The public sector covers the central government, local government and public corporations subsectors. Key statistics include the surplus or deficit on current budget, net borrowing, net cash requirement and net debt. Also covers internationally comparable measures of government deficit and debt.
Publications
Generational accounts provides a valid alternative view of long term public finance.
Contains estimates of government deficit and debt data submitted biannually to the European Commission for the Excessive Deficit Procedure (EDP) in accordance with the Maastricht Treaty.
The classification of finiancial crisis interventions
Contains estimates of government deficit and debt data submitted biannually to the European Commission by ONS in accordance with the protocol on the Excessive Deficit Procedure (EDP), annexed to the Maastricht Treaty.
National Accounts Sector Classification describes the classification of organisations and institutions in the National Accounts, as well as information on flows and transactions through the accounts, informed by decisions of the National Accounts Classification Committee (NACC) Regular publications include the Sector Classification Guide (SCG) monthly updates detailing new or recent changes in classifications, as well as classification articles, explaining particular classification decisions.
Monthly estimates of the main public sector finance statistics are issued jointly by the Office for National Statistics and HM Treasury.
Latest data on the Public Sector Net Borrowing, Net debt and the cash requirement.
Supplementary tables containing additional data relating to the Public Sector Finances statistical bulletin.
Monthly breakdown for government's net reserves, detailing gross reserves and gross liabilities.
This article is intended to address a recommendation made in the conclusion of a series of articles published by ONS in July 2009 in response to the financial crisis.
Overview
Each month, the Office for National Statistics (ONS) publishes summary statistics that can be used to assess the state of the public finances. Where possible they are analysed by subsector.
The main statistics are:
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current budget: the difference between current receipts and current expenditure
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net borrowing: the extent to which total expenditure (both current and capital) exceeds total income
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net cash requirement; similar to net borrowing but cash rather than accruals-based, and takes into account certain financial transactions, and
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public sector net debt: the difference between the public sector’s stock of borrowing and its liquid assets. Also expressed as a percentage of national income (gross domestic product (GDP))
Twice a year, ONS also publishes internationally comparable measures of general government deficit and debt as required by the Maastricht Treaty on EU. The Treaty obliges EU Member States to avoid excessive budgetary deficits, and monitors compliance against two criteria: a general government deficit to GDP ratio of 3 per cent, and a debt to GDP ratio of 60 per cent.
Technical Data
Main data sources
Comprehensive data are available monthly for central government. For public corporations and local government, there is only limited monthly data available, with more data being available quarterly. For each of the subsectors, banking statistics are supplied by the Bank of England. For public corporations and local government, the level of the cash requirement from central government is supplied by the Treasury.
Central government
Information on central government expenditure is supplied monthly by the Treasury. HM Revenue & Customs (HMRC) provide monthly details of taxes and National Insurance contributions collected.
Information on the cash requirement and other transactions in financial assets and liabilities are supplied by the Treasury.
Other sources include:
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Department of Work and Pensions (DWP) for expenditure on social security
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The National Loans Fund Account for central government borrowing data
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quarterly returns from the Ministry of Finance, Northern Ireland for income and expenditure
Local government
Most local government data are annual, relating to financial years. Detailed annual returns of expenditure and income are compiled from returns collected by Communities and Local Government, Scottish Government, Welsh Assembly and the Northern Ireland Government. Data for the most recent periods are based on local government budgets. Final figures are based on their audited accounts.
Communities and Local Government provide:
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quarterly data for wages and salaries, interest and dividend receipts and council tax receipts
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together with its devolved equivalents, quarterly data for capital expenditure
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monthly data from a sample of local authorities across the whole of the UK for borrowing and lending. Quarterly data are based on a larger sample
Information on some other transactions in financial assets and liabilities is provided by the Bank of England, for transactions with the banking sector, and the Treasury.
Public corporations
Details of transactions in financial assets and liabilities and of capital spending are obtained monthly from the two public corporations with the largest capital spending programmes and holdings of gilts. Top-to-bottom accounts are obtained quarterly from the nine largest corporations. For smaller public corporations, the estimates rely on published accounts.
Methods of compilation
For the periods covered by the quarterly national accounts, public sector finance statistics are mainly based on quarterly transactions for central government, local government and public corporations that are compiled for use in the national accounts. These statistics are available roughly three months after the period to which they relate, and the monthly series are constrained to be consistent with them. Interest and dividends are modified by the operation of the Dividend Interest Matrix used in the compilation of the quarterly national accounts.
A different approach is used to compile the accounts for the most recent months, which are not yet covered by the national accounts. Top-to-bottom accounts are available for central government. For public corporations and local authorities, the net cash requirement and net borrowing are built up from financial transactions with:
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banks and building societies as reported by the Bank of England
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central government as reported by HM Treasury, and
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the two public corporations surveyed monthly
Public corporations and local authorities’ monthly capital investment is estimated from the limited information available. When combined with the net borrowing estimates, this allows the current budget to be calculated.
More information can be found in the methodological guide on the National Statistics website.
Glossary
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Capital expenditure
See investment.
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Central government
All administrative departments of the state and other central agencies whose competence extends over the whole economic territory. Includes activities controlled by the assemblies for Scotland, Wales and Northern Ireland. Also includes non-profit making institutions which are controlled and predominantly financed by central government and whose competence extends over the whole economic territory. Bodies classified to central government include: Regional Health Authorities, NHS hospitals, the Housing Corporation, Housing for Wales and Regional Development Agencies.
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Current budget
Current income (such as taxes and interest receipts), less current expenditure (such as government spending on consumption, interest payments and social benefits), less capital consumption plus capital taxes. Also includes the gross operating surplus of general government (assumed to be equal to depreciation) and public corporations. Current budget is in surplus if income exceeds expenditure and in deficit if expenditure exceeds income.
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Current expenditure
Comprises interest payments (mainly on government bonds and National Savings products), net social benefits and other expenditure (mainly by central government departments and local government; also includes current grants).
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Current receipts
Comprises taxes on production, taxes on income and wealth, other taxes (including council tax, vehicle excise duty, television licence fee, inheritance tax), compulsory social contributions (National Insurance Contributions), interest and dividend receipts, and other receipts (mainly from leasing of the 3G spectrum to mobile phone companies).
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General government
Comprises central government and local government.
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Golden rule
One of the two fiscal rules (alongside the sustainable investment rule) established by the Labour administration when it came to power in 1997. It states that, on average over the economic cycle, the Government should borrow only to invest and not to fund current expenditure. So to accord with the rule, the average surplus on current budget over the cycle should be positive. In the November 2008 Pre-Budget Report, the Government announced a temporary departure from the fiscal rules until the global financial shocks have worked their way through the economy in full.
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Government debt
In the context of the Maastricht Treaty of the EU, this is the level of general government gross consolidated financial liabilities as measured at nominal values. It comprises the following classes of liability: currency and deposits, securities other than shares (excluding financial derivatives) and loans.
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Government deficit
General Government net borrowing is often called this in the context of the Maastricht Treaty which requires EU governments to keep their deficits below 3 per cent of gross domestic product (GDP).
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Investment
Capital expenditure (acquisitions less disposals) on tangible fixed assets (such as buildings, plants and machinery) and intangibles (such as software) plus capital grants.
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Liquid assets
Include cash, foreign exchange reserves, bank and building society deposits, short-term securities with an initial maturity of up to one year and all assets held by the Bank of England.
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Local government
Public administration whose competence extends to only a local part of the economic territory. Includes local government, counties and districts, parish councils, fire and police authorities and some other local bodies. Units supplying services on a non-market basis (such as education) stay part of the local government unit to which they belong.
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Maastricht Treaty
Formally known as the Treaty on EU, the Maastricht Treaty was signed on 7 February 1992. It created the EU and led to the creation of the euro. The Protocol on the Excessive Deficit Procedure, annexed to the Treaty, defines two criteria and reference values to identify Member States with excessive budgetary deficits. These are a deficit to gross domestic product (GDP) ratio of three per cent, and a debt to GDP ratio of 60 per cent.
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Net borrowing
Difference between total expenditure (both current and capital) and total income. Calculated as net investment less the current budget surplus. If total income exceeds total expenditure, there is net lending. Calculated on an accruals basis, whereby transactions are recorded when the economic activity took place; this does not necessarily coincide with the timing of the cash flows.
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Net cash requirement
Approximately, the flows equivalent of net debt. Can also be thought of as the cash equivalent of the accruals-based net borrowing, plus certain financial transactions, such as loans to the private sector, and the net acquisition of company securities (mainly shares).
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Net debt
Stock of public sector’s financial liabilities at face value minus its liquid assets. Financial liabilities include government bonds (gilts), the borrowings of banks classified as public corporations, Treasury bills, National Savings, and local authority debt.
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Net investment
Investment less depreciation (capital consumption).
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Public corporations
Non-financial corporations and public monetary financial institutions whose general corporate policy is subject to control by general government or subsidiaries of public corporations. The composition of the Public Corporations subsector may change over time as governments act to nationalise or privatise corporations, or convert non-market units into market bodies. Currently includes the BBC, Civil Aviation Authority, Post Office and British Nuclear Fuels Limited. Also includes government trading bodies such as the Central Office of Information, Companies House, Land Registry, local government housing revenue accounts, and Export Credits Guarantees Department.
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Public monetary financial institutions
Comprises Bank of England and other banks classified to the public sector (including their special purpose vehicle subsidiary institutions) including Northern Rock and Bradford & Bingley.
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Public sector
Comprises public corporations, central government and local government.
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Sustainable investment rule
One of the two fiscal rules (alongside the golden rule) established by the Labour administration when it came to power in 1997. It requires public sector net debt as a percentage of gross domestic product (GDP) to be held, over the economic cycle, at a stable and prudent level (40 per cent of GDP). In its November 2008 Pre-Budget Report, the Government announced a temporary departure from the fiscal rules until the global financial shocks have worked their way through the economy in full.
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Taxes on income and wealth
Includes income tax, capital gains tax, corporation tax and petroleum revenue tax.
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Taxes on production
Includes VAT; alcohol, tobacco and road fuel excise duties; stamp duties on shares and property transactions; insurance premium taxes; betting and lottery taxes and receipts.
Contact Details
For statistical enquiries about this topic, please contact:
Public sector accounts
Email: psa@ons.gsi.gov.uk
Telephone: +44 (0) 20 7014 2179
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