Borrowing (public sector net borrowing excluding public sector banks, PSNB ex) in October 2019 was £11.2 billion, £2.3 billion more than in October 2018; this is the highest October borrowing for five years (since October 2014).
Borrowing in the current financial year-to-date (April 2019 to October 2019) was £46.3 billion, £4.3 billion more than in the same period last year; this is the highest April-to-October borrowing for two years (since 2017), though April-to-October 2018 remains the lowest in such a period for 12 years (since 2007).
Debt (public sector net debt excluding public sector banks, PSND ex) at the end of October 2019 was £1,798.5 billion (or 80.4% of gross domestic product, GDP), an increase of £32.1 billion (or a decrease of 1.1 percentage points) on October 2018.
Debt at the end of October 2019 excluding the Bank of England (mainly quantitative easing) was £1,615.0 billion (or 72.2% of GDP); this is an increase of £42.8 billion (or a decrease of 0.3 percentage points) on October 2018.
Central government net cash requirement was £33.0 billion in the current financial year-to-date; this is £17.3 billion more than in the same period in the previous year.
Central government net cash requirement excluding both UK Asset Resolution Ltd and Network Rail was £32.8 billion in the current financial year-to-date; this is £15.5 billion more than in the same period last year.
In the UK, the public sector consists of six sub-sectors: central government, local government, public non-financial corporations, public sector pensions, the 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). 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 the government does not need to borrow to fund the debt of RBS, nor would surpluses achieved by RBS be passed on to the government, other than through any dividends paid as a result of the 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 (PSNB) 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; however, there are some transactions, for example, loans to the private sector, that 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, minus the amount of cash and other short-term assets it holds. Public sector net debt (PSND) is often referred to by commentators as “the 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 national 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.Nôl i'r tabl cynnwys
This section presents information on aspects of data or methodology that have been introduced or improved since the publication of the previous bulletin (22 October 2019), along with supporting information that users may find useful.
Bank of England Asset Purchase Facility Fund
In October 2019, there was a £3.4 billion dividend transfer from the Bank of England Asset Purchase Facility Fund (BEAPFF) to HM Treasury. As with other such transfers, central government net borrowing is reduced by the transfer, while the net borrowing of the Bank of England is increased by an equal and offsetting amount. There is no impact at the public sector level.
The Bank of England entrepreneurial income for the financial year ending (FYE) March 2019 (April 2018 to March 2019) was calculated as £11.2 billion. This is the total amount of dividend transfers that can impact on central government net borrowing in the FYE March 2020 (April 2019 to March 2020). So far in this financial year-to-date (April to October 2019), £6.9 billion in dividends have transferred from the BEAPFF to HM Treasury, compared with £9.2 billion in the same period last year.Nôl i'r tabl cynnwys
In October 2019, the public sector spent more money than it received in taxes and other income, meaning it had to borrow £11.2 billion, £2.3 billion more than in October 2018. Of this £11.2 billion, central government borrowed £7.6 billion, local government borrowed £1.0 billion and the Bank of England’s contribution to net borrowing was £2.5 billion.
In October 2019, there was a cash transfer of £3.4 billion recorded from the Bank of England Asset Purchase Facility Fund (BEAPFF) to central government. This transfer is public sector borrowing neutral, but it has the effect of reducing central government net borrowing by £3.4 billion and increasing the impact of the Bank of England on net borrowing by an equal and opposite amount. Had this transfer not taken place, central government’s net borrowing in October 2019 would have been £11.0 billion and the Bank of England would have shown a surplus of £0.9 billion.
Figure 1 presents both monthly and cumulative public sector net borrowing excluding public sector banks (PSNB ex) in the current financial year-to-date (April 2019 to October 2019) and compares these with the same period in the previous financial year.
Figure 2 summarises public sector net borrowing (PSNB) by sub-sector in October 2019 and compares this with the equivalent measures in the same month a year earlier (October 2018). This presentation splits PSNB ex into each of its five sub-sectors: central government, local government, non-financial public corporations, public sector pensions and the Bank of England.
The data for the latest months of every release contain a degree of forecasts. This is because 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.
Central government receipts in October 2019 increased by £0.2 billion (or 0.4%) to £61.7 billion, compared with October 2018, while total central government expenditure increased by £1.7 billion (or 2.6%) to £66.8 billion.
Of this £66.8 billion, £64.5 billion related to the cost of the “day-to-day” activities of the public sector (the current expenditure), while £2.3 billion was capital spending (or net investment), such as on infrastructure.
Tobacco duty receipts fell by £0.6 billion compared with October 2018, which may reflect the timing of the Autumn Budget Statement, which was held in October 2018. Tobacco duty tends to increase in the month prior to a fiscal event, as producers forestall their duty payments in anticipation of a tax rate rise.
Accrued Value Added Tax (VAT) increased by £0.6 billion over the same period, while October Corporation Tax receipts decreased by £0.3 billion. However, it is important to note that both of these taxes contain forecast cash receipts data and are liable to revision as actual cash receipts data are received.
Income-related revenue increased by £0.3 billion, with an increase in National Insurance contributions (NICs) of £0.5 billion, being offset by a decrease in Income Tax receipts of £0.2 billion.
Departmental expenditure on goods and services increased by £2.3 billion, compared with October 2018, including a £1.0 billion increase in expenditure on staff costs and a £1.0 billion increase in the purchase of goods and services.
Interest payments on the government's outstanding debt decreased by £0.5 billion, compared with October 2018, largely resulting from movements in the Retail Prices Index (RPI), to which index-linked bonds are pegged. The relationship between the RPI and the valuation index-linked bonds is explored further in the Public sector finances Quality and Methodology Information (QMI) report.
Local government data are based on budget data for England, Wales and Scotland for the financial year ending (FYE) March 2020. Public corporations data remain initial estimates, based on the Office for Budget Responsibility (OBR) forecasts. Current and capital transfers between these sectors and central government are based on administrative data supplied by HM Treasury.
Pensions data for the current financial year are our estimates based on the latest available data. Some of these estimates rely on actuarial modelling -- a complex process that most public sector schemes conduct every three to four years. Until such valuations become available, we forecast the change in pension liability using our knowledge of the economic climate. Pensions in the public sector finances: a methodological guide outlines both the theory and practice behind our calculation of pension scheme estimates.
Because of 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' figures. Figure 3 summarises the contributions of each sub-sector to PSNB ex in the latest financial year-to-date (April 2019 to October 2019) and compares these with the same period last year.
In the current financial year-to-date (April 2019 to October 2019), public sector spending exceeded the money received in taxes and other income. This meant the public sector had to borrow £46.3 billion, £4.3 billion more than the same period last year.
Of the £46.3 billion borrowed by the public sector in this period, £22.8 billion related to the cost of the “day-to-day” activities of the public sector (the current budget deficit), while £23.6 billion was capital spending (or net investment), such as on infrastructure.
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 year-to-date, central government receipts grew by 2.4% on the same period last year to £428.2 billion, including £312.6 billion in tax revenue.
Over the same period, central government spent £455.8 billion, an increase of 3.4%. Of this amount, around two-thirds was spent by central government departments (Education, Defence, and Health and Social Care); just below one-third was spent on social benefits (such as pensions, unemployment payments, Child Benefit and Statutory Maternity Pay); and the remainder was spent on capital investment and interest on the government’s outstanding debt.
Figure 4 shows annual borrowing has generally been falling since the peak in the FYE March 2010 (April 2009 to March 2010).
In the latest full financial year (April 2018 to March 2019), the £41.4 billion (or 1.9% of gross domestic product, GDP) borrowed by the public sector was around a quarter (26.2%) of the amount seen in the FYE March 2010, when borrowing was £158.3 billion (or 10.2% of GDP).Nôl i'r tabl cynnwys
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), which 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 October 2019, the amount of money owed by the public sector to the private sector stood at just below £1.8 trillion (Figure 5), which equates to 80.4% of the value of all the goods and services currently produced by the UK economy in a year (or gross domestic product, GDP).
The Bank of England’s contribution to net debt is largely a product of their quantitative easing measures, namely the Bank of England Asset Purchase Facility Fund (BEAPFF) and the Term Funding Scheme (TFS). If we were to exclude the Bank of England from our calculation of PSND ex, it would reduce by £183.5 billion, from £1,798.5 billion to £1,615.0 billion, or from 80.4% of GDP to 72.2%.
Figure 6 breaks down outstanding public sector net debt (PSND) at the end of October 2019 into the sub-sectors of the public sector. In addition to PSND ex, this presentation includes the effect of public sector banks on debt.
Figure 7 incorporates the borrowing components detailed in Figure 3 to show 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 2019 to October 2019).
The reconciliation between public sector net borrowing (PSNB) and the net cash requirement is presented in more detail in Table REC1 in the Public sector finances tables 1 to 10: Appendix A dataset.
Nôl i'r tabl cynnwys
Revisions can be the result of both updated data sources and methodology changes. This month, revisions to public sector finance statistics are a result of updated data only.
Following the publication of last month’s bulletin (22 October 2019), we identified an issue affecting local government current expenditure and local government net borrowing in the financial year-to-date (April to September 2019) as well as the equivalent general government and public sector measures, including public sector net borrowing (PSNB).
Public sector net borrowing excluding public sector banks (PSNB ex) was overstated by £1.3 billion in the financial year-to-date (April to September 2019); for September 2019 alone, it was overstated by £0.2 billion.
A corrected bulletin was re-published on 29 October 2019. The revisions discussed in this section reflect our latest estimates compared with those published on 29 October 2019.
Table 1 shows the revisions to the headline statistics presented in this bulletin compared with those presented in the previous bulletin (published as corrected on 29 October 2019).
|£ billion¹ (not seasonally adjusted)|
|Period||CG²||LG³||NFPCs⁴||PSP⁵||BoE⁶||PSNB ex⁷||PSND ex⁸||PSND % of GDP⁹||PSNCR ex¹⁰|
Download this table Table 1: Revisions to main aggregates.xls .csv
Revisions to public sector net borrowing excluding public sector banks in the current financial year-to-date (April to September 2019)
The data for the latest months of every release contain a degree of forecasts. The initial outturn estimates for the early months of the financial year, particularly April, contain more forecast data than other months. This is because 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.
PSNB ex in the current financial year-to-date (April to September 2019) has been revised down by £3.9 billion compared with figures presented in the previous bulletin (published as corrected on 29 October 2019) as a result of updated central government data.
Since the previous bulletin, total central government receipts in the current financial year-to-date are largely unchanged, showing only a relatively small decrease of less than £0.1 billion. Underlying this revision are a number of largely offsetting data changes.
The previous estimate of interest and dividends receipts has been increased by £0.7 billion, largely because of a £0.8 billion misrecording of the Royal Bank of Scotland (RBS), paid in April 2019, being captured in cash receipts but not in central government net borrowing. Further, updated bank levy data increased tax receipt estimates by £0.2 billion. These increases in receipts have been offset by a reduction to previous estimates of Value Added Tax (VAT), National Insurance contributions (NICs) and Corporation Tax of £0.5 billion, £0.2 billion and £0.1 billion respectively.
Over the same period, we have reduced our previous estimate of central government current expenditure by £2.5 billion. Reductions in previous estimates of the purchase of goods and services, social assistance and “other” current grants of £3.2 billion, £0.6 billion and £0.6 billion, respectively, were partially offset by a combined upward revision to previous estimates of staff costs and grants to local government of £1.4 billion and £0.5 billion.
This £0.5 billion increase in current transfers from central to local government in the current financial year-to-date, while increasing central government borrowing, has reduced local government borrowing by an equal and offsetting amount.
The previous estimate of net investment on capital in the current financial year-to-date has been reduced by £0.9 billion, with estimates of gross capital formation and capital transfers reducing by £0.6 billion and £0.3 billion since our last publication.
Figure 8 summarises the revisions to PSNB ex by sub-sector, comparing the latest estimates of borrowing with those presented in the previous bulletin (published as corrected on 29 October 2019). This presentation splits the revisions to PSNB ex into each of its five sub-sectors: central government, local government, non-financial public corporations, public sector pensions and the Bank of England.
Revisions to public sector net debt excluding public sector banks
Public sector net debt excluding public sector banks (PSND ex) at the end of September 2019 has been revised down by £0.2 billion compared with that presented in the previous bulletin (published as corrected on 29 October 2019), largely because of an increase of £0.2 billion to the previous estimate of local government liquid assets.
Revisions to the net borrowing and net debt of public sector banks
Estimates of the net borrowing, net cash requirement and net debt of public sector banks are derived from both the profit and loss (P&L) account and balance sheet of these organisations, supplied to us by the Bank of England twice annually.
This month we have received both P&L and balance sheet data covering the period January to June 2019 for the first time, enabling us to update previous estimates associated with public sector banks. Further, our own estimates covering the period July 2019 to date have been updated to reflect this new information.
As a consequence of receiving these data, our estimate of the PSNB of public sector banks for the financial year ending (FYE) March 2019 (April 2018 to March 2019) has decreased by £0.1 billion, while their corresponding net debt at the end of June 2019 has increased by £9.9 billion.Nôl i'r tabl cynnwys
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.
On 7 November 2019, the OBR announced that the planned technical restatement of their March 2019 public finance forecast would no longer be published. As a result of this decision, the debt and borrowing forecasts used in this bulletin remain based on those published in its Economic and Fiscal Outlook (EFO) – March 2019.
In their EFO for March 2019, the OBR forecast public sector net borrowing excluding public sector banks (PSNB ex) in the financial year ending (FYE) March 2019 to be £22.8 billion, with an expectation that it would increase to £29.3 billion in the FYE March 2020.
These March 2019 OBR forecasts do not include estimates of the revisions made in September 2019 for student loans and pensions data. In Chasrt B.4 of the EFO for March 2019 (Excel, 937 KB), the OBR estimates that the inclusion of student loans in the public sector would add £11.2 billion to public sector net borrowing (PSNB) in the FYE March 2020, giving an expected total PSNB of £40.6 billion for the current financial year. However, this is an initial forecast and does not include the impact of student loan sales as this methodology was yet to be determined at the time the forecast was made.
Table 2 compares the current outturn estimates for each of our main public sector excluding public sector banks aggregates for the current financial year-to-date with corresponding OBR forecasts for the following financial year.
In addition, Table 2 compares the latest full financial year (April 2018 to March 2019) outturn estimates with those of the previous financial year.
Caution should be taken when comparing public sector finances data with the 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 the OBR forecasts and outturn data.
|Excluding public sector banks||£ billion¹ (not seasonally adjusted)|
|Financial year-to-date⁷||Full financial year|
|2018/19||2019/20||% change||2018/19⁸ outturn||2019/20 OBR forecast⁹||% change|
|Current budget deficit²||20.7||22.8||10.1||-5.4||-17.7||-227.4|
|Net debt as a percentage of GDP⁶ ¹⁰||81.5||80.4||-1.1||80.8||82.2||1.4|
Download this table Table 2: Latest outturn estimates compared with the Office for Budget Responsibility forecasts.xls .csv
Government Finance Statistics
The UK government debt and deficit statistical bulletin is published quarterly (in January, April, July and October each year), to coincide with when the UK and other EU member states are required to report on their deficit (or net borrowing) and national debt to the European Commission.
On 18 October 2019, we published UK government debt and deficit: June 2019, consistent with Public sector finances, UK: August 2019 (published on 24 September 2019). In this publication, we stated that:
general government gross debt was £1,821.9 billion at the end of the financial year ending (FYE) March 2019, equivalent to 84.2% of gross domestic product (GDP); this is 24.2 percentage points above the Maastricht reference value of 60%
general government deficit (or net borrowing) was £41.5 billion in the FYE March 2019, equivalent to 1.9% of GDP; this is 1.1 percentage points below the Maastricht reference value of 3%
This bulletin presents no revision to the general government debt or deficit published on 18 October 2019.
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 bulletins differs from that used within the public sector finances statistical bulletins.
International Monetary Fund’s Government Finance Statistics framework
In June 2019, we published supplementary tables compliant with the International Monetary Fund's (IMF) Government Finance Statistics framework for the first time. These new supplementary tables, IMF's Government Finance Statistics framework in the public sector finances: Appendix E present the public sector balance sheet, statement of operations and statement of other economic flows.
In October 2019, the supplementary tables were improved to incorporate unfunded pensions, the gross reporting of funded pensions, improvements to the estimation of capital stocks (and therefore the consumption of fixed capital) and an extended coverage of public–-private partnerships – those that are considered to be on-balance sheet in the Whole of Government Accounts (WGA). These changes address methodological and coverage differences between the European System of Accounts 2010: (ESA 2010) and the Government Finance Statistics Manual 2014 (GFSM 2014) and brings us fully in line with GFSM 2014. As such, aggregates presented in the GFSM 2014 tables are different to those in the public sector finances.
Alongside this month's statistical bulletin, the supplementary tables have been improved to incorporate unfunded pensions, the gross reporting of funded pensions and improvements to the estimation of capital stocks (and therefore the consumption of fixed capital).
Further improvements include extended coverage of public--private partnerships -- those that are considered to be on-balance sheet in the Whole of Government Accounts (WGA). These changes address methodological and coverage differences between the European System of Accounts 2010 (ESA 2010) and the Government Finance Statistics Manual 2014 (GFSM 2014) and brings us fully in line with GFSM 2014. As such, aggregates presented in the GFSM 2014 tables are different to those in the public sector finances.
Reconciliation tables are included, and our methodological article, IMF's Government Finance Statistics framework in the public sector finances, accompanies the tables. It provides an overview of the IMF's framework, explains differences to the national accounts framework, provides information on data sources and quality, and details our future plans.Nôl i'r tabl cynnwys
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
the 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 interrelated. 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.
In September 2019, we incorporated provisional outturn data and removed our underspend adjustment for current expenditure in England over the financial year ending (FYE) March 2019, along with our underspend adjustment for both England and Scotland capital expenditure over the same period. The only adjustment remaining for FYE March 2019 is for Wales' capital expenditure (£0.2 billion).
For the FYE March 2020, we have introduced a £1.2 billion downwards adjustment to England's current expenditure, along with £0.7 billion and £0.2 billion adjustments to Scotland's and Wales' capital expenditure respectively.
Further information on these and additional adjustments can be found in the Public sector finances QMI report.Nôl i'r tabl cynnwys
This section explains the main methodology changes introduced to public sector finance statistics in September 2019 and presents estimates of our headline measures of public sector net borrowing excluding public sector banks (PSNB ex), public sector net debt excluding public sector banks (PSND ex) and public sector net financial liabilities excluding public sector banks (PSNFL ex) had these changes not been introduced.
Public sector pensions
We have adopted a new, gross presentation of funded employment-related pensions. This change, predominantly presentational in nature, has greatly increased the volume of assets recorded on the public sector balance sheet but consolidated many inter-public sector balances and transactions. We now also include the Pension Protection Fund within the public sector boundary.
These changes have reduced PSND ex at the end of March 2019 by £28.6 billion, reflecting the consolidation of gilts and recognition of liquid assets held by the public pension schemes.
Improvements in the statistical treatment of student loans have added £12.4 billion to PSNB ex in the financial year ending (FYE) March 2019. Outlays are no longer all treated as conventional loans. Instead, we split lending into two components: a genuine loan to students and government spending. This new approach recognises that a significant proportion of student loan debt will never be repaid. We record government expenditure related to the expected cancellation of student loans in the period that loans are issued. Further, government revenue no longer includes interest accrued that will never be paid.
In June 2019, we announced our intention to introduce a number of improvements to the estimation of capital stocks and therefore the consumption of fixed capital in September 2019. These improvements included a review of:
the life length of fixed assets
the classification of stocks by asset, industry and the institutional sector
the modelling of the age-efficiency profile of capital assets
Any updates to capital consumption are PSNB ex neutral and have no impact on PSND ex or PSNFL ex.
The impact of these developments
Tables 3, 4 and 5 present our latest estimates of PSNB ex, PSND ex and PSNFL ex with the impact of the methodology changes introduced in September 2019 removed.
|£ billion (not seasonally adjusted)|
|Public sector net borrowing ex¹||Public sector net borrowing ex as a percentage of GDP¹||Public sector funded pension schemes²||Student loans||Capital consumption||Public sector net borrowing ex³||Public sector net borrowing ex as a percentage of GDP³|
Download this table Table 3: The impacts on public sector net borrowing of removing the changes to the accounting for public sector pensions, student loans and capital consumption introduced in September 2019.xls .csv
|£ billion (not seasonally adjusted)|
|Public sector net debt ex¹||Public sector net debt ex as a percentage of GDP¹||Public sector funded pension schemes²||Student loans||Capital consumption||Public sector net debt ex³||Public sector net debt ex as a percentage of GDP³|
Download this table Table 4: The impacts on public sector net debt of removing the changes to the accounting for public sector pensions, student loans and capital consumption introduced in September 2019.xls .csv
|£ billion (not seasonally adjusted) unless otherwise stated|
|Public sector net financial liabilities¹||Public sector net financial liabilities as a percentage of GDP¹||Public sector funded pension schemes²||Student loans||Public sector net financial liabilities³||Public sector net financial liabilities as a percentage of GDP³|
Download this table Table 5: The impacts on public sector net financial liabilities of removing the changes to the accounting for public sector pensions, student loans and capital consumption introduced in September 2019.xls .csv
Impact of student loans, public sector-funded pension scheme changes and capital consumption changes introduced in September 2019: Appendix G expands this presentation to include the impact on current budget deficit and net investment and also provides additional quarterly and monthly time series. We plan to continue publishing updated versions of these tables until the end of the current financial year (April 2020).Nôl i'r tabl cynnwys
This section presents information on aspects of data or methodology that are planned but not yet included in the public sector finances.
Corporation Tax credits
Corporation Tax credits data are updated by HM Revenue and Customs (HMRC) each Autumn to take account of the latest outturn data. We plan to include the latest data in our December public sector finances release. This will cause largely offsetting revisions to receipts and expenditure, from April 2013 onwards. Taking the financial year ending (FYE) March 2018 as an example, on a national accounts basis, tax credits, Corporation Tax receipts and subsidies paid will each be revised by about £0.6 billion. Revisions to later periods may be larger because tax credits have been increasing in recent years. There is likely to be a small impact on public sector net borrowing (PSNB).
Looking ahead – developments in public sector finance statistics
On 31 May 2019, we published the second in our series of development articles, Looking ahead – developments in public sector finance statistics: 2019. In this article, we listed a number of short-term areas of work that we aim to implement in public sector finance statistics within 18 months from the date of this publication. These include:
treatment of student loans (subsequently introduced in September 2019)
presentation of pension data on a gross basis (subsequently introduced in September 2019)
International Monetary Fund's (IMF) Government Finance Statistics framework (subsequently introduced in October 2019)
treatment of capital consumption or depreciation (subsequently introduced in September 2019)
continuous development of public sector net financial liabilities (PSNFL)
recording of leases
The article also provides some detail on the areas of planned medium- and longer-term development.
Ongoing developments in public sector finance statistics
This section presents information on our current continuous improvement projects and methodological decisions that are planned but not yet included in the public sector finances.
Thomas Cook Group plc
On 23 September 2019, winding up orders were made against Thomas Cook Group plc and associated companies. The court appointed the Official Receiver as the liquidator. We will investigate any implications of this decision on the public sector and announce the results in due course.
Clinical Negligence Indemnity Cover
The scheme provides comprehensive cover to all General Practitioners (GPs) and their wider practice team for clinical negligence relating to NHS services occurring from 1 April 2019. In parallel, the government has agreed commercial terms with the Medical Protection Society covering claims for historical NHS clinical negligence incidents concerning their GP members occurring at any time before 1 April 2019.
We are currently assessing the implications of this scheme for the public sector finances and will announce our findings at the earliest opportunity.
EU withdrawal agreement
Although the Office for Budget Responsibility (OBR) discusses the EU settlement in their Economic and Fiscal Outlook (EFO) -- March 2019 report, the details in the report are still subject to negotiation.
There is insufficient certainty at this stage for us to complete a formal assessment of the impact on the UK public sector finances.
On 28 January 2019, former National Statistician John Pullinger released a statement outlining our legislative preparations for a possible no-deal Brexit.
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.
Following Carillion Plc declaring insolvency on 15 January 2018, the UK government announced that it would provide the 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 as Special Managers. The defined benefit pension schemes of former Carillion employees are currently being assessed by the Pension Protection Fund prior to any transition into the Pension Protection Fund 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.
Sale of railway arches
On 11 September 2018, Network Rail announced they had agreed terms for the sale of their Commercial Estate business in England and Wales. On 4 February 2019, the National Audit Office confirmed that Network Rail had completed a £1.46 billion sale of its commercial property portfolio consisting of approximately 5,200 properties across England and Wales, mainly railway arches.
Public sector net debt (PSND) at the end of February 2019 and the central government net cash requirement in February 2019 were each reduced by an amount equivalent to the cash received by central government from the sale.
We are currently investigating the nature of the transaction to ensure that the impacts will be fully reflected in the public sector finances, so it has yet to be determined whether public sector net borrowing (PSNB) is affected and therefore it remains unchanged.
McCloud pension case
In 2015, the government introduced changes to most public sector pension schemes. As part of the transitional arrangements, older members of the pension schemes had an opportunity to stay in their original pension schemes, which offered better terms than the new schemes introduced at the time. Younger members had to transfer to the new schemes. In December 2018, the Court of Appeal ruled that these arrangements amounted to unlawful age discrimination in a decision that was later upheld by the Supreme Court.
Although the court ruling was related to judges’ and firefighters’ pension schemes, on 15 July 2019 the Government confirmed that the difference in treatment will need to be remedied across all relevant public sector pension schemes.
The impact of this decision on the public sector finances is not yet known, but it has the potential to change the size of the pension liability as well as the net borrowing position of the public sector pension sub-sector. We will provide further information on the impacts of this ruling when it becomes available.Nôl i'r tabl cynnwys
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