Public sector finances, UK: February 2024

• Public sector net borrowing excluding public sector banks (borrowing) was £8.4 billion in February 2024, £3.4 billion less than in February 2023.

• Borrowing in the financial year-to-February 2024 was £106.8 billion, £4.6 billion less than in the same eleven-month period a year ago, and the lowest for four years in nominal terms.

• Public sector net debt excluding public sector banks (debt) was £2,659.4 billion at the end of February 2024, £157.4 billion more than at the end of February 2023.

• Debt was provisionally estimated at around 97.1% of the UK's annual gross domestic product (GDP) at the end of February 2024, 2.3 percentage points more than at the end of February 2023, and remains at levels last seen in the early 1960s.

• Excluding the Bank of England, debt was £2,423.5 billion, or around 88.5% of GDP, £236.0 billion (or 8.6 percentage points) lower than the wider measure.

• Public sector net worth excluding public sector banks was in deficit by £667.8 billion at the end of February 2024; this compares with a £582.8 billion deficit at the end of February 2023.

• Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £8.6 billion in February 2024, £1.9 billion more than in February 2023.

The public sector spent more than it received in taxes and other income in February 2024, requiring it to borrow £8.4 billion. This was £3.4 billion less than in February 2023.

Warm Home Discount Scheme

This month we have recorded the Warm Home Discount Scheme, as outlined on GOV.UK, for the first time. The Warm Home Discount Scheme in England and Wales acts to collect additional income from domestic customers through increased energy bills and to redistribute this to eligible low-income and vulnerable households.

Payments into the scheme are recorded as "other" central government tax receipts, while payments to eligible customers in the form of energy discounts are recorded as social assistance payments paid by central government.

As such, the Warm Home Discount Scheme is both central government and public sector borrowing neutral and has no impact on public sector net debt.

A breakdown of net borrowing by sub-sector and a summary of central government receipts and expenditure data are presented in Tables 1 to 3 in our Public sector finances summary tables: Appendix M dataset.

Central government borrowing

Central government forms the largest part of the public sector and includes HM Revenue and Customs, the Department of Health and Social Care, the Department for Education, and the Ministry of Defence.

The relationship between central government's receipts and expenditure is an important determinant of public sector borrowing. In February 2024, central government borrowed £3.2 billion, £4.2 billion less than in February 2023.

Central government receipts

Central government's receipts were £86.4 billion in February 2024, £7.2 billion more than in February 2023. Of this £7.2 billion increase in revenue:

• central government tax receipts increased by £6.3 billion to £65.9 billion, with increases in Income Tax, Corporation Tax and Value Added Tax (VAT) receipts of £3.5 billion, £1.9 billion and, £0.6 billion, respectively

• compulsory social contributions (largely National Insurance contributions) increased by £0.4 billion to £15.3 billion

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset.

Self-assessed tax receipts

Payments of self-assessed tax receipts (SA) close to deadline, and the time taken for those then to appear in administrative data, mean that the proportion of self-assessed taxes recorded in January and February can vary year on year. Therefore, it is advisable to consider these two months together when making annual comparisons.

• SA Income Tax receipts in February increased by £0.8 billion to £3.9 billion, bringing the total for January and February 2024 to £25.5 billion, £0.4 billion more than in the same two months in 2023

• SA Capital Gains Tax receipts in February increased by £0.2 billion to £2.2 billion, bringing the total for January and February 2024 to £13.6 billion, £1.2 billion less than in the same two months in 2023

Central government expenditure

Central government's total expenditure was £89.6 billion in February 2024, £2.9 billion more than in February 2023. Of this £2.9 billion increase in spending:

• net social benefits paid by central government increased by £5.9 billion to £25.0 billion, largely because of inflation-linked benefits uprating and around £2 billion in cost-of-living payments, as explained in guidance on GOV.UK

• central government departmental spending on goods and services increased by £3.2 billion to £34.0 billion, as inflation increased running costs

• subsidies paid by central government reduced by £4.9 billion to £2.2 billion, largely because of the cost of the Energy Price Guarantee (for households), as explained on GOV.UK, and the Energy Bill Relief Scheme (for businesses), as explained in GOV.UK guidance, affecting this month the previous year

• payments recorded under central government "other current grants" reduced by £2.3 billion to £1.5 billion, largely because of the cost of the previous year's Energy Bills Support Scheme, as explained on GOV.UK, when six relief payments were made directly to households monthly between October 2022 and March 2023, affecting this month the previous year

• interest payable on central government debt reduced by £1.1 billion to £6.8 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index

Interest payable on central government debt

In February 2024, the interest payable on central government debt was £6.8 billion, the lowest February interest payable since 2022.

The large month-on-month increases in the Retail Prices Index (RPI) since early 2021 led to substantial increases in debt interest payable, with the largest three months on record occurring in 2022 and 2023. The additional interest caused by RPI inflation is described as "capital uplift" and affects the value of the gilt principal.

Capital uplift in February 2024 was £2.5 billion reflecting the 0.5% increase in the RPI between November and December 2023. This increased the capital uplift on the three-month lagged index-linked gilts (as shown on the UK Debt Management Office website), which make up around three-quarters of the index-linked gilt stock.

A monthly time series of the total capital uplift on the index-linked gilts in issue is available as series identifier code MW7L.

For further details of our approach, see our Calculation of interest payable on government gilts methodology.

The £8.4 billion borrowed in February 2024, combined with an upward revision of £1.8 billion to our previously published financial year-to-January 2024 borrowing estimate, brings our provisional estimate for the total borrowed in the financial year-to-February 2024 to £106.8 billion.

The Office for Budget Responsibility forecast that borrowing will settle at £114.1 billion for the financial year ending March 2024 as a whole.

Of the £106.8 billion borrowed by the public sector in the first eleven months of the current financial year, central government borrowed £126.4 billion. This was partially offset by a £22.5 billion Bank of England (BoE) surplus and balanced by remaining subsectors.

The borrowing of both of these subsectors is affected by payments totalling £44.4 billion made by central government to the BoE over the last eleven months under the Asset Purchase Facility Fund (APF) indemnity agreement.

As with similar intra-public sector transactions, these payments are public sector borrowing neutral. They increase central government's borrowing by £44.4 billion compared with the same period the previous year but reduce the borrowing impact of the BoE by an equal and offsetting amount.

Central government receipts

In the eleven months to February 2024, central government's income was £906.2 billion, an increase of £50.0 billion compared with the same period a year ago. Of this £50.0 billion increase in revenue:

• central government tax receipts increased by £45.0 billion to £687.2 billion, with Income Tax, Corporation Tax and Value Added Tax (VAT) receipts increasing by £22.5 billion, £14.3 billion, and £9.5 billion, respectively

• compulsory social contributions (largely National Insurance contributions) increased by £1.4 billion to £162.7 billion

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset.

Central government expenditure

This increase in income was exceeded by a £69.1 billion increase in total expenditure, which rose to £1,032.6 billion over the same period. Of this £69.1 billion increase in spending:

• net investment spending increased by £58.0 billion to £104.3 billion, largely because of a £39.4 billion increase in payments to the APF (which reduce BoE borrowing) and a £10.0 billion capital receipt from the household sector in December 2022 caused by an exceptional update to the value of the UK government's student loans book

• net social benefits paid by central government increased by £33.4 billion to £267.7 billion, largely because of inflation-linked benefits uprating and cost-of-living payments (explained in GOV.UK guidance)

• central government departmental spending on goods and services increased by £31.3 billion to £369.9 billion, as inflation increased running costs

• subsidies paid by central government reduced by £17.8 billion to £27.6 billion, largely because of the reduction in energy support costs, the bulk of which were paid between October 2022 and June 2023

• payments recorded under central government "other current grants" reduced by £14.2 billion to £19.2 billion, partly because a Cost-of-Living Council Tax Rebate (of £3.2 billion) paid to households during April 2022 and partly because of energy support payments made to households (of £1.9 billion a month) during the second half of the financial year ending March 2023

• interest payable on central government debt reduced by £30.3 billion to £75.2 billion, largely because of a slowing of the month-on-month growth in the Retail Prices Index

Since our Public sector finances, UK: March 2023 bulletin published on 25 April 2023, we have reduced our estimate of borrowing for the 12 months to March 2023 (financial year ending (FYE) 2023) by £11.2 billion, from £139.2 billion to £128.0 billion.

Expressing borrowing as a ratio of gross domestic product (GDP – the value of the output of the economy) gives an estimate of its affordability and provides a more robust measure for comparison of the UK's fiscal position over time.

The coronavirus (COVID-19) pandemic had a substantial impact on the economy as well as public sector borrowing. Expressed as a proportion of GDP, borrowing in the financial year ending (FYE) 2021 was 15.1%, the highest for 75 years.

This proportion fell by 9.7 percentage points to 5.4% of GDP in FYE 2022 as the economy recovered from the pandemic. This was broadly in line with the borrowing ratio of 5.3% in FYE 2015 during the economic recovery following the global financial crisis of the late 2000s.

Current estimates show that for the 12 months to March 2023, the proportion remains broadly around that of FYE 2015, having reduced by only a further 0.4 percentage points to 5.0%.

Our article, The use of gross domestic product (GDP) in public sector fiscal ratio statistics, describes the methodology used for the presentation of our GDP ratios.

The public sector balance sheet describes its financial position at a point in time. It shows its liabilities (amounts owed) and its assets (amounts owned).

There are several measures of the public sector balance sheet that we discuss in our What the UK government owns and what it owes blog.

Table 2 presents the narrowest balance sheet measure, which is the redemption value of central government gilts. It then builds upon this measure, widening coverage by both the subsector and the range of asset and liability types included to reach the far wider measure of public sector net worth, which we explain in our Wider measures of the public sector balance sheet: public sector net worth methodology.

Our Public sector balance sheet tables: Appendix N presents a detailed reconciliation between the balance sheet measures summarised in Table 2.

Public sector net debt

The most widely used balance sheet measure used to describe the UK public sector's financial position at a point in time is public sector net debt excluding public sector banks (PSND ex). Net debt is commonly expressed as a ratio of gross domestic product (GDP) – (the value of the output of the economy), which gives an indication of its affordability and helps with comparability over time.

The net debt-to-GDP ratio at the end of February 2024 was provisionally estimated at 97.1%, 2.3 percentage points higher than a year ago. However, this is a highly provisional estimate and is likely to be revised in future publications because it partly relies on GDP estimates based on the March 2024 Office for Budget Responsibility forecast.

Public sector net debt excluding the Bank of England (BoE) was £2,423.5 billion at the end of February 2024, or around 88.5% of GDP, £236.0 billion (or 8.6 percentage points of GDP) less than the wider measure. This difference is largely a result of the BoE's quantitative easing activities, including the gilt-purchasing activities of the Asset Purchase Facility (APF) Fund.

The APF's gilt holding is not recorded directly as a component of public sector net debt. Instead, in February 2024, we record the £103.0 billion difference between the £732.8 billion of reserves created to purchase its gilts (at market value) and their £629.7 billion redemption value. For details of the BoE's contribution to public sector net debt, see Table PSA9A of our Public sector finances tables 1 to 10: Appendix A dataset.

Public sector net worth

Public sector net worth excluding public sector banks (PSNW ex) was in deficit by £667.8 billion at the end of February 2024. This compares with a £582.8 billion deficit at the end of February 2023.

The main reason for the £85.0 billion reduction in PSNW ex over the last 12 months was a £157.4 billion increase in PSND ex, partly offset by a £60.8 billion increase in public sector non-financial assets. 

If we exclude the public sector's £1,595.7 billion of non-financial assets, public sector net financial worth excluding public sector banks (PSNFW ex) deteriorated by £145.8 billion over the same period to a deficit of £2,263.5 billion.

PSNFW ex is equivalent to public sector net financial liabilities excluding public sector banks (PSNFL ex), shown in Table 2 but expressed with the reverse sign.

The data for the latest months of every release contain a degree of forecasts. Subsequently, these are replaced by improved estimates, as further data are made available, and finally by outturn data.

Tables 4 to 6 of our Public sector finances summary tables: Appendix M dataset compare our latest public sector finances data with those in our Public sector finances, UK: January 2024, published on 21 February 2024, and highlight the revisions to borrowing by subsector, with additional detail for central government receipts and expenditure.

Our Public sector finance revisions analysis: Appendix P dataset records monthly borrowing data as at first and at subsequent publications, graphically illustrating any potential bias to our early estimates.

Revision to public sector net borrowing (PSNB ex) in the financial year-to-January 2024

Since publishing our Public sector finances, UK: January 2024, we have increased our estimate of borrowing in the financial year-to-January (FY) 2024 by £1.8 billion. This change was largely the result of our regular quarterly updates of local government data replacing previous estimates and the impact of increasing our in-year overspend adjustment applied to England revenue expenditure, based on new Quarterly Revenue Update (QRU) data published by Department for Levelling Up, Housing and Communities (DLUHC).

Most notably we have increased our previous estimates of local government expenditure on goods and services by £0.9 billion, subsidies by £0.4 billion and net social benefits by £0.2 billion. The increase in subsidies largely reflects the inclusion of quarterly Capital Payments and Receipts (CPR) data published by DLUHC, which affects our in-year estimates of expenditure relating to the Housing Revenue Account.

Revision to public sector net borrowing (PSNB ex) in earlier financial years

Since publishing our Public sector finances, UK: January 2024 bulletin, we have:

• reduced our estimate of borrowing in the FY to January 2023 by £0.7 billion

• increased our estimate of borrowing in the FY to January 2022 by £0.3 billion

• increased our estimate of borrowing in the FY to January 2018 by £0.6 billion

These changes were largely the result of new central government data replacing previous estimates, most notably improvements to estimates of central government debt interest payable, which:

• reduced by £0.5 billion in the FY to January 2023

• increased by £0.6 billion in the FY to January 2022

• increased by £0.6 billion in the FY to January 2018

Revision to public sector net debt (PSND ex) at the end of January 2024

Since publishing our Public sector finances, UK: January 2024 bulletin, we have increased our estimate of debt at the end of January 2024 by £0.8 billion to £2,647.3 billion.

This change was largely because we reduced our estimate of the cash holding of the Bank of England Asset Purchase Facility Fund by £0.8 billion. These data are reported one month in arrears.

This month, our regular quarterly updates of local government and public corporations balance sheet data replace previous estimates. However, these updates offset each other at a public sector level.

Revisions to gross domestic product

Since publishing our Public sector finances, UK: January 2024 bulletin, we have increased our estimate of debt (PSND ex) expressed as a ratio of gross domestic product (GDP) at the end of January 2024 by 0.3 percentage points, from 96.5% to 96.8% of GDP. 

This change was largely because of routine updates to forecast GDP published on 6 March 2024 by the Office for Budget Responsibility in its Economic and fiscal outlook – March 2024 report. These updates have replaced our previous estimates. 

Our blog, How the ONS estimates UK debt to GDP figures, explains why our estimates of GDP ratios are susceptible to revision.

Public sector

In the UK, the public sector consists of six subsectors:

• central government

• local government

• public non-financial corporations

• public sector funded pensions

• the Bank of England (BoE)

• public financial corporations (or public sector banks)

The figures presented in this release exclude public financial corporations unless otherwise noted.

Public sector current budget deficit

Public sector current budget deficit (PSCB) is the gap between current expenditure and current receipts on an accruals basis, having taken account of depreciation. The current budget is in surplus when receipts are greater than expenditure and is indicated with a negative sign.

Public sector net borrowing

Public sector net borrowing (PSNB) is the gap between total expenditure and current receipts on an accruals basis. If receipts exceed expenditure, this is referred to as a surplus and is indicated with a negative sign. Borrowing is often referred to by commentators as "the deficit".

Central government net cash requirement

The central government net cash requirement (CGNCR) represents the cash needed to be raised from the financial markets over a period to finance its activities. The amount of cash required will be affected by changes in the timing of payments to and from the public sector, rather than when these liabilities were incurred.

Public sector net debt

Public sector net debt (PSND) represents the amount of money the public sector owes to the private sector and overseas (in the form of loans, debt securities, deposit holdings and currency), net of liquid financial assets held.

Public sector net debt is often referred to by commentators as "the national debt".

Public sector net financial liabilities

Public sector net financial liabilities (PSNFL) are a wider measure of the balance sheet than public sector net debt and includes all financial assets and liabilities recognised in the national accounts. 

Public sector net worth

Public sector net worth (PSNW) is the widest measure of the balance sheet, broadening the PSNFL measure by considering the public sector's non-financial assets.

Comparing our data with official forecasts

The independent Office for Budget Responsibility (OBR) is responsible for the production of official forecasts for the UK government. These forecasts are usually produced twice a year, in spring and autumn. The latest forecast was published in the OBR's Economic and fiscal outlook – March 2024 report.

Each month on the same day as the Office for National Statistics (ONS) release, the OBR publishes a brief analysis of the latest public sector finances in its Monthly public finances release.

Public sector banks

Unless otherwise stated, the figures quoted in this bulletin exclude public sector banks, currently only the NatWest Group (NWG), formerly the Royal Bank of Scotland (RBS) Group.

The reported position of debt, and to a lesser extent borrowing, would be distorted by the inclusion of NWG's balance sheet (and transactions). This is because the government does not need to borrow to fund the debt of NWG, nor would surpluses achieved by NWG be passed on to the government, other than through any dividends paid as a result of the government equity holdings.

Tax receipts

In the most recent months, tax receipts recorded on an accrued basis are subject to some uncertainty. This is because many taxes such as Value Added Tax (VAT), Corporation Tax, and Pay As You Earn Income Tax contain some forecast cash receipts data and are liable to revision when actual cash receipts data are received.

The forecasts underlying our current tax estimates reflect the expectations published in the Office for Budget Responsibility's (OBR's) Economic and fiscal outlook – November 2023 report. We will update our estimates to reflect the OBR's Economic and fiscal outlook – March 2024 report in our 22 May 2024 publication.

Local government and public corporations

In recent years, planned local government expenditure initially reported in local authority budgets has been systematically lower than final outturn current expenditure reported in the audited accounts, and higher than that reported in final outturn capital expenditure. We therefore include adjustments to increase or decrease the amounts reported at the budget stage.

For the financial year ending (FYE) 2024, we include:

• a £3.0 billion upward adjustment to England's current expenditure on goods and services

• a £0.5 billion downward adjustment to Wales's capital expenditure

• a £0.5 billion downward adjustment to Scotland's capital expenditure

We apply a further £1.3 billion downward adjustment to budget data for current expenditure on benefits in the FYE 2024, to reflect the most recently available data for housing benefits.

Data for public corporations in the FYE 2023 and FYE 2024 remain largely based on the OBR's Economic and fiscal outlook – November 2023 report, although supplemented by in-year data replacing previous estimates for train operating companies, the Housing Revenue Account and surveyed public corporations. We will update our estimates to reflect the OBR's Economic and fiscal outlook – March 2024 report at the earliest opportunity.

Estimating the cost of the energy support schemes

Though fully reflected in our central government expenditure estimates, the costs of the individual energy support schemes are not separately identifiable in our source data on an accruals basis.

The UK government provided cash estimates on the cost of each of the energy support schemes for the financial year ending (FYE) March 2023 in its Energy Prices Act 2022 and expenditure on energy schemes – Q1 2023 statement, published on 8 June 2023.

In addition, the OBR provided estimates of the ongoing cost of the energy subsidy schemes in its March 2023 Economic and fiscal outlook monthly profiles (XLSX, 125KB).