public sector net borrowing (excluding cash transfers from the Asset Purchase Facility) was £3.0 billion lower in May 2013 and that the OBR estimate of tax payments from the Swiss banks recorded in May 2013 is £3 .2 billion. Therefore, if the tax cooperation agreement with Switzerland had not been struck then public sector net borrowing (excluding cash transfers from the Asset Purchase Facility) in May 2013 would be similar in level to that in May 2012.
The effect on net borrowing of the transfer in April 2012 of the historic liabilities and some of the assets of the Royal Mail Pension Plan (RMPP) has been revised down from £28.0 billion to £27.3 billion. The reduction follows clarification from Eurostat (the European statistical agency) that the £0.7 billion of the assets transferred which were in the form of property should be treated differently to the other transferred assets. The approach is that the property assets are still recorded within the £28 billion capital transfer to government but they are simultaneously recorded as government payments towards acquisition of a capital fixed asset. The effect is to reduce the estimated benefit to government net borrowing in April 2012 to £27.3 billion. When the property assets are sold then there is a positive effect on government net borrowing as the sale is recorded at the point of sale as disposal of a capital fixed asset. The measure of borrowing excluding the impacts of the transfers from the Royal Mail Pension Plan and the Asset Purchase Facility is, of course, unaffected by this.
The methodological improvement was announced in last month’s statistical bulletin and more information on this can be found in the “Recent events and methodological changes” section.
In this month’s publication there have been revisions to public sector net borrowing and public sector net debt for the time period between 1997/98 and 2012/13. The annual revisions vary in magnitude and direction and are due to a range of corrections and improvements that have been made as part of a process to align National Accounts data with that of this publication. Details of the revisions can be found in the “Revisions since the last bulletin” section, with more information on the background to the revisions available in the “Recent events and methodological changes” section.
The Office for Budget Responsibility (OBR) latest forecasts were that :
- PSNB ex in 2011/12 would be £126.0 billion;
- PSNB ex in 2012/13 would be £86.5 billion;
- PSNB ex in 2012/13 after removing the impacts of the transfer of the Royal Mail Pension Plan and the transfers from the Asset Purchase Facility would be £120.9 billion;
- PSND ex at the end of March 2013 would be £1,189.2 billion.
OBR Forecasts for 2013/2014 are shown in Table 2.
This statistical bulletin reports the latest estimates of outturn as :
- PSNB ex in 2011/12 was £118.5 billion;
- PSNB ex in 2012/13 was £85.0 billion;
- PSNB ex in 2012/13 after removing the impacts of the transfer of the Royal Mail Pension Plan and the transfers from the Asset Purchase Facility was £118.8 billion;
- PSND ex at the end of March 2013 was £1,181.1 billion
Table 2 'Latest Outturn Estimates vs OBR Forecasts' calculates the rate of increase/decrease between the outturn estimates for the period April 2013 to May 2013 and the outturn for the same period in 2012/13. As a comparison the table also shows the rate of increase/decrease between the OBR forecast for 2013/14 (published in March 2013) and the outturn for 2012/13.
As an example of how to interpret the table, the public sector current budget deficit is showing a fall of 50.6% between the initial estimates for outturn in the April 2013 to May 2013 period and the outturn in the same period in 2012/13. The comparable OBR forecast is for a full year reduction in the public sector current budget deficit of 7.0% between 2012/13 and 2013/14.
|United Kingdom||£ billion1 (not seasonally adjusted)|
|April - May||Forecast vs Outturn|
|2013/14||2012/13||Increase/ Decrease %||2013/14 OBR Forecast||2012/13 Outturn||Forecasted Increase/Decrease %|
|PS Current Budget (PSCB)2||-10.9||-22.1||50.6||-83.5||-89.8||7.0|
|PSCB excluding Asset Purchse Facility (APF) Transfers||-18.7||-22.1||15.5||-95.6||-96.2||0.6|
|PS Net Investment (PSNI)3||2.7||-25.2||110.7||24.2||-4.8||609.3|
|PSNI excluding Royal Mail Pension Plan (RMPP)||2.7||2.2||25.1||24.2||22.6||7.2|
|PS Net Borrowing (PSNB ex)4||13.6||-3.0||551.6||107.7||85.0||26.7|
|PSNB ex excluding (RMPP)||13.6||24.3||-43.9||107.7||112.3||-4.1|
|PSNB ex excluding RMPP and APF||21.4||24.3||-11.9||119.8||118.8||0.9|
|PS Net Debt (PSND ex)||1,189.2||1,095.4||8.6||1,286.4||1,181.1||8.9|
|PS Net Debt as a % of annual GDP 5,6||75.2||71.1||5.8||79.2||75.1||5.5|
In its 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.
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 basis the latest outturn estimates of Public Sector Net Borrowing (PSNB ex) in 2012/13 is £2.5 billion higher than for 2011/12.
It is important to remember that initial outturn estimates for 2012/13 are provisional and may be subject to sizeable revisions in later months. More information on the source and likely scale of future revisions to 2012/13 estimates can be found in the Revisions overview section.
For 2012/13, central government net cash requirement was £109.6 billion. This figure does not yet incorporate Bradford and Bingley and Northern Rock Asset Management (B&B and NRAM) data. Therefore, the appropriate figure for comparison from the OBR’s Budget 2013 forecast is £102.4 billion which is the forecast for CGNCR after the adjustment for B&B and NRAM.
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. There are many reasons why the outturn data in this publication may differ from the OBR forecasts. For instance, the OBR will have included in its forecasts its estimates of the impacts of certain pending ONS classification decisions which have yet to be implemented in the outturn data. The OBR commentary provides qualitative information to help users identify where differences may be expected.
The “Blue Book” is an annual National Accounts publication and the 2013 version is to be published in July with a consistent set of quarterly National Accounts being published on 27th June. It is an essential principle of the Public Sector Finances (as published in this bulletin) that they are based on National Accounts concepts, definitions and methodologies. However, although National Accounts and Public Sector Finances are conceptually aligned, over the last eight years or so the data in the different publications have diverged due to different revision policies in National Accounts and Public Sector Finances.
Both publications should be aligned to National Accounts classification decisions. Public Sector Finances has an open revisions policy meaning it takes on decisions from the National Accounts Classification Committee (NACC) as soon as possible.
National Accounts has an annual revisions round and for the past few years, the National Accounts have taken on major decisions from the NACC but not all decisions. Blue Book 2013 in July 2013 will deliver a major improvement in alignment between the publications.
While the majority of revisions have impacted on National Accounts there have been a number of Public Sector Finance revisions in this month’s bulletin as a consequence of the alignment work. These revisions are itemised in the section on “Revisions since the last bulletin”. More information on the methodological changes can be found in an article (184.9 Kb Pdf) on the alignment between National Accounts and Public Sector Finances. This article is being published in parallel to this statistical bulletin, on 21 June 2013, and is available on the ONS website.
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 BEAPFF. 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.
In 2012/13, there were £11.3 billion of transfers from the Asset Purchase Facility to HM Treasury. Of these £6.4 billion affected PSNB ex.
It is planned that transfers from the BEAPFF to the Exchequer will continue to take place on a regular monthly basis over the first half of 2013/14. In April 2013 and May 2013, £3.9 billion was transferred each month and all of this has impacted on PSNB ex as the transfer will be is below the 2013/14 annual limit for cash transfers from the Bank of England which can impact on net borrowing. The 2013/14 annual limit has been calculated, from the 2012/13 entrepreneurial income of the Bank, to be £12.3 billion. This means that if each monthly transfer is £3.9 billion (and for simplicity we assume there are no other cash transfers from the Bank of England) then the April, May and June transfers will impact in their entirety on the net borrowing measure, only £0.7 billion of the July transfer will impact and subsequent transfers within 2013/14 will have no effect on net borrowing. All cash transferred during 2013/14 will, however, impact on central government net cash requirement and net debt.
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.
The £2.3 billion April 2012 transfer from the final profits of the Special Liquidity Scheme is classified as a dividend payment. This means that central government revenue is increased in April 2012 by £2.3 billion, leading to the public sector current budget deficit and public sector net borrowing excluding temporary effects of financial interventions (PSNB ex) being suppressed in this month by £2.3 billion. There is no impact on public sector net borrowing including temporary effects of financial interventions (PSNB) as the transfer is within the public sector, as it is defined in this statistical measure.
In the January 2013 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.
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.
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. £240 million of refund payments took place in March 2013 and these have been recorded, under National Accounts rules, as current transfers to the private sector, which means that they 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.
In April 2012, the historic liabilities and some of the assets of the Royal Mail Pension Plan (RMPP) were transferred to government. The value of the RMPP assets transferred was £28 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 is recorded in the government finances.
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 to record a capital transfer of £28 billion to the government which has reduced public sector net borrowing in April 2012 by this amount.
This month, the effect on net borrowing of the transfer in April 2012 of the historic liabilities and some of the assets of the Royal Mail Pension Plan (RMPP) has been revised down from £28.0 billion to £27.3 billion. The reduction follows clarification from Eurostat (the European statistical agency) that the £0.7 billion of the assets transferred which were in the form of property should be treated differently to the other transferred assets. The approach is that the property assets are still recorded within the £28 billion capital transfer to government but they are simultaneously recorded as government payments towards acquisition of a capital fixed asset. The effect is to reduce the impact on government net borrowing in April 2012 to £27.3 billion.
When the property assets are sold then there is a positive effect on government net borrowing as the sale is recorded at the point of sale as disposal of a capital fixed asset. In February 2013 government sold some of the property received from the Royal Mail Pension Plan for £0.4 billion. Public sector net borrowing in February 2013 is therefore reduced by the £0.4 billion sale receipts. When the government sells the remaining property that it acquired from the Royal Mail Pension Plan it will record, at that point, capital receipts from the sale(s) which will further reduce public sector net borrowing.
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 for this is when the Swiss authorities will have calculated the liabilities and are expected to have begun to make regular payments to the UK. Therefore, this payment from the Swiss authorities will increase central government tax revenue in May and so suppress the public sector current budget deficit and net borrowing.
In January 2013, the Swiss authorities made an initial payment of £342 million to the UK Government which has been accrued to May 2013. The accrual date of May 2013 is based on when the Swiss authorities will have calculated the liabilities. The payments are currently estimated by the Office for Budget Responsibility to be £3.2 billion and although the cash is anticipated to arrive over the coming year, under National Accounts rules the full cash amount is being accrued to May 2013 when the liability fell due. Therefore, this bulletin records an estimated £3.2 billion payment from the Swiss authorities in May 2013. The payment has been recorded as a tax on income and wealth in Tables PSF3A and PSF3B.
HM Revenue and Customs (HMRC) has replaced the accounting system used for reporting PAYE and Class 1 NICs data for 2013/14 onwards. Parallel runs of the new system have been successful but there remains a risk that revisions to income tax data may be larger than normal due to the transition between the two systems.
More detailed information on the revisions is given below, but in terms of the major impacts on borrowing for the most recent years:
In 2010/11 and 2011/12, public sector net borrowing was revised downwards (on all measures of net borrowing) by £1.8 billion and £2.4 billion respectively. The largest impacts were due to:
- methodological changes to calculation of public corporation acquisitions and disposals of fixed capital assets, artistic originals and computer software has resulted in upward revisions of between £900 million and £1 billion a year.
- replacement of previous data on public corporation capital expenditure, gross trading surplus and subsidies with data from the Whole of Government Accounts resulting in a net impact of around £0.5 billion.
In 2012/13 all measures of net borrowing have been revised down by £0.1 bn. While the above 2010/11 and 2011/12 method changes continued, there were also;
- upward revisions to central government of £1 billion due largely to revisions to previous tax receipt estimates;
- upward revisions to local government of £0.5 billion due to updated capital and current expenditure data as well as an offsetting revision to the Housing Revenue Account imputed subsidies (see below).
This month there are a large number of revisions to both historic and recent data. Data have been revised back to 1997/98 and the impact on net borrowing and net debt are shown in Table R.
There are broadly three types of revision. These are:
implementation of methodological improvements in Public Sector Finances and National Accounts;
alignment of Public Sector Finances with National Accounts where National Accounts had previously incorporated methodologies that had not been taken on in Public Sector Finances;
inclusion of latest data where sources have been updated
Major revisions in the first category are:
change in treatment of central government road maintenance expenses; previously a road renewals methodology was used in Public Sector Finances but a depreciation model is now being adopted so as to be in line with the treatment of other fixed assets and statistical best practice. The revisions are neutral in central government net borrowing terms, but there are movements between current and capital expenditure.
change in methodology for imputation of taxes and subsidies resulting from the trade in Renewal Obligation Certificates; the revised methodology has resulted in upward revisions to taxes on production since 2002/03, offset by revisions to subsidies on production. The revision is neutral in terms of central government net borrowing.
correction of previous error in treatment of the purchase of cherished license plates has resulted in downward revisions to central government net borrowing, since 1997/98, of around £200 million a year.
methodological changes to calculation of public corporation acquisitions and disposals of fixed capital assets, artistic originals and computer software has resulted in upward revisions of between £900 million and £1 billion a year.
Major revisions in the second category:
change in calculations of interest and dividends received and paid where National Accounts had implemented a methodology using improved data sources that previously had not been implemented in Public Sector Finances.
change in calculations of local and central government debt to incorporate methodological improvements previously implemented in National Accounts.
Major revisions in the third category:
replacement of previous data on public corporation capital expenditure, gross trading surplus and subsidies with data from the Whole of Government Accounts.
inclusion of latest data from public corporation accounts for recent years.
£700 million revision to 2012/13 subsidies for the Housing Revenue Account which is offsetting between local government and public corporations and so public sector net borrowing neutral.
When National Accounts publishes its latest figures on 27 June there will be revisions to GDP. Although the aligned public sector finance data are being published in this bulletin the new GDP data cannot be taken on until after National Accounts has been published. This means that any aggregates calculated as a percentage of GDP are likely to be revised again next month.
More details on the background behind the revisions this month are available in a short article (184.9 Kb Pdf) on the alignment between National Accounts and Public Sector Finances.
|United Kingdom||£ billion1 (not seasonally adjusted)|
|Net Borrowing||Net Debt|
|Financial Years||Central government||Local government||Non-financial PCs||PSNB ex (all measures)||PSND ex||PSND ex as % of GDP2|
April 2013 public sector net borrowing excluding temporary effects of financial interventions has been revised down by £1.4 billion. This is in large part due to upward revisions of £2.1 billion to central government receipts and an off-setting £0.7 billion reduction in local government expenditure.
Income and capital gains tax receipts and national insurance contributions for April 2013 have collectively been revised upwards by £2.1bn. This reflects that outturn was higher than original estimates. Income tax receipts are often quite unpredictable at this time of the year as they contain returns from volatile bonuses.
As foreshadowed in last month’s bulletin there has been a £8.5 billion upward revision to central government current grants to local government in April 2013. These grants are all within the Public Sector and so are public sector net borrowing neutral.
This bulletin contains the third estimate of public sector borrowing for the 2012/13 financial year. This 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 two to three 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 three 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 three to four 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 February audited data for public corporations’ accounts are obtained and fed through into the statistics.
Even after all audited data for the public sector are available, there may still be revisions to reflect for example the implementation of classification decisions and other methodological changes.
The implication is that the earliest estimates of outturn for 2012/13 will be subject to revision as revised data are 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 to May 2013 the estimate for 2011/12 was fairly steady at between £120.9 billion and £121.6 billion. Methodological and data revisions implemented in this month’s publication have further revised PSNB ex for 2011/12 to £118.5 billion. For more information on the revisions made this month to historic data see the Revisions section of the bulletin.
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.
It is important to note that data for the public sector banking groups (such as Royal Bank of Scotland and Lloyds Plc) are only available at six monthly intervals. Thus the net debt, net cash requirement and net borrowing of public sector banking groups are currently only based on outturn figures up until December 2012, with ONS estimates being included for subsequent months.
ONS estimates for the public sector banks are often substantially revised once outturn data become available. Given this and the potential size of the impact of the public sector banks on certain public sector finance statistics, particular caution should be exercised when interpreting full year PSNB, PSND and PSNCR data prior to outturn data for the public sector banking groups becoming available. Public sector bank data, for the first six months of the calendar year (January to June), are normally available to be incorporated into the bulletin around September and the last six months (July to December) around March. This means that, for the public sector finance statistical measures which include the public sector banks, reliable data on the previous financial year are not available until the Autumn.
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 3 April 2013 reports that in 2012 the general government deficit (or net borrowing) was 6.3% of GDP, and at the end of December 2012 the general government gross debt was 90.0% 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 March 2013 were published on the ONS website 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 with 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 May 2013, public sector net borrowing, excluding the temporary effects of financial interventions (PSNB ex) and removing the impact of the BEAPFF cash transfers, was £12.7 billion. This was £3.0 billion lower than in May 2012, when net borrowing was £15.6 billion. If the impact of the BEAPFF cash transfers are included then public sector net borrowing in May 2013 was £6.9 billion lower than in May 2012.
In 2012/13, the public sector net borrowing, excluding the temporary effects of financial interventions (PSNB ex) and removing the impact of the BEAPPF cash transfers and the Royal Mail Pension Plan transfer, was £118.8 billion. This was £0.2 billion higher than in 2011/12, when net borrowing was £118.5 billion. If the impact of the BEAPFF cash transfers and Royal Mail Pension Plan transfer are included then public sector net borrowing in 2012/13 was £33.5 billion lower than in 2011/2012.
The £0.2 billion drop in PSNB ex between 2011/12 and 2012/13, once BEAPFF cash transfers and the Royal Mail Pension Plan transfer impacts are removed, is composed of a £6.1 billion reduction in net investment and a £6.3 billion increase 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 (that is, 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 amount.
In the UK the public sector consists of four sub-sectors: central government, local government, non-financial public corporations and financial public corporations (that is, public sector banking groups). Much the largest share of the public sector net borrowing relates to central government transactions, as shown in Table 3 ‘Sectoral Breakdown of Public Sector Net Borrowing’. A time series presentation of these same data can be found in table PSF2 of this bulletin.
|United Kingdom||£ billion 1(not seasonally adjusted)|
|May||April - May|
|Non-Financial Public Corporations 2||0.0||0.0||0.0||-0.2||-0.1||-0.1|
|PS Net Borrowing (PSNB ex)||8.8||15.6||-6.9||13.6||-3.0||16.7|
|Public Sector Banking Groups||1.8||-2.1||3.9||3.5||-2.0||5.5|
|PS Net Borrowing (PSNB)||10.5||13.5||-2.9||17.2||-5.0||22.2|
At the end of May 2013 the public sector net debt excluding the temporary effects of financial interventions (PSND ex) was £1,189.2 billion (75.2% of GDP). This compares with a PSND ex of £1,095.4 billion (71.1% of GDP) at the end of May 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 (that is the cost to the issuer at redemption) and consolidated (that is 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 May 2013, central government accrued current receipts were £46.9 billion, which was £8.1 billion, or 21.0%, higher than in May 2012, when central government current receipts were £38.7 billion.
For the period April 2013 to May 2013, central government accrued current receipts were £97.7 billion, which was £13.8 billion, higher than the same period the previous year.
April 2013 and May 2013 current receipts have been bolstered by £7.8 billion of dividends from the Bank of England Asset Purchase Facility Fund (BEAPFF). However, April 2012 current receipts were also bolstered by dividend payments, in this case £2.3 billion of dividends from the Special Liquidity Scheme (SLS). If the effect of the SLS and BEAPFF transactions were to be excluded then central government accrued current receipts for the period April 2013 to May 2013 would be £8.3 billion, or 10.2%, higher than in the same period the previous year.
In 2012/13, central government accrued current receipts were £547.0 billion, which was £9.7 billion, or 1.8%, higher than in 2011/12, when central government current receipts were £537.3 billion.
The £9.7 billion increase in central government accrued current receipts between 2011/12 and 2012/13 includes a £6.9 billion increase in interest and dividends, a £2.4 billion increase in VAT, a £2.4 billion increase in income tax and national insurance contributions and a £3.0 billion decrease in corporation tax.
Although receipts have increased by £9.7 billion between 2011/12 and 2012/13 there was a SLS dividend payment of £2.3 billion in April 2012 and BEAPFF dividend payments of £6.4 billion in January and February 2013. If the effect of the SLS transaction and BEAPFF transactions were to be excluded then central government would have increased by £1.0 billion between 2011/12 and 2012/13.
For further details on the SLS and BEAPFF dividend payments see the ‘Recent events and methodological changes’ section.
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.
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 Figure 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 May 2013, central government accrued current expenditure was £51.5 billion, which was £2.4 billion, or 4.5%, lower than May 2012, when central government current expenditure was £53.9 billion.
For the period April 2013 to May 2013, central government accrued current expenditure was £113.7 billion, which was £6.6 billion, or 6.2% higher than the same period the previous year. Within this, net social benefit expenditure was £32.3 billion, which was £0.2 billion, or 0.5% higher than in the same period in 2012/13
Monthly expenditure between 2013/14 and 2012/13 can be difficult to compare as there have been a number of changes to the way that local authorities are funded. In 2012/13 local authorities received a almost all their funding from CLG through redistributed business rates rather than the Revenue Support Grant. From 2013/14 local authorities will retain half of the business rates they collect with the remainder redistributed through the Revenue Support Grant. In 2011/12 and earlier years the redistributed rates were distributed in multiple, near equal sized, payments throughout the year. By contrast in 2012/13, as in earlier years, the bulk of the Revenue Support Grant has been paid in April with a small balance paid later in the year. Additionally the Revenue Support Grant in 2013/14 includes a number of grants that were paid by other departments in 2012/13, including the one to fund Council Tax benefit localisation. This means that central government current expenditure year-on-year growth for April is very high at 17.0% while year-on-year growth in other months will, generally, be much lower.
In 2012/13, central government accrued current expenditure was £630.3 billion, which was £11.2 billion, or 1.8%, higher than in 2011/12, when central government current expenditure was £619.1 billion.
The £11.2 billion increase in central government accrued current expenditure between 2011/12 and 2012/13 is composed of a £10.1 billion increase in net social benefits (largely pension benefits), a £0.7 billion decrease in interest payments and a £1.9 billion increase in other current expenditure. The increase in year-on-year spending on Net Social Benefits is mainly due to the uprating of benefits. Benefits, uprated in line with the Consumer Price Index (CPI), were uprated by 5.2% in 2012/13. This contrasts with an equivalent figure of 2.2% in 2013/14 - which partly explains the low growth in net social benefits in the period April 2013 to May 2013 outlined above.
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. On this basis, the total accrued current expenditure excluding debt interest for 2012/13 was £583.3 billion, which was £11.9 billion, or 2.1%, higher than in 2011/12.
The profile of accrued Central Government expenditure is broadly flat through the year as can be seen in Figure 3 and Figure 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 May 2013, central government net investment was £1.9 billion, which was the same as in May 2012.
For the period April 2013 to May 2013, central government net investment was £4.3 billion, which was £27.3 billion, higher than the same period the previous year.
April 2012 net investment was negative (that is a surplus) thanks to the transfer of the historic liabilities and some of the assets of the Royal Mail Pension Plan. This transfer resulted in a £27.3 billion reduction to central government net investment. If the effect of the transfer were to be excluded then central government net investment for the period April 2013 and May 2013 would be the same as between April 2012 and May 2012.
For details of the Royal Mail Pension Plan transfer see the ‘Recent events and methodological changes’ section.
In 2012/13, central government net investment was £-2.9 billion, which was £25.9 billion lower than in 2011/12, when central government net investment was £23.0 billion.
If the effect of the Royal Mail Pension Plan transfer were to be excluded then central government net investment for 2012/13 would be £24.5 billion, which would be £1.4 billion higher than in 2011/12.
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 transfers to and from the private sector and other parts of the public sector. Capital transfers 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 May 2013, central government net cash requirement (CGNCR) was £5.8 billion, which was £7.5 billion, or 56.5%, lower than in May 2012, when there was a CGNCR of £13.3 billion.
For the period April 2013 to May 2013, central government net investment was £4.3 billion, which was £27.3 billion, higher than the same period the previous year.
For the period April 2013 to May 2013, CGNCR was £8.2 billion, which was £1.8 billion, or 28.5%, higher than in the same period the previous year, when there was a CGNCR of £6.4 billion.
The effects of;
the Royal Mail Pension Plan transfer and subsequent sale of assets,
the transfer of the Special Liquidity Scheme final profits, and
the 4G Spectrum sale
all had the effect of driving down CGNCR in 2012/13. The transfers between the BEAPFF and Government similarly drive down CGNCR in 2012/13 and 2013/14.
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 31% 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 45% of GDP at the end of March 2008 to 75% of GDP at the end of March 2013.
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 Figure 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 Figure 7. Between 1998/99 and 2000/01, when public sector net debt was falling, net borrowing cumulatively over the year was negative (that is, there was a surplus), but before and after this period the net borrowing was positive (that is, there was a deficit). Between 2003/04 and 2007/08 net borrowing was fairly static, varying between £34 billion and £42 billion, but with the onset of the financial crisis in late 2007 net borrowing rose sharply to a peak of £157 billion in 2009/10 before falling a little to £139 billion in 2010/11 and then further to £119 billion in 2011/12 and £85 million in 2012/13 (or £119 billion excluding the Royal Mail Pension Plan transfer and the BEAFF transfers).
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 PSF 11 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 (that is, 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’.
Table 4 compares the key measures of PSNB and PSND, and related statistics, for the first two months of 2013/14 with the first two months of 2012/13. It should be noted that 2013/14 figures for the public sector banking groups are ONS estimates and so significant revisions can occur once the 2013/14 outturn data become available.
|United Kingdom||£ billion1 (not seasonally adjusted)|
|May||April - May|
|PS Current Budget2||-9.2||-12.1||2.9||-14.4||-20.1||5.7|
|PS Net Investment3||1.4||1.4||0.0||2.7||-25.1||27.9|
|PS Net Investment ex RM 3,5||1.4||1.4||0.0||2.7||2.2||0.5|
|PS Net Borrowing (PSNB)4||10.5||13.5||-2.9||17.2||-5.0||22.2|
|PS Net Borrowing (PSNB) ex RM 4,5||10.5||13.5||-2.9||17.2||22.3||-5.1|
|PS Net Debt (PSND)6||2,217.9||2,134.5||83.4||2,217.9||2,134.5||83.4|
|PS Net Debt as a % of annual GDP 7||140.3||138.6||1.7||140.3||138.6||1.7|
Public sector net borrowing including the temporary effects of financial interventions (PSNB) covers all public sector bodies and so the cash transfers from the Bank of England Asset Purchase Facility Fund (BEAPFF) to Government have no impact on PSNB. This is as the transfers are within the public sector and not between the public and private sector. However, in the case of the transfer of the Royal Mail Pension Plan this does impact on PSNB as the historic pension assets and liabilities were transferred from a pension fund (classified outside the public sector) to the Government. The impact of the Royal Mail Pension Plan transfer is shown in Table 4.
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 May 2013 was £2,217.9 billion (140.3% of GDP), this compares with a public sector net debt excluding the temporary effects of financial interventions of £1,189.2 billion (75.2% 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 £972.0 billion at the end of June 2013. 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 May 2012 and May 2013 the public sector net debt (PSND) increased by £83.4 billion from 138.6% of GDP to 140.3% of GDP.
As can be seen in table PSF1, the 2012/13 public sector net borrowing including the temporary effects of financial interventions is £68.4 billion which is £16.6 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.
As announced in last month’s bulletin and within the recently released National Accounts workplan, ONS have begun a review of Public Sector Finances. This review is expected to conclude in Autumn 2013 after considering a number of broad presentational issues in the light of the changing demands on Public Sector Finances. The drivers and the scope of the review are set out below.
Public Sector Finances are a complex area of statistics and the bulletin is therefore a difficult bulletin for non-expert users to follow. In addition, the links between the Maastricht debt and deficit measures and the UK specific measures are split over two publications which has caused problems for some users. As part of our commitment to continuously improving our service to users, during 2013 we plan to review the presentation of these statistics looking at:
- The balance in the bulletin between different measures and how best to present a meaningful narrative to users on changes in public sector debt and borrowing;
- A review of the methodology underpinning the implementation of the ex-measures, their ongoing usefulness to users and how they fit into an overarching presentation of debt and borrowing;
- The readability and ease of understanding of these key statistics;
- How we inform users and provide meaningful information surrounding one-off factors;
- Increasing the amount of underlying data available to aid analysis of trends in Public Sector Finance Statistics.
We will discuss with users over the Summer their views on the bulletin and these issues.
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 & 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.
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 its designation as National Statistics confirmed.
The UK 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 2012/13, there have been three major transfers which have impacted substantively on the Public Sector Finances:
the transfer of the historic liabilities and some assets of the Royal Mail Pension Plan to Central Government;
the transfer from the Bank of England to the Treasury of the final profits of the Special Liquidity Scheme;
the transfer of cash from the Bank of England Asset Purchase Facility to HM Treasury.
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. As part of Blue Book 2013, the annual National Accounts publication, a process of alignment has taken place between National Accounts and Public Sector Finances. This has reduced significantly the historic differences between National Accounts and Public Sector Finances. As a result of this work the figures in this monthly publication are largely consistent with the National Accounts figures due to be published on 27 June 2013, for more details of the alignment work and the existing differences between Public Sector Finances and National Accounts see the ONS article on the subject.
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 3 April 2013 . The next bulletin will be published on 2 October 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 fourth quarterly data set from OSCAR, published on 21 June 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 public finance data are available from the Public Finances Databank which can be found on the Office for Budget Responsibility's website.
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. These revisions are not normally included in the Public Sector Finances statistical bulletin until the September release.
Data for 2009/10, 2010/11 and 2011/12 are at stage 4 and data for 2011/12 are at stage 3.
Data for 2012/13 and 2013/14 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 (207 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)||8,753||-907||1,650|
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: email@example.com
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 Financesfirstname.lastname@example.org|