Recent and upcoming changes to public sector finance statistics: January 2024

This article increases transparency around our current methodology work, the implementation of classification decisions into the public sector, and provides impacts on the public sector aggregates. The need for statistics to keep pace with the evolving economy prompts most methodological changes to the public sector finances (PSF) statistics. These changes bring PSF statistics closer in line with government's true fiscal exposure, as measured by the fiscal aggregates, such as public sector net borrowing (PSNB), or public sector net debt (PSND).

For more information about future developments in public sector finance statistics, see our Looking ahead - developments in public sector finance statistics: 2023 article.

On 6 March 2024, the Chancellor of the Exchequer will present the 2024 Spring Budget to members of Parliament, outlining the UK government's plans for taxation and public spending. The contents of the Spring Budget and the potential impacts on the public sector finances will be discussed in the next edition of our Recent and upcoming changes to public sector finance statistics article, to be published 21 March 2024.

We have completed a targeted review of the methods and calculations used to produce estimates of public sector-funded pensions. Our review found that an amendment to the calculation used to estimate the value of pension funds' property income receivable from outside the public sector was required. The purpose of this amendment was to ensure the calculations in our data processing fully align with the methods detailed in our Pensions in the public sector finances: a methodological guide article, and does not represent a change to that methodology.

We have now made the required amendment to our public sector-funded pensions estimates, such that it is reflected in the public sector finance statistics from this month. The impacts on the headline fiscal aggregates are presented in Table 1.

As property income receivable (D.41) is the only transaction affected by this change, the impacts are limited to public sector current budget deficit (PSCBD) and public sector net borrowing (PSNB). The change affects both of these fiscal aggregates by an equal amount in each year.

The change has an impact over the whole series of public sector pensions statistics, from the financial year ending (FYE) March 1998 to FYE March 2024. The largest impacts of this change occur in the more recent years. For example, PSNB is increased by £1.8 billion in FYE March 2022; by £2.9 billion in FYE March 2021; and by £2.3 billion in FYE March 2017.

While data from FYE March 1998 to FYE March 2023 are outturn data, our estimates for the period April 2023 to December 2023 are forecast data, as such these will be revised when new outturn data become available. The changes to the data resulting from this amendment cause our forecasts for PSNB in the current financial year to date (April 2023 to December 2023) to reduce by £0.5 billion.

Recording of Organisation for Economic Cooperation and Development Pillar 2 taxes

In the Autumn Statement 2022, the UK government announced plans to implement the globally agreed G20-Organisation for Economic Cooperation and Development (OECD) inclusive Pillar 2 framework in the UK. For more information, see Section 3: Updates to public sector finances statistics of our Recent and upcoming changes to public sector finances: November 2023 article.

On 31 January 2024, the results of a classification review into these taxes were published. For further details, see Section 4: Classification announcements. These classifications have been reflected in the public sector finances statistics from this month.

Organisations and institutional units

The following bodies were classified to the central government (S.1311) subsector in January 2024:

• Truth Recovery Programme Independent Panel, as part of its controlling body, The Executive Office, which is a Northern Ireland Government Department

The following bodies were classified to the local government (S.1313) subsector in January 2024:

• Cumberland Council, with effect from 1 April 2023

• Westmorland and Furness council, with effect from 1 April 2023

The following bodies were classified as having been disbanded or deleted in January 2024, all with effect from 1 April 2023:

• Allerdale Borough Council

• Copeland Borough Council

• Carlisle City Council

• Cumbria County Council

• Barrow Borough Council

• Eden District Council

• South Lakeland District Council

Transactions and schemes

The following transactions were classified in January 2024:

• Multinational top-up tax was classified as a tax on income (D.51), paid by non-financial corporations (S.11) and financial corporations (S.12) to the central government subsector (S.1311), with effect from 31 December 2023

• Domestic top-up tax was classified as a tax on income (D.51), paid by non-financial corporations (S.11) and financial corporations (S.12) to the central government subsector (S.1311), with effect from 31 December 2023

For more information on the classification decisions, see Section 3: Classification update of our Economic statistics sector classification - classification update and forward work plan: January 2024 article.

For more information on what these classifications mean (including the full European System of Accounts 2010 publication), see the publication details of the European system of accounts - ESA 2010 on the Eurostat website.