Public sector finances, UK: November 2018

• Borrowing (public sector net borrowing excluding public sector banks) in November 2018 was £7.2 billion, £0.9 billion less than in November 2017; this was the lowest November borrowing for 14 years (since 2004).

• Borrowing in the current financial year-to-date (YTD) was £32.8 billion, £13.6 billion less than in the same period in 2017; the lowest year-to-date for 16 years (since 2002).

• Borrowing in the financial year ending (FYE) March 2018 was £41.5 billion, £4.1 billion less than in FYE March 2017; the lowest financial year for 11 years (since FYE 2007).

• Debt (public sector net debt excluding public sector banks) at the end of November 2018 was £1,795.1 billion (or 83.9% of gross domestic product (GDP)); an increase of £59.3 billion (unchanged at 83.9% of GDP) on November 2017.

• Debt at the end of November 2018 excluding Bank of England (mainly quantitative easing) was £1,606.5 billion (or 75.1% of GDP); an increase of £31.5 billion (or a decrease of 1.0 percentage point) on November 2017.

• Central government net cash requirement in the current financial YTD was £24.5 billion (£5.7 billion less than financial YTD 2017) or £25.7 billion excluding both UK Asset Resolution Ltd and Network Rail (£5.6 billion less than in financial YTD 2017).

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.

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. Public sector net debt is often referred to by commentators as “national debt”.

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.

Accounting for student loans

On 17 December 2018, we announced our decision on how we will treat student tuition fee and maintenance loans in the government’s accounts. We have published a blog explaining our role and why we have taken these decisions. We aim to implement these changes in September 2019.

This section presents information on aspects of data or methodology that have been introduced or improved since the publication of the previous bulletin, along with supporting information users may find useful.

Revisions to public sector net borrowing (excluding public sector banks) in October 2018

This month we report a £2.4 billion reduction to October 2018’s public sector net borrowing since the previous bulletin (published on 21 November 2018). This revision is largely a temporary effect of the alignment of our monthly public finances data and our quarterly government finance statistics (GFS) reported to the European Commission.

This month’s GFS submission requires the alignment of these two datasets for the period up to and including September 2018. As is usual, since the finalisation of our GFS dataset, we have received further, more up-to-date central government expenditure data from HM Treasury. In order to reflect this expenditure in the latest month (November 2018) and to preserve most up-to-date current financial year-to-date (April to November 2018) expenditure totals, we have applied a number of profile adjustments to October’s expenditure data. On this occasion, a larger than normal portion of the financial year-to-date revision is applied to October 2018, rather than across the whole April to October 2018 period.

This is a regular quarterly phenomenon and these temporary adjustments applied to October 2018 will be removed for the next release (due to be published on 22 January 2019).

Early repayment of Term Funding Scheme loans

The introduction of the Term Funding Scheme (TFS) in September 2016 led to an increase in public sector net debt, as the loans provided under the scheme were not liquid assets and therefore did not net off in public sector net debt (against the liabilities incurred in providing the loans). The TFS closed for drawdowns of further loans on 28 February 2018 with a loan liability of £127.0 billion.

In November 2018, BoE received a £5.0 billion early repayment on the TFS loans, reducing the outstanding loan liability to £121.4 billion at end of November 2018. This repayment reduced Bank of England’s contribution to net debt by £5.0 billion and therefore reduced public sector net debt by an equivalent amount.

Sale of UK Asset Resolution mortgage portfolio

On 27 September 2018, the government announced its intention to sell a £860 million equity release mortgage portfolio, owned by Bradford and Bingley and NRAM Limited (formerly part of Northern Rock). This sale was completed in October 2018 and raised £943 million.

While being recorded in last month’s release this sale was not explicitly shown in Table PSA7D as a component of Net Acquisitions of Company Securities, but instead as a component of Net Department Outlays. This month our presentation has been corrected, with no impact on central government net cash requirement.

Business rates retention

The Ministry of Housing, Communities and Local Government (MHCLG) is currently operating 100% business rate retention pilot schemes for local authorities in England. As part of the scheme, local authorities are required to make tariff payments to central government and the way the scheme operates altered in April 2018.

Since last month, we have improved our estimates for the tariff payments and the impact is to reduce the net current transfer from central government to local government by approximately £300 million per month in the current financial year to date. Such grants are public sector borrowing neutral, reducing central government net borrowing and increasing local government net borrowing by an equal and offsetting amount.

Student loan sales

On 4 December 2018, the government announced the sale of part of the older, pre-2012, English student loan book achieving a value of £1.9 billion.

While we have announced a change to our accounting for student loans (to be introduced in September 2019), this sale will be treated according to current procedures applied to previous asset sales; the public sector net cash requirement in December 2018 and public sector net debt at the end of December 2018 will both reduce by the cash value received from the sale, while public sector net financial liabilities will increase by the difference between the nominal value of the loans sold and the sale price. There is no public sector net borrowing impact recorded as a result of this sale.

The proceeds of this sale will be recorded in the December 2018 dataset (released on 22 January 2019).

Mersey Gateway

The capital expenditure outturn data for England in the financial year ending March 2018, as published by the Ministry of Housing, Communities and Local Government (MHCLG), includes £0.6 billion of new construction expenditure reported by the Halton local authority.

This expenditure was confirmed to relate to the Mersey Gateway Project, more specifically the completion and opening of the Mersey Gateway Bridge in 2017.

Although the expenditure on the entire project was reported by Halton in their accounts for the financial year ending March 2018, we have taken the decision to record this expenditure across the construction period, in line with the recommendations of the Manual on Government Deficit and Debt (MGDD) and European System of Accounts 2010: ESA 2010 guidance.

We have therefore only recorded £0.1 billion of expenditure on the Mersey Gateway Project in the financial year ending March 2018. We plan to introduce the remainder of the expenditure in the appropriate years to national accounts and public sector finances simultaneously in September 2019.

In November 2018, the public sector spent more money than it received in taxes and other income. This meant it had to borrow £7.2 billion; that is, £0.9 billion less than the same period in November 2017. This was the lowest November borrowing for 14 years.

Of this £7.2 billion, £7.0 billion was borrowed by central government and £1.2 billion by local government, while the Bank of England recorded a surplus borrowing of £0.9 billion.

Central government receipts in November 2018 increased by 3.8% compared with November 2017, to £56.6 billion; while total central government expenditure increased by 3.7% to £62.0 billion.

Much of this annual growth in central government receipts in November 2018 came from Value Added Tax (VAT), Income Tax and National Insurance contributions; while tobacco duties have fallen compared with November 2017.

In the current account, there were notable growths in expenditure on goods and services, along with net social benefits. Over the same period, interest payments on the government’s outstanding debt have decreased; due largely to movements in the Retail Prices Index to which index-linked bonds are pegged.

In the capital account, central government gross capital formation increased by £0.6 billion on November 2017. Capital transfers from central to local government increased by £0.6 billion compared with November 2017. As with other such transfers, central government net borrowing increased by an amount equivalent to the transfer, while the net borrowing of local government reduced by an equal and offsetting amount, with no impact at a public sector borrowing level.

Figure 1 summarises public sector borrowing by sub-sector in November 2018 and compares this with the equivalent measures in the same month a year earlier (November 2017). 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.

While local government data for November 2018 are based on budget forecasts for England, Wales and Scotland, public corporations data remain initial estimates, with most components calculated by Office for National Statistics (ONS) based on Office for Budget Responsibility (OBR) forecasts. In both cases, additional administrative source data are used to estimate transfers to each of these sectors from central government.

Figure 1: Contributions to public sector net borrowing (excluding public sector banks) by sub-sector

November 2018, compared with November 2017, UK

Source: Office for National Statistics

Notes:

1. PSNBex – Public sector net borrowing excluding public sector banks.

2. CGNB – Central government net borrowing.

3. LGNB – Local government net borrowing.

4. PCNB – Non-financial public corporations net borrowing.

5. BoENB – Bank of England net borrowing.

6. L&P – Land and property.

7. I & W – Income and wealth.

8. Contributions to EU – UK VAT, GNI and abatement contributions to the EU budget.

9. NICs – National Insurance contributions.

Download this image Figure 1: Contributions to public sector net borrowing (excluding public sector banks) by sub-sector

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

In the financial year-to-date (YTD) (April to November 2018), public sector spending exceeded the money received in taxes and other income. This meant it had to borrow £32.8 billion; that is, £13.6 billion less than the same period in 2017. Borrowing so far this financial year was the lowest for any April to November period for 16 years.

Of the £32.8 billion borrowed by the public sector in this period, £11.5 billion related to the cost of the “day-to-day” activities of the public sector (the current budget deficit), while £21.3 billion was capital spending (or net investment), such as on infrastructure.

Figure 2 presents both monthly and cumulative public sector net borrowing (excluding public sector banks) in the current financial YTD (April to November 2018) and compares these with the previous financial year.

Figure 3 summarises the contributions of each sub-sector to public sector net borrowing (excluding public sector banks) in the current financial YTD (April to November 2018) and compares these with the same period in 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 latest financial YTD (April to November 2018), of the £32.8 billion borrowed by the public sector, £33.2 billion was borrowed by central government, while local government was in surplus by £0.9 billion.

In the current financial YTD, central government received £471.1 billion in income, including £353.5 billion in taxes. This was around 4% more than in the same period in 2017.

Over the same period, central government spent £491.9 billion, around 2% more than in the same period in 2017. 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.

Figure 3: Contributions to public sector net borrowing (excluding public sector banks) by sub-sector

Current financial year-to-date (April to November 2018) compared with the same period last year, UK

Source: Office for National Statistics

Notes:

1. PSNBex – Public sector net borrowing excluding public sector banks.

2. CGNB – Central government net borrowing.

3. LGNB – Local government net borrowing.

4. PCNB – Non-financial public corporations net borrowing.

5. BoENB – Bank of England net borrowing.

6. L&P – Land and property.

7. I & W – Income and wealth.

8. Contributions to EU – UK VAT, GNI and abatement contributions to the EU budget.

9. NICs – National Insurance contributions.

Download this image Figure 3: Contributions to public sector net borrowing (excluding public sector banks) by sub-sector

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Figure 4 illustrates that annual borrowing has been generally falling since the peak in the financial year ending (FYE) March 2010 (April 2009 to March 2010).

In the latest full financial year (April 2017 to March 2018), the £41.5 billion (or 2.0% of gross domestic product (GDP)) borrowed by the public sector was around one-quarter of PSNB ex in the FYE March 2010, when borrowing was £153.1 billion (or 9.9% of GDP).

Figure 4: Public sector net borrowing (excluding public sector banks)

April 1993 to November 2018, UK

Source: Office for National Statistics

Notes:

1. Financial year 2017/18 represents the financial year ending 2018 (April 2017 to March 2018).

2. Office for Budget Responsibility (OBR) full financial year forecast of £25.5 billion for public sector net borrowing excluding public sector banks (October 2018 Economic and Fiscal Outlook).

3. YTD equals year-to-date (April to November 2018).

Download this image Figure 4: Public sector net borrowing (excluding public sector banks)

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Public sector net debt (PSND ex) represents the amount of money the public sector owes to private sector organisations (including overseas institutions), that has built up by successive government administrations over many years.

When the government borrows, this normally adds to the debt total, but it is important to remember that reducing the deficit is not the same as reducing the debt.

At the end of November 2018, the amount of money owed by the public sector to the private sector stood at around £1.8 trillion (Figure 5), which equates to 83.9% of the value of all the goods and services currently produced by the UK economy in a year (or gross domestic product (GDP)).

Figure 5: Public sector net debt (excluding public sector banks)

March 1994 to the end of November 2018, UK

Source: Office for National Statistics

Notes:

1. Includes Asset Purchase Facility (APF), which includes the Term Funding Scheme (TFS).

2. Public sector net debt excluding public sector banks (PSND ex) is the combination of PSND ex Bank of England (BoE) plus BoE contribution to PSND ex.

Download this image Figure 5: Public sector net debt (excluding public sector banks)

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The introduction of the Term Funding Scheme (TFS) in September 2016 led to an increase 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).

Since November 2017, the net debt associated with the Bank of England (BoE) increased by £27.8 billion to £188.6 billion. Nearly all of this growth was due to the activities of the Asset Purchase Facility Fund, of which the TFS is a part.

The TFS closed for drawdowns of further loans on 28 February 2018 with a loan liability of £127.0 billion. The TFS loan liability at the end of November 2018 was £121.4 billion.

If we were to exclude the activities of the BoE in the estimation of public sector net debt (excluding public sector banks), it would reduce by £188.6 billion, from £1,795.1 billion to £1,606.5 billion, or from 83.9% of GDP to 75.1%.

Figure 6 breaks down outstanding public sector net debt at the end of November 2018 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.

Figure 7 incorporates 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 2018).

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.

Figure 7: Components of net debt

How the difference in expenditure and receipts affect public sector net debt (excluding public sector banks), UK

Source: Office for National Statistics

Notes:

1. Cash transactions in (non-financing) financial assets, which do not impact on net borrowing.

2. Timing differences between cash and accrued data.

3. Revaluation of foreign currency debt (for example, foreign currency). Debt issuances or redemptions above or below debt valuation (for example, bond premia and discounts and capital uplifts). Changes in volume of debt not due to transactions (for example, sector reclassification).

Download this image Figure 7: Components of net debt

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Revisions can be the result of both updated data sources and methodology changes. This month, revisions to public sector net borrowing are as a result of updated data sources.

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. This month we have no errors to report.

Table 1 presents the revisions to the headline statistics presented in this bulletin compared with those presented in the previous publication (published on 21 November 2018).

Revisions to public sector net borrowing (excluding public sector banks) in the current financial year-to-date (April to October 2018)

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.

Public sector net borrowing excluding public sector banks (PSNB ex) in the period April to October 2018 has been revised down by £1.1 billion compared with figures presented in the previous bulletin (published on 21 November 2018).

Over this period, a change in the way we account for business rates (outlined in Section 3) has led to a reduction in the current grants paid by central government to local government of £2.3 billion. This change offsets across central and local government expenditure, meaning that of the £3.6 billion decrease in central government net borrowing, £2.3 billion was due to central government paying less grants to local government, while £1.3 billion was due to other data changes resulting from improved data. Conversely, of the £2.8 billion increase in local government net borrowing, £2.3 billion was due to them receiving less grants from central government (these grants are recorded as negative expenditure by local government), while £0.5 billion was due to other data changes, again from improved data.

The estimate of central government receipts for the period April to October 2018 increased by £0.9 billion; with tax receipts and National Insurance contributions increasing by £1.0 billion and £0.2 billion respectively. These increases were partially offset by a decrease in interest and dividends of £0.3 billion.

Over the same period, estimates for central government current expenditure reduced by £2.7 billion; due largely to the decrease in local government grants outlined previously, along with a decrease of £0.2 billion in expenditure on goods and services and a £0.3 billion reduction in the subsidies paid by central government.

Figure 8 breaks down this revision to PSNB ex by each of its four sub-sectors: central government, local government, non-financial public corporations and Bank of England (BoE).

Figure 8: Revisions to net borrowing

Latest data covering April to October 2018, compared with that presented in the previous bulletin (21 November 2018), UK

Source: Office for National Statistics

Notes:

1. PSNBex – Public sector net borrowing excluding public sector banks.

2. CGNB – Central government net borrowing.

3. LGNB – Local government net borrowing.

4. PCNB – Non-financial public corporations net borrowing.

5. BoENB – Bank of England net borrowing.

6. L&P – Land and property.

7. I & W – Income and wealth.

8. Contributions to EU – UK VAT, GNI and abatement contributions to the EU budget.

9. NICs – National Insurance contributions.

Download this image Figure 8: Revisions to net borrowing

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Revisions to public sector net borrowing (excluding public sector banks) in the financial year ending March 2018

Since the last publication (21 November 2018), estimates of public sector net borrowing for the financial year ending (FYE) March 2018 have increased by £1.4 billion, with estimates of central government and local government net borrowing increasing by £0.7 billion and £1.0 billion respectively.

The increase in central government net borrowing was largely due to a £0.5 billion increase in the estimate of gross capital formation, where we have further aligned our central government capital expenditure data to published departmental accounts.

The receipt of local government current expenditure final outturn data for England and Wales, along with capital expenditure final outturn data for Wales, led to the increase in local government net borrowing.

Revisions to public sector net debt excluding public sector banks

Public sector net debt excluding public sector banks (PSND ex) was revised up by £0.9 billion at the end of October 2018, compared with figures presented in the previous bulletin (published on 21 November 2018).

This revision was due largely to the receipt of improved local government data increasing local government gross debt by £0.8 billion and reducing liquid assets by £0.2 billion.

The independent Office for Budget Responsibility (OBR) is responsible for the production of official forecasts for government. These forecasts are usually produced twice a year, in spring and autumn.

The OBR forecasts used in this bulletin are based on those published in its Economic and Fiscal Outlook – October 2018.

Table 2 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 financial year-to-date (April to November 2018) outturn estimates with those of the previous financial year.

Caution should be taken when comparing public sector finances data with OBR figures for the full financial year. Data are not finalised until some time 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.

The UK government debt and deficit 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 19 October 2018, we published UK government debt and deficit: June 2018, consistent with Public sector finances, UK: August 2018 (published on 21 September 2018). In this publication we stated that:

• general government gross debt was £1,763.8 billion at the end of March 2018, equivalent to 85.6% of gross domestic product (GDP); 25.6 percentage points above the Maastricht reference value of 60.0%

• general government deficit (or net borrowing) was £41.0 billion in the financial year ending (FYE) March 2018, equivalent to 2.0% of GDP; 1.0 percentage point below the Maastricht reference value of 3.0%

This bulletin presents an upward revision to general government deficit in the FYE March 2018 of £1.9 billion, to £42.9 billion, compared with that published on 19 October 2018; while the estimate of general government gross debt remains unchanged at £1,763.8 billion.

The UK general government debt and deficit data we published on 19 October 2018 was published by Eurostat on 22 October 2018 (PDF, 548KB) in context with the other 27 EU member states.

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 statistical bulletin, differs from that used within the Public sector finances statistical bulletin.

The public sector finances Quality and Methodology Information (QMI) 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

The public sector finances methodological guide provides comprehensive contextual and methodological information concerning the monthly Public sector finances statistical bulletin.

The guide sets out the conceptual and fiscal policy context for the bulletin, identifies the main fiscal measures and explains how these are derived and inter-related. Additionally, it details the data sources used to compile the monthly estimates of the fiscal position.

Local government forecasts

In recent years, planned expenditure initially reported in local authority 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.

Since our last publication (21 November 2018), we have increased the underspend adjustment applied to current expenditure for England in the financial year ending March 2019, from £1.0 billion to £1.5 billion, based on the latest in-year data supplied by the Ministry of Housing, Communities and Local Government (MHCLG). The underspend adjustments applied to capital expenditure remain unchanged, in that no adjustment is applied to capital expenditure in England, while capital expenditure in Scotland and Wales are adjusted by £0.5 billion and £0.2 billion respectively.

Further information on these and additional adjustments can be found in the public sector finances methodological guide.

This section presents information on aspects of data or methodology that are planned but not yet included in the public sector finances.

Further, in our article Looking ahead: developments in public sector finance statistics, we provide users with early sight of those areas where the fiscal statistics may be significantly impacted upon by methodological or classification changes during the coming 24 months.

Fines and penalties

We are currently investigating our recording of fines and penalties for the late payment of taxes to HM Revenue and Customs (HMRC).

Any additional revenue identified and recorded by the inclusion of such payments will increase central government receipts and so reduce public sector net borrowing.

Based on our ongoing investigation, we expect borrowing to reduce by around £0.7 billion in the financial year ending (FYE) March 2018 due to this revenue increase. We will introduce these changes at the earliest opportunity.

Accounting for student loans: how we are improving the recording of student loans in government accounts

Office for National Statistics (ONS) announced on 24 April 2018 that it would review the treatment of student loans in the UK government’s accounts. This is to ensure that the way these loans are treated reflects how the system works in practice as well as being in line with international best practice. This review followed recommendations from both the Treasury Select Committee and the House of Lords Economic Affairs Committee (PDF, 1.6MB) .

On 17 December 2018, we announced our decision on how we will treat student tuition fee and maintenance loans in the government’s accounts. We have published a blog explaining our role and why we have taken this decision.

In addition, we have published a technical note, giving further information about how we came to our decision.

It is anticipated that implementation of this decision into its headline statistics will take some time and that any change will be reflected in the public sector finances in September 2019.

Further information on the review can be found in the Looking ahead – developments in public sector finance statistics: 2018 article, published on 17 July 2018.

Crossrail

On 10 December 2018, the government published an Update on the financial package for Crossrail. In this release, they announced a financial package of £1.4 billion, largely made up of a loan of £1.3 billion from the Department for Transport (DfT) to the Greater London Authority (GLA).

The government also announced that, as the final costs of the Crossrail project are yet to be confirmed, a contingency arrangement has also been agreed between Transport for London (TfL) and DfT. The DfT will loan TfL up to £750 million in the event that further finance is required for the project.

We will reflect the impact of these financial transactions in the public sector finances at the earliest opportunity after these transactions have taken place.

The sale of railway arches

On 11 September 2018, Network Rail announced they had agreed terms for the sale of its Commercial Estate business in England and Wales, the majority of the properties in which are railway arches. We are currently investigating the nature of the transaction to ensure that the impacts will be fully reflected in the public sector finances.

East Coast Mainline

On 16 May 2018, the government announced that from 24 June 2018, London North Eastern Railway (LNER) will take over the running of East Coast Mainline services. On 31 August 2018, we announced that LNER would be classified to the public non-financial corporations sub-sector, effective from 14 February 2018. We are currently investigating the implications of this decision and our conclusions will be announced in due course.

Future changes to the recording of the Term Funding Scheme

On 21 June 2018, the government published a new Memorandum of Understanding between HM Treasury and the Bank of England (BoE), which sets out the financial relationship between the two institutions.

This memorandum announced that during the current financial year (April 2018 to March 2019), the £127 billion liabilities of the Term Funding Scheme (TFS) (PDF, 1.4MB) will be transferred from the Bank of England Asset Purchase Facility Fund (APF) to the BoE’s own balance sheet and that the HM Treasury indemnity for it was being removed.

TFS was introduced in 2016, as a quantitative easing measure under the APF umbrella, to enable financial institutions to cut the time in passing on interest rate reductions to consumers and businesses.

This change will have no impact on public sector net debt (both including and excluding public sector banks).

Further, to enable the BoE to take TFS on balance sheet without an indemnity from the Treasury, a capital injection of £1.2 billion from HM Treasury to the BoE has been announced. The nature of the capital injection will be formally discussed at a classifications meeting and announced in due course.

EU withdrawal agreement

Although the Office for Budget Responsibility (OBR) discusses the EU settlement in Annex B (PDF, 2.5MB) of their Economic and Fiscal Outlook – March 2018, the details in the report are still subject to negotiation and so there is insufficient certainty at this stage for us to complete a formal assessment of impact on the UK public sector finances.

Carillion insolvency

Following Carillion Plc declaring insolvency on 15 January 2018, the UK government announced that it would provide the necessary funding required by the Official Receiver, to ensure continuity of public services through an orderly liquidation. The Official Receiver has been appointed by the court as liquidator, along with partners at PwC that have been appointed Special Managers. The defined benefit pension schemes of former Carillion employees are currently being assessed by the Pension Protection Fund (PPF) prior to any transition into the PPF scheme.

We are currently investigating the various impacts of the liquidation of Carillion on the public sector finances, including in relation to the public-private partnership projects in which Carillion was involved and the additional funding that the government has provided to maintain public services. We will announce our findings in due course.

Prior to liquidation, Carillion held approximately 450 contracts with government, representing 38% of Carillion’s 2016 reported revenue.

Time series data

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 finances Tables 1 to 10: Appendix A

• Large impacts on public sector fiscal measures excluding banking groups: Appendix B

• Public sector finances revisions analysis on main fiscal aggregates: Appendix C

• Public sector current receipts: Appendix D

• Impact of the reclassification of housing associations into the public sector: Appendix E

• Revisions to the first reported estimate of public sector net borrowing: Appendix F

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).