Public sector finances, UK: October 2021

How the relationship between UK public sector monthly income and expenditure leads to changes in deficit and debt.

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Cyswllt:
Email Fraser Munro

Dyddiad y datganiad:
19 November 2021

Cyhoeddiad nesaf:
21 December 2021

1. Other pages in this release

Other commentary from the latest public sector finances data can be found on the following pages:

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2. Main points

  • Public sector net borrowing (excluding public sector banks, PSNB ex) was estimated to have been £18.8 billion in October 2021; this was the second-highest October borrowing since monthly records began in 1993, £0.2 billion less than in October 2020.

  • PSNB ex was estimated to have been £127.3 billion in the financial year-to-October 2021; this was the second-highest financial year-to-October borrowing since monthly records began in 1993, £103.4 billion less than in the same period last year.

  • Public sector net debt excluding public sector banks (PSND ex) was £2,277.6 billion at the end of October 2021 or around 95.1% of gross domestic product (GDP), maintaining a level not seen since the early 1960s.

  • Public sector net debt excluding public sector banks and the Bank of England (PSND ex BoE) was £1,986.7 billion at the end of October 2021 or around 83.0% of GDP.

  • Provisional October 2021 estimates of central government receipts were £65.5 billion, up £3.8 billion (or 6.2%) compared with October 2020, while central government bodies spent £78.8 billion, up £1.5 billion (or 1.9%) from October 2020.

  • Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £2.6 billion in October 2021, £11.8 billion less than in October 2020, bringing the total for the financial year-to-October 2021 to £101.2 billion.

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3. The impact of coronavirus on the public finances

The coronavirus (COVID-19) pandemic has had a substantial impact on the economy and on public sector borrowing and debt.

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Although the impact of the coronavirus pandemic on public finances is becoming clearer, its effects are not fully captured in this release meaning that estimates of public sector expenditure and borrowing are subject to greater uncertainty than usual.

Central government tax and National Insurance receipts combined in the financial year ending (FYE) 2021 (April 2020 to March 2021) were £668.2 billion, a fall of £36.7 billion (or 5.2%), compared with the same period a year earlier.

Government support for individuals and businesses during the coronavirus pandemic contributed to an increase of £204.4 billion (or 27.7%) in central government day-to-day (or current) spending, bringing the total to £942.5 billion.

As a result of these low receipts and high expenditure, provisional estimates indicate that in FYE 2021, the public sector borrowed £323.1 billion. This is equivalent to 15.1% of the UK's gross domestic product (GDP), the highest such ratio since the end of World War Two, when it was 15.2% in FYE 1946.

In total, more than 50 schemes have been announced by the UK government and the devolved administrations to support individuals and businesses during the coronavirus pandemic. Our article Recent and upcoming changes to public sector finance statistics: October 2021 and earlier editions of this article discuss the largest of the coronavirus schemes by implementation status within the public sector finances.

The extra funding required by government coronavirus support schemes, combined with reduced cash receipts and a fall in GDP, have all helped to push public sector net debt as a ratio of GDP to levels last seen in the early 1960s. Public sector net debt excluding public sector banks (PSND ex) at the end of October 2021 was equivalent to 95.1% of GDP.

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Our estimates expressed as a percentage of GDP are partially based on official projections, which means figures for recent periods are subject to revision, particularly considering the uncertain impacts of the coronavirus pandemic on the economy.

More about economy, business and jobs

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4. Borrowing in October 2021

The public sector spent more than it received in taxes and other income in October 2021, requiring it to borrow £18.8 billion, the second-highest October borrowing on record.

Analysis of the components of borrowing in October 2021

Central government is the largest sub-sector of the public sector and therefore changes in central government receipts and expenditure usually have the most influence on public sector net borrowing. Public sector finances tables 1 to 10: Appendix A provide further information.

Central government receipts

Central government receipts in October 2021 were estimated to have been £65.5 billion, a £3.8 billion increase compared with October 2020. Of these receipts, tax revenue increased by £2.6 billion to £44.2 billion.

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

The forecasts underlying our current tax estimates are based on the Office for Budget Responsibility's (OBR's) March 2021 forecasts. These will be updated to reflect the OBR's October 2021 forecasts in the data presented in the November PSF bulletin to be published on 21 December 2021.

Corporation Tax

In October 2021, Corporation Tax receipts on an accrued basis were £3.7 billion, a reduction of £0.7 billion compared with a year earlier. A portion of this fall is likely to be because of the super-deduction capital allowance, providing tax incentives for companies to invest in qualifying new plant and machinery assets.

Under the super-deduction, for every pound a company invests in qualifying new plant and machinery assets, their taxes are cut by up to 25 pence. These assets include solar panels, computer equipment, vehicles, tools, office furniture, electric vehicle charge points and heavy machinery.

Though the rate of uptake of this scheme is not yet clear, early evidence suggests that super-deduction claims are building up more slowly than expected. In their Economic and fiscal outlook - October 2021, the OBR expects this scheme to reduce Corporation Tax receipts by £9.3 billion in the current financial year, largely over the second half, adding further uncertainty to the profile of Corporation Tax receipts in recent months.

Bank of England Asset Purchase Facility Fund

This month the Bank of England Asset Purchase Facility Fund (BEAPFF) transferred £4.9 billion to HM Treasury under its indemnity agreement, £0.4 billion more than in October 2020.

Recorded within interest and dividends receipts in Table 2, as with other such transfers, central government net borrowing is reduced by an amount equivalent to the transfer, while the net borrowing of the Bank of England is increased by an equal and offsetting amount.

Central government expenditure

Central government bodies spent £78.0 billion in October 2021, £1.5 billion more than in October 2020.

Interest payments on debt by central government

Interest payments on central government debt were £5.6 billion in October 2021, £3.8 billion more than in October 2020.

The recent high levels of debt interest payments are largely a result of movements in the Retail Prices Index (RPI) to which index-linked gilts are pegged. To estimate the RPI uplift for three-month lagged index-linked gilts in October 2021, we reference the RPI movement between July and August 2021.

While any RPI uplift will impact on accrued expenditure (as used in the calculation of borrowing) it will not be wholly and immediately reflected in the central government net cash requirement. These movements are reflected in the government's liabilities, which will be realised as the existing stock of index-linked gilts is redeemed.

Central government expenditure on procurement and pay

Central government departments spent £31.9 billion on goods and services in October 2021, an increase of £2.0 billion from October 2020.

Spending in this area includes £17.9 billion on procurement and £13.6 billion in pay. This cost includes the expenditure by the Department of Health and Social Care (DHSC), devolved administrations and other departments in response to the coronavirus pandemic including the NHS Test and Trace programme and the cost of vaccines.

Transfers to local government

Central government current transfers to local government were £9.2 billion in October 2021, a decrease of £1.2 billion compared with October 2020.

Current and capital transfers between central government and local government are based on administrative data supplied by HM Treasury and have no impact at the public sector level.

Job support schemes

The Coronavirus support schemes, the Coronavirus Job Retention Scheme (CJRS) and Self Employment Income Support Scheme (SEISS), closed in September 2021. Our estimates of the cost of these schemes are not yet final. We expect to update our estimates over the coming months as further data become available.

Although both schemes have closed, small amounts on a cash basis will continue to be recorded when any late payments and refunds occur. Given that SEISS is recorded on a cash basis we will see further payments or refunds contributing to central government borrowing beyond September 2021. However, because CJRS is recorded on an accrued basis, any CJRS payments or refunds after September will be reflected as revised estimates for the period to which they relate.

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5. Borrowing in the financial year-to-October 2021

The public sector borrowed £127.3 billion in the financial year-to-October 2021 (April to October 2021), £103.4 billion less than in the same period a year earlier.

Official forecasts suggest that borrowing may reach £183.0 billion by the end of the financial year ending (FYE) 2022 (April 2021 to March 2022), £140.1 billion less than the £323.1 billion borrowed in the FYE 2021.

Borrowing had generally been falling since its peak of £157.8 billion during the economic downturn in FYE March 2010. However, largely as a result of the impact of the coronavirus (COVID-19) pandemic, the £323.1 billion borrowed in FYE March 2021 was double this previous record.

Analysis of the components of borrowing in financial year-to-October 2021

Central government is the largest sub-sector of the public sector and therefore changes in central government receipts and expenditure usually have the most influence on public sector net borrowing. Public sector finances tables 1 to 10: Appendix A provide further information.

Central government receipts

Central government receipts in the financial year-to-October 2021 were estimated to have been £447.5 billion, a £59.7 billion increase compared with the same period in 2020. Of these receipts, tax revenue increased by £54.2 billion to £327.2 billion.

Central government expenditure

Central government day-to-day (or current) spending was estimated to have fallen by £25.6 billion to £529.8 billion, in financial year-to-October 2021 compared with the same period a year earlier.

Current budget deficit

Central government’s current budget deficit is the difference between current expenditure (Table 6) and current receipts (Table 5), plus depreciation.

In the financial year-to-October 2021, central government's current budget deficit was £100.6 billion, indicating that its current expenditure was greater than its income.

Over the same period, the public sector current budget deficit was £98.5 billion, with public corporations, public sector pension schemes and the Bank of England sub-sectors showing surpluses.

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6. Central government net cash requirement

The central government net cash requirement (CGNCR), excluding UK Asset Resolution Ltd and Network Rail, is the amount of cash needed immediately for the UK government to meet its obligations. To obtain cash, the UK government sells financial instruments, gilts or Treasury Bills.

The amount of cash required will be affected by changes in the timing of tax payments by individuals and businesses, but does not depend on forecast tax receipts in the same way as our accrued (or national accounts) based measures.

The CGNCR consequently contains the timeliest information and is less susceptible to revision than other statistics in this release. However, as for any cash measure, the CGNCR does not reflect the overall amount for which the government is liable or the point at which any liability is incurred – it only reflects when cash is received and spent.

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7. Debt

Public sector net debt represents the amount of money the public sector owes to private sector organisations (including overseas institutions). When the government borrows, this normally adds to the debt total, but it is important to remember that reducing borrowing (the deficit) is not the same as reducing the debt.

Public sector net debt excluding public sector banks (PSND ex) stood at £2,277.6 billion at the end of October 2021, an increase of £206.2 billion compared with the same point last year.

Over the course of the coronavirus (COVID-19) pandemic, the increase in debt and a fall in gross domestic product (GDP) have helped push public sector net debt as a ratio of GDP to levels last seen in the early 1960s. Debt as a ratio of GDP stands at 95.1% at the end of October 2021.

Central government gilts

Debt represents the amount of money owed by the public sector to the private sector and is largely made up of gilts (or bonds) issued to investors by central government.

There were £1,988.4 billion of central government gilts in circulation at the end of October 2021 (including those held by the Bank of England (BoE) Asset Purchase Facility Fund). This comprised £1,504.9 billion in conventional gilts and £483.4 billion in index-linked gilts (at redemption value).

These gilts are auctioned by the Debt Management Office (DMO), on behalf of central government in accordance with its financing remit.

The Bank of England's contribution to debt

The BoE's contribution to debt is largely a result of its quantitative easing activities through the Asset Purchase Facility (APF) and Term Funding Schemes (TFS).

Our presentation of the BoE's contribution to net debt can be found in Table PSA9A in our Public sector finances tables 1 to 10: Appendix A.

The estimated impact of the APF's gilt holdings on debt currently stands at £111.7 billion, representing the difference between the value of the reserves created to purchase gilts (or market value of the gilts) and the £738.1 billion face (or redemption) value of the gilts purchased.

The total corporate bond holdings of the APF at the end of October 2021 stood at £19.5 billion, adding an equivalent amount to the level of debt.

The loan liability under the TFS umbrella increased by £57.3 billion between September and October 2021 and now stands at £171.5 billion, adding an equivalent amount to the level of debt. The draw down period for TFS with incentives for small and medium enterprises (TFSME) ended on 31 October 2021 and as a result we saw a larger than usual increase in the loans provided under the scheme this month.

Our estimate of the loans recorded under the TFS is recorded as at 27 October 2021. As at 10 November 2021, the loans under the TFSME had increased from £166.5 billion to £193.4 billion. The additional £26.9 billion in loans will be recorded as a part of the November debt estimates.

Our public sector net debt excluding the public sector banks and the Bank of England (PSND ex BoE) measure removes the debt impact of these schemes along with the other transactions relating to the normal operations of the BoE. Currently standing at £1,986.7 billion at the end of October 2021 or around 83.0% of GDP, PSND ex BoE is £290.9 billion (or 12.1 percentage points of GDP) less than PSND ex.

Wider measures of the public sector balance sheet

In the Autumn Statement 2016, the government announced the supplementary fiscal aggregate public sector net financial liabilities excluding public sector banks (PSNFL ex).

PSNFL ex is a more comprehensive measure of the public sector balance sheet, capturing a wider range of financial assets and liabilities than recorded in PSND ex. For example, the assets held under the Term Funding Schemes fall outside the boundary of PSND ex.

PSNFL ex was £1,939.5 billion at the end of October 2021 or around 81.0% of GDP.

Table PSNFL 1 summarises the components used to estimate PSNFL ex, while Table PSNFL 3 provides a reconciliation between the latest measure of PSND ex and PSNFL ex.

PSNFL ex is very similar to the national accounts concept of public sector net worth (PSNW). The notable differences between the two aggregates are that PSNW includes non-financial assets, whereas PSNFL ex does not and that deposit, loan and debt security liabilities are recorded at market value in PSNW, where as in PSNFL ex they are recorded at face value.

Our latest estimates of PSNW are presented in International Monetary Fund's Government Finance Statistics framework in the public sector finances: Appendix E.

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8. Revisions

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

The coronavirus (COVID-19) pandemic has had a substantial impact on both tax receipts and expenditure. These impacts are likely to be revised further as the full effects of the coronavirus pandemic on the public finances continue to become clearer.

The revisions to the components of central and local government borrowing are summarised in Public sector finances tables 1 to 10: Appendix A.

Recording Value Added Tax during the coronavirus pandemic

A deferral scheme for Value Added Tax (VAT) was introduced at the start of the coronavirus pandemic. VAT liabilities for the period March to June 2020 could be paid at a later date, initially by the end of March 2021.

Subsequently, the New Payment Scheme was introduced, providing the possibility to pay deferred VAT according to a payment schedule running up to the end of March 2022.

The availability of these schemes has altered the usual pattern of VAT payments on a cash basis. However, as the underlying liabilities remain unchanged, working with HM Revenue and Customs (HMRC), we have used adjustments to calculate VAT receipts on a national accounts (accrued) basis.

This month, we have updated our adjustments in two ways. Firstly, we have improved the estimate of cash deferred and subsequently paid as part of the VAT deferral policy, one factor of which is eventual anticipated losses incurred through non-payment of VAT liabilities for the March to June 2020 period.

Secondly, we have amended the monthly profile of VAT receipts on a national accounts (accrued) basis to better reflect the sharp change in economic output in March 2020. Here we have referred to market sector gross value added (GVA) for the period between February and September 2020, on the basis that this is the period in which the economic distortions because of coronavirus were most apparent (February being the initial baseline).

Initial estimates indicate that as a result of this work, VAT receipts on a national accounts (accruals) basis have increased by £1.0 billion in the financial year ending March 2020, reduced by £2.1 billion in the financial year ending March 2021 and reduced by £0.2 billion in the current financial year-to-September 2021.

These estimated revisions to VAT revisions exclude the impact of routine data updates in the financial year ending March 2021 and in the current financial-year-to-September 2021 explained in the following section.

Revisions to net borrowing

Since our last publication (21 October 2021), we have increased our estimate of borrowing in the financial year-to-September 2021 by £0.4 billion, largely because of an increase of £2.3 billion in our previous estimate of central government tax receipts, offset by a £3.4 billion increase in our previous estimate of staff costs.

Revisions to net borrowing in earlier financial years

Since our last publication (21 October 2021), we have increased our estimate of borrowing in the financial year ending March 2021 by £3.2 billion.

This month we have included tax data aligned to HM Revenue and Customs's (HMRC's) Trust Statement for the financial year ending March 2021. This, combined with our review of the recording of VAT during the coronavirus pandemic, has led to a £1.9 billion reduction in VAT receipts across the financial year. Further, the alignment to the Trust Statement has reduced Income Tax receipts by £1.4 billion across the same 12-month period.

We have reduced our previous estimate of public sector borrowing for the financial year ending March 2020 by £1.5 billion. This change is largely a result of our review of the recording of VAT during the coronavirus pandemic and is limited to the January to March 2020 period.

Revisions to public sector net debt

This month we have reduced our previous estimate of the level of debt at the end of September 2021 by £10.0 billion from that published on 21 October 2021, as a result of the reduction in of our estimate of the cash held within the Asset Purchase Facility Fund.

Revisions to the public sector banks' contribution to net debt

Estimates of the public sector banks' contribution to both net cash requirement and net debt are derived from the balance sheet information of these organisations, supplied to us by the Bank of England twice annually.

This month we have received data covering the period January to June 2021 for the first time, enabling us to update our previous debt estimates. As a consequence, our estimate of public sector banks' contribution to net cash requirement has increased by £4.4 billion in the financial year ending March 2021 and £8.7 billion in the financial year-to-September 2021. Additionally, our estimate of public sector banks' contribution to net debt at the end of September 2021 has increased by £2.3 billion.

Revisions to gross domestic product

This month we have reduced our previous estimate of the level of debt as a ratio of gross domestic product (GDP) at the end of September 2021 by 2.6 percentage points from that published on 21 October 2021. This was partially a result of our £10.0 billion reduction in our previous estimate of net debt but more substantially because of our update of GDP estimates.

GDP used to present debt and other headline measures are partly based on provisional and official forecast data.

This month we have updated our estimate for GDP in the third quarter (July to September) of 2021 published on 11 November 2021. Further, following the publication of the Office for Budget Responsibility's Economic and Fiscal Outlook (October 2021) we have updated our GDP forecasts. As a result of these updates, we have reduced our estimate of the level of public sector net debt excluding public sector banks (PSND ex) at the end of September 2021 expressed as a ratio of GDP by 2.6 percentage points.

The revisions to our debt aggregates are presented in Public sector finances tables 1 to 10: Appendix A.

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9. Public sector finances data

Public sector finances tables 1 to 10: Appendix A
Dataset | Released 19 November 2021
The data underlying the public sector finances statistical bulletin are presented in the tables PSA 1 to 10.

Large impacts on public sector fiscal measures excluding banking groups: Appendix B
Dataset | Released 19 November 2021
A summary of the large events which impact on the current PSNB ex and PSND ex from the period May 2000 onwards.

Public sector finances revisions analysis on main fiscal aggregates: Appendix C
Dataset | Released 19 November 2021
Revisions analysis for central government receipts, expenditure, net borrowing and net cash requirement statistics for the UK over the last five years.

Public sector current receipts: Appendix D
Dataset | Released 19 November 2021
A breakdown of UK public sector income by latest month, financial year-to-date and full financial year, with comparisons with the same period in the previous financial year.

International Monetary Fund's Government Finance Statistics framework in the public sector finances: Appendix E
Dataset | Released 19 November 2021
Presents the balance sheet, statement of operations and statement of other economic flows for public sector compliant with the Government Finance Statistics Manual 2014: GFSM 2014 presentation.

Revisions to the first reported estimate of public sector net borrowing: Appendix F
Dataset | 19 November 2021
Summarises revisions to the first estimate of UK public sector borrowing (excluding public sector banks) by sub-sector. Revisions are shown at 6 and 12 months after year end.

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10. Glossary

Public sector

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 (BoE) and public financial corporations (or public sector banks).

Public sector banks

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

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

Public sector current budget deficit

Public sector current budget deficit is the difference between current receipts (mainly from taxes) and current expenditure, on an accrued basis; it is the gap between current expenditure and current receipts (having taken account of depreciation). The current budget is in surplus when receipts are greater than expenditure.

Public sector current expenditure

Current expenditure measures reflect the cost of the public sector's day-to-day activities. For example, in the case of central government these include:

  • providing services and grants (for example, related to education, defence, and health and social care) – including the recent COVID-19 job furlough schemes

  • payment of social benefits (such as pensions, unemployment payments, Child Benefit and Statutory Maternity Pay)

  • payment of the interest on the government's outstanding debt

Public sector debt interest to revenue ratio

The debt interest to revenue ratio (DIR) represents the proportion of net interest paid (gross interest paid less interest received) by the public sector (excluding public sector banks), compared with the non-interest receipts it receives in a given period.

Public sector net borrowing

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)). PSNB is often referred to by commentators as "the deficit".

Public sector net cash requirement

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 borrowing (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

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. PSND is often referred to by commentators as "the national debt".

Public sector net investment

Public sector net investment is the sum of all capital spending, mainly net acquisitions of capital assets and capital grants, less the depreciation of the stock of capital assets.

Public sector net financial liabilities

Public sector net financial liabilities excluding public sector banks (PSNFL ex) is a comprehensive measure of the public sector balance sheet, capturing a wider range of financial assets and liabilities than recorded in PSND ex.

PSNFL ex is very similar to the national accounts concept of public sector net financial worth (PSNFW), albeit that they are expressed with opposite signs. The notable difference between the two aggregates is that in PSNFL ex, the deposit, loan and debt security liabilities are recorded at face value, whereas in PSNFW these assets and liabilities are recorded at market value.

Gross domestic product

Gross domestic product (GDP) measures the value of goods and services produced in the UK. It estimates the size of and growth in the economy.

GDP used to present debt and other headline measures are partly based on provisional and official forecast data. Our October 2021 estimate of monthly GDP requires data across five quarters of GDP. Of these, two are based on the quarterly national accounts published by the Office for National Statistics (ONS) on 11 November 2021 and three are based on the Office for Budget Responsibility's Economic and Fiscal Outlook (October 2021) .

Total managed expenditure

Total managed expenditure (TME) covers all current and capital spending carried out by the public sector, including depreciation. This is equal to public sector current expenditure, plus public sector net investment, plus deprecation.

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11. Measuring the data

Comparisons with official forecasts

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

Notes

  1. This table uses the revised OBR Economic and fiscal outlook – October 2021.

  2. Difference from outturn to forecast expressed in percentage points.

  3. All public sector measures in this table exclude public sector banks

  4. Figures may not sum because of rounding.

Fiscal measures introduced in November 2021

On 27 October 2021, the UK government published its Charter for Budget Responsibility: autumn 2021 update. This document presents the fiscal mandate by which its performance will be assessed.

This month we have introduced three new tables presenting public sector net debt excluding both public sector banks and the Bank of England (PSA3B_1), public sector current budget (PSA3B_2) and public sector net investment (PSA3B_3) as ratios of GDP to enable users to track these metrics.

Public sector finances tables 1 to 10: Appendix A provide further information.

Central government resource accounts

Most central government departments usually publish their audited resource accounts by August of each year enabling us to reflect them in the September publication. Because of the exceptional demands of the coronavirus (COVID-19) pandemic, a number of central government departments are yet to publish their audited accounts for the financial year ending March 2021. We will reflect updates from audited outturn in our dataset at the earliest opportunity.

Local government and public corporations

In recent years, planned local government expenditure initially reported in local authority budgets has been systematically higher than the final outturn expenditure reported in the audited accounts. We therefore include adjustments, usually to reduce the amounts reported at the budget stage.

For financial year ending (FYE) March 2021 we include:

  • a £0.4 billion downward adjustment to Wales' capital expenditure

  • an £8.5 billion upward adjustment to England's current expenditure on goods and services, as the budget forecasts on which these are based were prepared before the coronavirus pandemic

We apply a further £1.5 billion downward adjustment to budget forecast current expenditure on benefits in FYE 2021, to reflect the most recently available data for housing benefits.

For FYE 2022 we include:

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

  • a £0.4 billion downward adjustment to Wales' capital expenditure

  • a £6.0 billion upward adjustment to England's current expenditure on goods and services

We apply a further £0.6 billion downward adjustment to budget forecast current expenditure on benefits in FYE 2022, to reflect the most recently available data for housing benefits.

Public corporations' data in the most recent periods are initial estimates, largely based on the OBR Economic and fiscal outlook (EFO) – March 2021, with adjustments being applied as needed. Data supplied by the Department for Transport have been used in implementing the reclassification of train operating companies under emergency measures for the FYE 2021.

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12. Strengths and limitations

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Public sector finances QMI.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Fraser Munro
public.sector.inquiries@ons.gov.uk
Ffôn: +44 1633 456402