1. Main points

  • Public sector net borrowing (excluding public sector banks) decreased by £3.1 billion to £48.1 billion in the current financial year-to-date (April 2017 to November 2017), compared with the same period in 2016; this is the lowest year-to-date net borrowing since 2007.

  • Public sector net borrowing (excluding public sector banks) decreased by £0.2 billion to £8.7 billion in November 2017, compared with November 2016; this is the lowest November net borrowing since 2007.

  • The Office for Budget Responsibility (OBR) forecast that public sector net borrowing (excluding public sector banks) will be £49.9 billion during the financial year ending March 2018, an increase of £4.4 billion on the outturn net borrowing in the financial year ending March 2017.

  • Public sector net debt (excluding public sector banks) was £1,734.8 billion at the end of November 2017, equivalent to 84.6% of gross domestic product (GDP), an increase of £72.2 billion (or 1.2 percentage points as a ratio of GDP) on November 2016.

  • Public sector net debt (excluding both public sector banks and Bank of England) was £1,574.5 billion at the end of November 2017, equivalent to 76.7% of GDP, a decrease of £23.5 billion (or 3.5 percentage points as a ratio of GDP) on November 2016.

  • Public sector net debt has been reduced by £65.5 billion in November 2017 due to the reclassification of English housing associations from the public to private sector. See section 2, “What’s changed in this release?” for further details.

  • Central government net cash requirement decreased by £30.6 billion to £30.7 billion in the current financial year-to-date (April 2017 to November 2017), compared with the same period in 2016; this is the lowest year-to-date central government net cash requirement since 2007.

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2. What’s changed in this release?

This month we have taken the opportunity to introduce a number of methodology and classification changes for the first time. This section presents information on aspects of these changes, along with areas of data improvement also introduced in this bulletin for the first time.

Reclassification of English housing associations

Following passage of the Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017, we completed an assessment of private registered providers of social housing in England, referred to here as housing associations (HAs). This review was completed in the context of international rules laid out in the European System of Accounts 2010 and the accompanying Manual on Government Deficit and Debt 2016.

We have concluded that HAs in England are now private market producers and as such have been reclassified to the private non-financial corporations sub-sector for the purpose of national accounts and other economic statistics. This reclassification took effect from 16 November 2017, the date the regulations came into force. Prior to this date they remain classified as public non-financial corporations.

As of the end of October 2017, English HAs' net debt amounted to £65.5 billion, which from November 2017 will no longer be counted as public sector debt. Further, public sector net borrowing has fallen by around £0.3 billion a month as a result of this reclassification.

This reclassification only applies to English HAs with Welsh, Scottish and Northern Irish HAs remaining classified as public non-financial corporations. We are aware of proposed legislative changes to the housing associations sectors in Wales and Scotland and if the legislation comes into force then we will review the classification of housing associations in those countries at that point in time.

Immigration Skills Charge

In April 2017, the government introduced the Immigration Skills Charge, levied on employers of non-European Economic Area (EEA) migrants who apply under Tier 2 (General) or Tier 2 (Intra-company Transfer) for a visa to work in the UK. The levy has been set at £1,000 per employee per year and a reduced rate of £364 for small or charitable organisations.

This charge affects employers across the public and private sectors and has been classified by Office for National Statistics (ONS) as a tax on production collected by central government. This tax has been estimated as £7 million per month based on forecasts made by the Office for Budget Responsibility (OBR), with £56 million recorded in the financial year-to-date. These forecasts will be updated with outturn data at the earliest opportunity.

Any additional central government income has the effect of reducing central government net borrowing (CGNB) and subsequently public sector net borrowing (PSNB).

Changes to the accrued methodology for Apprenticeship Levy receipts

In the June 2017 publication, we introduced the Apprenticeship Levy in the public sector finances as a tax on production for the first time. In the absence of official guidance, this income was recorded on a cash basis (cash equals accruals).

In the light of an agreed accruals methodology, this month we have improved the recording of Apprenticeship Levy in the estimation of borrowing, whereby accrued receipts will lag cash receipts by one month in a similar approach taken with other accrued tax receipt recording.

As a result of this change, central government receipts have increased by £0.2 billion in the financial year-to-date (April 2017 to November 2017), reducing public sector net borrowing (both including and excluding public sector banks) by a corresponding amount.

Multilateral development banks

In the March 2015 Public sector finances bulletin we included changes as a result of international guidance on multilateral development banks. At the time we changed the treatment of the UK government subscriptions to the International Development Agency (IDA), which is where the largest subscriptions are. This month we have expanded this work to encompass other multilateral developments banks, such as the European Bank for Reconstruction and Development (EBRD) and the African Development Banks (AfDB). This improvement has resulted in increases in public sector net borrowing of around £0.2 billion in each financial year from the financial year ending March 2008 to date but has no impact on public sector net debt.

Data improvements

We regularly review our data sources to ensure they are the most up-to-date available. We have recently been working to improve our data for Financial Services Compensation Scheme (FSCS) and interest receivable by central government. These improvements have been introduced in this bulletin.

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3. Planned changes for a future release

Value Added Tax on electronic services

On 1 January 2015, Value Added Tax (VAT) rules relating to the supply of telecommunications, radio and television broadcasting, and electronically supplied services changed.

Prior to 1 January 2015, supplies made by EU businesses to EU resident customers were subject to VAT in the country where the suppliers were established; from 1 January 2015, the supplies have been subject to VAT in the country where the customer is resident. The tax changes are as a result of European legislation.

The legislation provides for a transition period of four years, during which the tax authority in the country where the supplier is located can retain a part of the VAT collected prior to passing on the remainder of the collected tax to the country where the customer is resident. From 1 January 2019, all collected tax must be transferred to the tax authority in the appropriate country.

Currently the VAT on electronic services collected for the UK is recorded net of retained amounts; however, to comply with international guidance these collection fees should not be recorded as tax but as current transfers between countries.

We planned to introduce this methodology change in this release, however, work is still ongoing and we will introduce the change at the first available opportunity.

The sale of the English student loan book

On 6 December 2017, the government issued a statement on the sale of part of the pre-2012, English student loan book. This sale of government assets will be recorded in the public sector finances in due course. The proceeds of such sales reduce the central government net cash requirement (CGNCR) and public sector net debt (PSND) by an amount corresponding to the cash raised from the sale but have no impact on public sector net borrowing.

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4. Things you need to know about this release

What are the most important terms I need to know?

Public sector net borrowing excluding public sector banks (PSNB ex) measures the gap between revenue raised (current receipts) and total spending (current expenditure plus net investment (capital spending less capital receipts)). Public sector net borrowing is often referred to by commentators as “the deficit”.

The public sector net cash requirement (PSNCR) represents the cash needed to be raised from the financial markets over a period of time to finance the government’s activities. This can be close to the deficit for the same period but there are some transactions, for example, loans to the private sector, which need to be financed but do not contribute to the deficit. It is also close but not identical to the changes in the level of net debt between two points in time.

Public sector net debt excluding public sector banks (PSND ex) represents the amount of money the public sector owes to private sector organisations including overseas institutions, largely as a result of issuing gilts and Treasury Bills, less the amount of cash and other short-term assets it holds.

While borrowing (or the deficit) represents the difference between total spending and receipts over a period of time, debt represents the total amount of money owed at a point in time.

The debt has been built up by successive government administrations over many years. When the government borrows (that is, runs a deficit), this normally adds to the debt total. So reducing the deficit is not the same as reducing the debt.

If you’d like to know more about the relationship between debt and deficit, please refer to our article The debt and deficit of the UK public sector explained.

What does the public sector include?

In the UK, the public sector consists of five sub-sectors: central government, local government, public non-financial corporations, Bank of England and public financial corporations (or public sector banks).

Unless otherwise stated, the figures quoted in this bulletin exclude public sector banks (that is currently only Royal Bank of Scotland (RBS)), as the reported position of debt (and to a lesser extent borrowing) would be distorted by the inclusion of RBS's balance sheet (and transactions). This is because government does not need to borrow to fund the debt of RBS, nor would surpluses achieved by RBS be passed on to government, other than through any dividends paid as a result of government equity holdings.

The sub-sector breakdown of public sector net borrowing is summarised in Table PSA2 in the Public sector finances Tables 1 to 10: Appendix A dataset.

Should I look at monthly or financial year-to-date data to understand public sector finances?

A financial year is an accounting period of 12 months running from 1 April one year to 31 March the following year. For example, the financial year ending March 2016 comprises the months from April 2015 to March 2016.

Due to the volatility of the monthly data, the cumulative financial year-to-date borrowing figures provide a better indication of the position of the public finances than the individual months.

Are our figures adjusted for inflation?

All monetary values in the public sector finances (PSF) bulletin are expressed 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.

In order to compare data over long time periods, to aid international comparisons and provide an indication of a country’s ability to service borrowing and debt, commentators often discuss changes over time to fiscal aggregates in terms of gross domestic product (GDP) ratios. GDP represents the value of all the goods and services currently produced by the UK economy in a period of time.

The use of GDP in public sector fiscal ratio statistics

An article, The use of GDP in public sector fiscal ratio statistics, explains that for debt figures reported in the monthly public sector finances, a 12-month GDP total centred on the month is employed, while in the UK government debt and deficit for Eurostat statistical bulletin, the total GDP for the preceding 12 months is used.

As a consequence of using a centred GDP estimate, our estimates include a degree of official forecast data produced by the Office for Budget Responsibility (OBR) and are subject to revision when OBR update their estimates (usually in March and November each year).

Are our figures adjusted for seasonal patterns?

All monetary values in the public sector finances (PSF) bulletin are not seasonally adjusted. We recommend you use year-on-year comparisons (be it cumulative financial year-to-date or individual monthly borrowing figures) rather than making month-on-month comparisons.

Are our monthly figures likely to change over time?

Each PSF bulletin contains the first estimate of public sector borrowing for the most recent period and is likely to be revised in later months as more data become available.

In publishing monthly estimates, it is necessary to use a range of different types of data sources. Some of these are subject to revision as budget estimates (forecasts) are replaced by outturn data and these then feed into the published aggregates. In addition to those that stem from updated data sources, revisions can also result from methodology changes. An example of the latter is the changes that were due to the introduction of improved methodology for the recording of Corporation Tax, Bank Corporation Tax Surcharge receipts and Bank Levy implemented in the PSF estimates released in February 2017.

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5. How much is the public sector borrowing?

In the current financial year-to-date (April 2017 to November 2017), the public sector spent more money than it received in taxes and other income. This meant it had to borrow £48.1 billion; that is, £3.1 billion less than in the same period in the previous financial year.

Of this £48.1 billion of public sector net borrowing excluding public sector banks (PSNB ex), £26.2 billion related to the cost of the “day-to-day” activities of the public sector (the current budget deficit), while £21.9 billion related to capital spending (or net investment) such as infrastructure.

Figure 1 presents both monthly and cumulative public sector net borrowing (excluding public sector banks) in the current financial year-to-date and compares these with the previous financial year.

The difference between central government's income and spending makes the largest contribution to the amount borrowed by the public sector. In the current financial year-to-date, of the £48.1 billion borrowed by the public sector, £45.8 billion was borrowed by central government.

In the current financial year-to-date, central government received £447.2 billion in income, including £333.7 billion in taxes. This was around 4% more than in the same period in the previous financial year.

Over the same period, central government spent £481.0 billion; around 3% more than in the same period in the previous financial year. Of this amount, just below two-thirds was spent by central government departments (such as health, education and defence), around one-third on social benefits (such as pensions, unemployment payments, Child Benefit and Maternity Pay), with the remaining being spent on capital investment and interest on government’s outstanding debt.

Appendix D to this release contains a detailed breakdown of public sector current receipts

Figure 2 summarises public sector borrowing by sub-sector in the current financial year-to-date (April to November 2017) and compares these with the same period in the previous financial year.

This presentation splits PSNB ex into each of its four sub-sectors: central government, local government, public corporations and Bank of England.

A further breakdown (receipts, expenditure (both current and capital) and depreciation) is provided for central government, local government and public corporations, with central government current receipts and current expenditure being presented in further detail.

Figure 3 illustrates that annual borrowing has generally been falling since the peak in the financial year ending March 2010 (April 2009 to March 2010).

In the financial year ending March 2017 (April 2016 to March 2017), the public sector borrowed £45.5 billion, or 2.3% of gross domestic product (GDP). This was £27.6 billion lower than in the previous full financial year and around one-third of that borrowed in the financial year ending March 2010, when borrowing was £153.0 billion or 9.9% of GDP.

Since the first estimate of public sector net borrowing (excluding public sector banks) for the financial year ending March 2017 (April 2016 to March 2017) was published on 25 April 2017, the estimate has been revised downwards by £6.5 billion, from £52.0 billion to £45.5 billion. However, these are not final figures and may be revised further over the coming months as we replace our provisional estimates with final outturn data.

Currently, for the financial year ending March 2017:

  • central government net borrowing comprises largely audited account data

  • local government data are based on budget figures published by the Department for Communities and Local Government (DCLG) and the devolved administrations

  • public corporations’ net borrowing estimates remain calculated by Office for National Statistics (ONS) and are based on Office for Budget Responsibility (OBR) forecasts

The data for the latest month of every release contain some forecast data. The initial outturn estimates for the early months of the financial year, particularly April, contain more forecast data than other months, as profiles of tax receipts, along with departmental and local government spending are still provisional. This means that the data for these months are typically more prone to revision than other months and can be subject to sizeable revisions in later months.

Appendix G shows revisions to the first reported estimate of financial-year-end public sector net borrowing (excluding public sector banks) by sub-sector. It summarises revisions to the first estimate of public sector net borrowing (excluding public sector banks) by sub-sector for the last six financial years. Revisions are shown at 6 and 12 months after year-end.

We have published an article, Public Sector Finances – Sources summary and their timing (PDF, 23KB), which provides a brief summary of the different sources used and the implications of using those data in the monthly public sector finances (PSF) statistical bulletin. 

Focusing on the current month

In November 2017, the public sector spent more money than it received in taxes and other income. This meant it had to borrow £8.7 billion; that is, £0.2 billion less borrowing than in November 2016.

Appendix D to this release contains a detailed breakdown of public sector current receipts.

Figure 4 summarises public sector borrowing by sub-sector in November 2017 and compares this with the equivalent measures in the same month a year earlier (November 2016).

This presentation splits public sector net borrowing excluding public sector banks (PSNB ex) into each of its four sub-sectors: central government, local government, public corporations and Bank of England.

A further breakdown (receipts, current expenditure, capital expenditure and depreciation) is provided for central government, local government and public corporations. Central government current receipts and current expenditure are presented in further detail.

Both local government and public corporations data for November 2017 are provisional estimates.

While some components of local government net borrowing are still based on Office for Budget Responsibility (OBR) forecasts, principally these have now been replaced with budget data received from the Department for Communities and Local Government (DCLG) and the devolved administrations.

Components of public corporations’ net borrowing remain calculated by ONS and are based on estimates for financial year ending March 2017 for the majority of public corporations, and a combination of quarterly survey returns and OBR forecasts for larger public corporations.

For both local government and public corporations, administrative source data are used for transfers to each of these sectors from central government.

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6. How big is public sector debt?

The amount of money owed by the public sector to the private sector stood at nearly £1.7 trillion at the end of November 2017, which equates to 84.6% of the value of all the goods and services currently produced by the UK economy in a year (or gross domestic product (GDP).

This £1.7 trillion (or £1,734.8 billion) debt at the end of November 2017 represents an increase of £72.2 billion since the end of November 2016.

Following passage of the Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017, we have concluded that housing associations (HAs) in England are now private market producers and as such they have been reclassified to the private non-financial corporations sub-sector for the purpose of national accounts and other economic statistics. This reclassification took effect from 16 November 2017, the date the regulations came into force. Prior to this date they remained classified as public non-financial corporations. As of the end of October 2017, English HAs’ net debt amounted to £65.5 billion, which from November 2017 will no longer be counted as public sector debt.

Since November 2016, the debt associated with Bank of England increased by £95.7 billion to £160.3 billion. Nearly all of this growth is due to the activities of the Asset Purchase Facility, including £86.8 billion from the Term Funding Scheme (TFS).

If we were to exclude the activities of the Bank of England in the estimation of public sector net debt (excluding public sector banks), then public sector net debt (excluding both public sector banks and Bank of England) would reduce by £160.3 billion, from £1,734.8 billion to £1,574.5 billion, or from 84.6% of GDP to 76.7%.

Figure 5 breaks down outstanding public sector net debt at the end of November 2017 into the sub-sectors of the public sector. In addition to public sector net debt excluding public sector banks (PSND ex), this presentation includes the effect of public sector banks on debt.

Net debt is defined as total gross financial liabilities less liquid financial assets, where liquid assets are cash and short-term assets, which can be released for cash at short notice without significant loss. These liquid assets comprise mainly foreign exchange reserves and bank deposits.

Figure 6 presents public sector net debt excluding public sector banks (PSND ex) at the end of November 2017 by sub-sector. Time series for each of these component series are presented in Tables PSA8A to D in the Public sector finances Tables 1 to 10: Appendix A dataset.

Figure 7 illustrates PSND ex from the financial year ending March 1994 to the end of November 2017.

PSND ex increased at the time of the economic downturn. Since then, it has continued to increase but at a slower rate. The introduction of the Term Funding Scheme in late 2016 has led to a rise in net debt, as the loans provided under the scheme are not liquid assets and therefore do not net off in public sector net debt (against the liabilities incurred in providing the loans).

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7. How much cash does the public sector need to raise?

The net cash requirement is a measure of how much cash the public sector needs to raise from the financial markets (or pay out from its cash reserves) to finance its activities. This amount can be close to net borrowing for the same period but there are some transactions, for example, lending to the private sector or the purchase of shares, that need to be financed but do not contribute to net borrowing. Similarly, repayments of principal on loans extended by government or sales of shares will reduce the level of financing necessary but not reduce the net borrowing.

Figure 8 presents public sector cash requirement by sub-sector in the current financial year-to-date (April 2017 to November 2017). Time series for each of these component series are presented in Table PSA7A in the Public sector finances Tables 1 to 10: Appendix A dataset.

Central government net cash requirement (CGNCR) is a focus for some users, as it provides an indication of the volume of gilts (government bonds) the Debt Management Office may issue to meet the government’s borrowing requirements.

In the current financial year-to-date (April to November 2017), central government net cash requirement (CGNCR) was £30.7 billion, that is, £30.6 billion less than in the same period in the previous year. A number of one-off factors have led to this decrease.

The sale of central government assets

The sale of £11.8 billion of Bradford and Bingley loans to Prudential plc in April 2017, reduced CGNCR by a corresponding amount in the current financial year-to-date.

The redemption of index-linked gilts

The redemption of any government security requires the raising of cash to pay investors:

  • the redemption of a 2.5% index-linked gilt in July 2016 required £9.4 billion to repay investors

  • the redemption of a 1.25% index-linked gilt in November 2017 required £4.2 billion to repay investors

While both these redemptions increased CGNCR by a corresponding amount in their respective financial year-to-date, £5.2 billion less cash was required in the current financial year-to-date than in the corresponding period in the previous financial year.

CGNCR is quoted both including and excluding the net cash requirement of Network Rail (NR) and UK Asset Resolution LTD (UKAR) (which manages the closed mortgage books of both Bradford and Bingley, and Northern Rock Asset Management). It is the CGNCR excluding NR and UKAR that is the particular focus of users with an interest in the gilt market.

CGNCR excluding NR and UKAR decreased by £33.7 billion to £31.3 billion in the current financial year-to-date (April 2017 to November 2017), compared with the same period in 2016.

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8. How was debt in the current financial year-to-date accumulated?

Figure 9 brings together the borrowing components detailed in Figure 2 to illustrate how the differences between income and spending (both current and capital) have led to the accumulation of debt in the current financial year-to-date (April to November 2017).

This presentation excludes public sector banks, focusing instead on the public sector net borrowing excluding public sector banks (PSNB ex) measure.

The reconciliation between public sector net borrowing and net cash requirement is presented in more detail in Table REC1 in the Public sector finances Tables 1 to 10: Appendix A dataset.

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9. How do these figures compare with official forecasts?

The Office for Budget Responsibility (OBR) normally produces forecasts of the public finances twice a year (currently in March and November). The OBR forecasts used in this bulletin are based on those published on 22 November 2017.

The government has adopted OBR forecasts as its official forecast.

The OBR forecast that the public sector will borrow £49.9 billion during the current financial year (April 2017 to March 2018), an increase of £4.4 billion on the current outturn estimate for the financial year ending March 2017.

Figure 10 presents the cumulative public sector net borrowing for the latest and previous full financial years. The figure also presents the OBR forecast for the latest financial year.

The monthly path of spending and receipts is not smooth within the financial year and also can vary compared with previous years, both of which can affect year-on-year comparisons.

In the current financial year-to-date (April to November 2017), the public sector has borrowed £48.1 billion, a decrease of £3.1 billion on the same period in the last financial year. However, in paragraph 4.40 of their Economic and fiscal outlook – November 2017, the OBR state that they expect receipts growth to slow in the second half of the current financial year, exerting an upward pressure on borrowing.

Table 1 compares the current outturn estimates for each of our main public sector (excluding public sector banks) aggregates for the latest full financial year with corresponding OBR forecasts for the following financial year. Further, it compares the current year-to-date outturn estimates with those of the previous financial year-to-date.

Caution should be taken when comparing public sector finances data with OBR figures for the full financial year, as data are not finalised until sometime after the financial year ends, with initial estimates made soon after the end of the financial year often subject to sizeable revisions in later months as forecasts are replaced with audited outturn data.

There may also be known methodological differences between OBR forecasts and outturn data.

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10. Revisions since previous release

Revisions can be the result of both updated data sources and methodology changes. This month, in addition to updating our data sources, we have taken the opportunity to introduce a number of methodology and classification changes for the first time.

These methodological changes have been discussed in section 2, “What’s changed in this release?” of this bulletin and include:

  • introducing the Immigration Skills Charge into the public sector accounts

  • introducing an accrued methodology for the recording of Apprenticeship Levy receipts

  • improving our coverage of multilateral development banks

  • improving our recording of the Financial Services Compensation Scheme (FSCS) and interest receivable by central government

Table 2 presents the revisions to the headline statistics presented in this bulletin compared with those presented in the previous publication (published on 21 November 2017).

Revisions to public sector net borrowing

Figure 11 compares the latest estimate of public sector net borrowing excluding public sector banks (PSNB ex) for the period April to October 2017, with that presented in the previous bulletin (21 November 2017).

This presentation splits PSNB ex into each of its four sub-sectors: central government, local government, non-financial public corporations and Bank of England (BoE).

Given that, in the latest financial year-to-date, £45.8 billion of the £48.1 billion borrowed by the public sector was borrowed by central government, a further breakdown of central government current receipts and current expenditure is provided to reflect the significance of these components.

Revisions to central government net borrowing

In the current financial year-to-date, central government net borrowing has been revised up by £1.3 billion. To supplement Figure 11, it is worth noting that taxes on production have been collectively been revised up by £1.3 billion. Of these, receipts from VAT, FSCS, Renewable Obligation Certificates and Apprenticeship Levy have been revised up by £0.2 billion, £0.2 billion, £0.5 billion and £0.2 billion respectively.

To supplement Table 2, the following sections focus on revisions to central government net borrowing in earlier financial years. Given that these revisions are primarily the result of methodology changes introduced this month, which, individually are (relatively) small in terms of net borrowing, individual changes are discussed in terms of millions, rather than billions of pounds.

  • Between the financial year ending March 1998 and March 2001

    Improvements to our measure of central government interest and dividends (received) have led to decreases in current receipts of between £40 million and £70 million.

  • Between the financial year ending March 2002 and March 2007

    Improvements to our measure of central government interest and dividends (received) have lead to decreases in current receipts of between £36 million and £69 million. Improvements to our measure of FSCS - a levy-funded body, have led to increases in current receipts of between £56 million and £238 million.

  • Between the financial year ending March 2008 and March 2016

    Improvements to our measure of central government interest and dividends (received) have led to decreases in current receipts of between £36 million and £417 million, while, improvements to our measure of FSCS receipts have led to increases in current receipts of up to £547 million. Further, improvements to our coverage of our measure of UK contribution to multilateral development banks have led to increases in capital spending of between £75 million and £259 million.

  • Financial year ending March 2017

    Current receipts were revised down by £463 million. This change was largely a result of a decrease of £672 million to the estimate of Income Tax, partially offset by an increase of £261 million due to the combined impact of the improvements to the measures of central government interest and dividends and FSCS. Over the same period, improved data for both expenditure on goods and services and public sector pensions have contributed to a fall of £222 million in current expenditure. Capital expenditure increased by £649 million, due in part to a £279 million increase in the UK contribution to multilateral development banks and an increase of £219 million in transfers to public corporations.

Revisions to non-financial public corporations’ net borrowing

While no substantial revisions have occurred in the financial year-to-date, the net borrowing of non-financial public corporations in the financial year ending March 2017 has been revised down by £1.1 billion.

In this release forecast data for current receipts and capital expenditure in financial year ending March 2017 are replaced with provisional outturn data from HM Treasury Whole of Government Accounts.

Current receipts were revised upward by £0.6 billion, largely a result of an increase of £0.6 billion to the estimate of gross operating surplus. While current expenditure remained unchanged, over the same period, capital expenditure decreased by £0.6 billion, due to downwards revisions to the estimate of gross fixed capital formation and an upwards revision to capital grants (net) within the public sector.

The net result of these changes was a fall in the estimate of non-financial public corporations’ net borrowing of £1.1 billion in the 12 months between April 2016 and March 2017.

Revisions to local government net borrowing

Since the previous bulletin (21 November 2017), local government net borrowing in the current financial year-to-date has been revised down by £0.3 billion and remain provisional estimates. While some components of local government net borrowing are still based on OBR forecasts, principally these have now been replaced with budget data received from the DCLG and the devolved administrations.

Revisions to public sector net debt

Public sector net debt excluding public sector banks (PSND ex) at the end of October 2017 has been revised downwards by £0.8 billion compared with that presented in the previous bulletin (21 November 2017).

This change is largely the result of a downward revision to both the Bank of England’s and local government’s contribution to net debt at the end of October 2017 of £0.5 billion and £0.3 billion respectively.

The reporting of errors in the public sector finance dataset

It is important to note that revisions do not occur as a result of errors; errors lead to corrections and are identified as such when they occur. There are no errors reported in this month’s bulletin.

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11. International comparisons of borrowing and debt

The UK government debt and deficit for Eurostat statistical bulletin is published quarterly (in January, April, July and December each year), to coincide with when the UK and other EU member states are required to report on their deficit (or net borrowing) and debt to the European Commission.

On 17 October 2017, we published the latest UK government debt and deficit for Eurostat statistical bulletin, consistent with the August 2017 public sector finances bulletin (published on 21 September 2017). In this publication we stated that:

  • general government gross debt was £1,720.0 billion at the end of March 2017, equivalent to 86.8% of gross domestic product (GDP); an increase of £68.1 billion on March 2016

  • general government deficit (or net borrowing) was £45.5 billion in the financial year ending March 2017 (April 2016 to March 2017), equivalent to 2.3% of GDP; a decrease of £30.3 billion on March 2016

This bulletin reports an unchanged estimate of general government gross debt compared with that published on 21 September 2017; however, the estimate of deficit in the financial year ending March 2017 has been revised up by £1.4 billion to £46.9 billion or 2.4% of gross domestic product.

We will publish our next UK government debt and deficit for Eurostat statistical bulletin on Wednesday 17 January.

It is important to note that the GDP measure, used as the denominator in the calculation of the debt ratios in the UK government debt and deficit for Eurostat statistical bulletin, differs from that used within the public sector finances statistical bulletin.

An article, The use of GDP in public sector fiscal ratio statistics, explains that for debt figures reported in the monthly public sector finances, a 12-month GDP total centred on the month is employed, while in the UK government debt and deficit for Eurostat statistical bulletin, the total GDP for the preceding 12 months is used.

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12. Quality and methodology

The public sector finances Quality and Methodology Information report contains important information on:

  • the strengths and limitations of the data and how it compares with related data

  • uses and users of the data

  • how the output was created

  • the quality of the output including the accuracy of the data

How is the debt interest paid by the government affected by movements in the level of Retail Price Index?

Index-linked gilts, a form of government bond, are indexed to the Retail Prices Index (RPI). When the RPI rises, the inflation uplift that applies to index-linked cash flows (both regular coupon payments and final payment at gilt maturity) also rises. If the RPI should fall, the inflation uplift would also fall. In this way, the returns to the investor from holding index-linked gilts are maintained in real terms – as measured by the RPI.

Taking £100 as the unit price for a gilt, an index-linked gilt will pay more than £100 at redemption if the RPI increases over the life of the gilt. Similarly, if the RPI increases over the life of the gilt each coupon payment will be higher than the previous one; while if the RPI were to decrease, a coupon payment could be lower than the previous one.

Both the uplift on coupon payments and the uplift on the redemption value are recorded as debt interest paid by the government, so month-on-month there can be sizeable movements in payable government debt interest as a result of movements in the RPI.

Time series of central government debt interest (series identifier NMFX) and the index-linked gilt capital uplift (series identifier MW7L) are available in Tables PSA6B and REC3 in the tables associated with this release or by searching directly by series identifier.

Adjustments to local government data in the current financial year-to-date

Most local government data are annual, relating to financial years (April to March) and based on information collected from local authorities by the Department for Communities and Local Government and the devolved administrations.

The data are collected in two main phases: budget, before the start of the financial year, and outturn, after the end of the financial year.

Some information is available within the year and this is taken into account wherever possible.

In recent years, planned expenditure initially reported in budgets has systematically been higher than the final outturn expenditure reported in the audited accounts. We therefore include adjustments to reduce the amounts reported at the budget stage and this affects the figures for the latest financial year-to-date.

UK Statistics Authority assessment of public sector finances

On 20 June 2017, the UK Statistics Authority published a letter confirming the designation of the monthly public sector finances bulletin as a National Statistic. This letter completes the 2015 assessment of public sector finances.

In order to meet the requirements of this assessment we published an article, Quality assurance of administrative data used in the UK public sector finances. This report provides an assessment of the administrative data sources used in the compilation of the public sector finances statistics in accordance with the UK Statistics Authority’s Administrative Data Quality Assurance Toolkit.

How classification decisions are made

Each quarter we publish a forward workplan outlining the classification assessments we expect to undertake over the coming 12 months. To supplement this, each month a classifications update is published, which announces classification decisions made and includes expected implementation points (for different statistics) where possible.

Classification decisions are reflected in the public sector finances at the first available opportunity and, where necessary, outlined in this section of the statistical bulletin.

The Monthly statistics on the public sector finances: a methodological guide (PDF, 360KB) was last updated in August 2012. We are currently working to update this publication.

Pre-release access to ONS statistics

On 15 June 2017, the National Statistician announced that from 1 July 2017 pre-release access to Office for National Statistics (ONS) statistics would cease. While there is no longer any pre-release access granted to the public sector finances bulletin, it should be noted that this bulletin remains jointly produced by members of the Government Statistical Service (GSS) working in both ONS and HM Treasury.

GSS staff will continue to work together to produce the bulletin but ministers and those officials not directly involved in the production and release of statistics will not have access to them in advance of publication.

Time series data

We recently reviewed and improved the content of our downloadable time series data file consistent with the data underlying each public sector finances statistical bulletin and the accompanying public sector finances borrowing by sub-sector presentation.

All data contained within these publications are available to download via the Public sector finances time series dataset. From April 1997 to date, where available, time series are presented as monthly data, with series extending further back in time, generally presented on a quarterly or financial year basis.

Time series exclusive to the public sector finances borrowing by sub-sector presentation are only available as quarterly time series, though these extend back to 1946.

Supporting documentation

Documentation supporting this publication is available in appendices to the bulletin:

Public sector borrowing by sub-sector

Each month, at 9.30am on the working day following the public sector finances statistical bulletin, we publish Public sector finances borrowing by sub-sector .This release contains an extended breakdown of public sector borrowing in a matrix format and also estimates of total managed expenditure (TME).

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Contact details for this Statistical bulletin

Fraser Munro
fraser.munro@ons.gsi.gov.uk
Telephone: +44 (0)1633 456402