Public sector finances, UK: January 2017

• Public sector net borrowing (excluding public sector banks) decreased by £13.6 billion to £49.3 billion in the current financial year-to-date (April 2016 to January 2017), compared with the same period in the previous financial year; this is the lowest year-to-date borrowing since the financial year-to-date ending January 2008.

• Public sector net borrowing (excluding public sector banks) was in surplus by £9.4 billion in January 2017, a £0.3 billion larger surplus than in January 2016; this is the highest January surplus since 2000.

• Public sector net debt (excluding public sector banks) was £1,682.8 billion at the end of January 2017, equivalent to 85.3% of gross domestic product (GDP); an increase of £91.7 billion (or 1.9 % points as a ratio of GDP) since January 2016.

• Public sector net debt (excluding both public sector banks and Bank of England) was £1,589.2 billion at the end of January 2017, equivalent to 80.5% of gross domestic product (GDP); an increase of £43.6 billion (or a decrease of 0.6 % points as a ratio of GDP) since January 2016.

• Central government net cash requirement decreased by £12.8 billion to £32.6 billion in the current financial year-to-date, compared with the same period in the previous financial year; this is the lowest year-to-date central government net cash since January 2008.

This section presents information on aspects of data or methodology that is important to understand when reading this bulletin. Where appropriate, further details of individual changes are discussed in the Quality and methodology section of this bulletin.

Self-assessed tax receipts

In both January and (to a lesser extent) July receipts are particularly high due to the receipt of self-assessed Income Tax, Capital Gains Tax and self-assessed (Class 4) National Insurance contributions.

Self-assessed Income Tax and Capital Gains Tax receipts increased by £2.0 billion to £19.8 billion in January 2017 compared with January 2016; this is the highest January on record (monthly recording of self-assessed tax receipts began in April 1999).

The revenue raised through self-assessed taxes, although primarily affecting January and July receipts, also tends to lead to high receipts in the following month (February and August respectively), although to a lesser degree.

The proportion of self-assessed taxes recorded in January and February can vary year-on-year and it is therefore advisable to consider data for the 2 months (January and February) together.

Corporation Tax, Bank Corporation Tax Surcharge and Bank Levy

In this month’s bulletin we have introduced a new methodology for the recording of Corporation Tax and Bank Corporation Tax Surcharge receipts.

Previously, we have used cash receipts for these taxes as a proxy for accrued revenue. An improved methodology derives accrued revenue figures by adjusting cash receipts to more accurately reflect the time at which the economic activity relating to the tax receipts took place.

In addition to these changes the accrual methodology for the Bank Levy has been modified to make it consistent with the approach being used for Corporation Tax. More information on the methodological changes can be found in a separate methodological note.

The impact of introducing the new methodology is to distribute the tax revenue more evenly over individual months in the year. It also leads to revisions in the financial year totals for these taxes which in turn revises net borrowing.

Due to changes in the payment schedule for corporation taxes and data limitations, the improved methodology has only been applied from the financial year ending March 2001 onward.

Data for the period in the financial years ending March 2001 to March 2005 have been estimated by the Office for National Statistics (ONS) while data from the financial year ending March 2006 have been compiled and provided by HM Revenue and Customs (HMRC).

Table 1 summarises the impact on central government receipts and net borrowing of moving to the time-adjusted cash recording for Corporation Tax, bank surcharge and Bank Levy between the financial years ending March 2009 and March 2016.

Housing associations

This month we have implemented the reclassification, from the private sector to public corporation sector, of registered social landlords in Scotland and Wales and registered housing associations (HAs) in Northern Ireland, for the first time.

This reclassification was announced in September 2016 and its impact on the fiscal aggregates in this bulletin has been to increase public sector net debt at the end of March 2016 by £5.8 billion and to reduce public sector net borrowing in the financial year ending March 2016 by £0.2 billion.

In addition to the inclusion of the devolved social landlords and housing associations we have also taken on the latest global accounts data for English HAs published by the Homes and Communities Agency on 17 February 2017. These data relate to the financial year ending March 2016 and so revisions can be seen for this year as well as the financial year ending March 2015 where figures have been restated.

Estimates for the financial year ending March 2017 remain based on the forecasts published by the Office for Budget Responsibility alongside the Autumn Statement on 23 November 2016.

The HAs data are attached in Appendix E.

Due to data availability, the reclassifications of English and devolved HAs have been implemented from the financial year ending March 2009. Full time series back to the effective classification dates will be implemented in due course.

Full details of the methodology used in compiling housing associations are due to be published on 5 June 2017 as part of the suite of methodological articles related to the UK National Accounts publication, Blue Book 2017.

Table 2 summarises the impact of the changes for HAs on both public non-financial corporations and public sector net borrowing between the financial year ending March 2005 and the financial year ending March 2016.

The impact of the inclusion of HAs on the borrowing and debt of public corporations is summarised in Impact of the reclassification of housing associations into the public sector: Appendix E.

Lloyds share sales

In recent years the government has entered a programme of selling shares in publicly owned organisations. On the 30 January 2017 the Government announced that its current trading plan has enabled its remaining shareholding in Lloyds Banking Group (LBG), to be reduced to less than 5%.

This month we have recorded £1.8 billion of LBG shares sales (across November 2016, December 2016 and January 2017), bringing the government’s disposal of LBG share sales since September 2013 to £18.0 billion.

The proceeds of such sales reduce the central government net cash requirement (CGNCR) and public sector net debt (PSND) by an amount corresponding to the cash raised from the sale but have no impact on public sector net borrowing.

Bank of England Asset Purchase Facility Fund (APF)

In January 2017, £2.1 billion was transferred from the APF to HM Treasury, bringing the total money transferred under the current scheme to £10.1 billion in this financial year-to-date (April 2016 to January 2017); £1.6 billion more than in the same period in the previous financial year.

The Bank of England entrepreneurial income for the financial year ending March 2016 (April 2015 to March 2016) was calculated as £11.9 billion. This is the total amount of dividend transfers that can impact on central government net borrowing in the financial year ending March 2017 (April 2016 to March 2017).

What are the most important terms I need to know?

Public sector net borrowing excluding public sector banks (PSNB ex) measures the gap between revenue raised (current receipts) and total spending (current expenditure plus net investment (capital spending less capital receipts)). Public sector net borrowing is often referred to as “the deficit”.

The public sector net cash requirement (PSNCR) represents the cash needed to be raised from the financial markets over a period of time to finance the government’s activities. This can be close to the deficit for the same period but there are some transactions, for example loans to the private sector, 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 2 points in time.

Public sector net debt excluding public sector banks (PSND ex) represents the amount of money the public sector owes to private sector organisations including overseas institutions, largely as a result of issuing gilts and treasury bills, less the amount of cash and other short-term assets it holds.

While borrowing (or the deficit) represents the difference between total spending and receipts over a period of time, debt represents the total amount of money owed at a point in time.

The debt has been built up by successive government administrations over many years. When the government borrows (that is, runs a deficit), this normally adds to the debt total. So reducing the deficit is not the same as reducing the debt.

If you’d like to know more about the relationship between debt and deficit, please refer to our article The debt and deficit of the UK public sector explained.

What does the public sector include?

In the UK, the public sector consists of 5 sub-sectors: central government, local government, public non-financial corporations, Bank of England and public financial corporations (that is, public sector banks – currently only Royal Bank of Scotland (RBS)).

The figures quoted in this bulletin exclude public financial corporations (unless otherwise stated) as the reported position of both borrowing and debt would be dominated and distorted by the inclusion of RBS’s balance sheet (and transactions) given its size relative to the rest of the public sector.

Additionally the government’s fiscal rules are based on aggregates that exclude public sector banks.

The sub-sector breakdown of public sector net borrowing is summarised in Table PSA2 in the Public Sector Finances Tables 1 to 10: Appendix A dataset.

Should I look at monthly or financial year-to-date data to understand public sector finances?

A financial year is an accounting period of 12 months running from 1 April one year to 31 March the following year. For example, the financial year ending March 2016 comprises of the months from April 2015 to March 2016.

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

Are our figures adjusted for inflation?

All monetary values in the PSF bulletin are expressed in terms of “current prices‟, that is, they represent the price in the period to which the expenditure or revenue relates and are not adjusted for inflation.

In order to compare data over long time periods, to aid international comparisons and provide an indication of a country’s ability to service borrowing and debt, commentators often discuss changes over time to fiscal aggregates in terms of gross domestic product (GDP) ratios. GDP represents the value of all the goods and services currently produced by the UK economy in a period of time.

Are our figures adjusted for seasonal patterns?

All monetary values in the PSF bulletin are not seasonally adjusted. We recommend you use year-on-year comparisons (be it cumulative financial year-to-date or individual monthly borrowing figures) rather than making month-on-month comparisons.

In the current financial year-to-date (April 2016 to January 2017), the public sector spent more money than it received in taxes and other income. This meant it had to borrow £49.3 billion; £13.6 billion less than in the same period last year (April 2015 to January 2016).

Of this £49.3 billion public sector net borrowing excluding public sector banks (PSNB ex), £22.1 billion related to the cost of the “day-to-day” activities of the public sector (the current budget deficit), while £27.2 billion related to capital spending (or net investment) such as infrastructure.

Figure 1 presents cumulative public sector net borrowing (excluding public sector banks) by month in the current financial year-to-date and compares the cumulative borrowing in the current financial year-to-date to that in the previous financial year.

The difference between central government's income and spending makes the largest contribution to the amount borrowed by the public sector. In the current financial year-to-date, £43.1 billion of the £49.3 billion borrowed by the public sector was by central government.

In the current financial year-to-date, central government received £553.7 billion in income; including £416.8 billion in taxes. This was around 5% more than in the previous financial year-to-date.

Over the same period, central government spent £581.2 billion; around 2% more than in the previous financial year-to-date. Of this amount, just below two-thirds was spent by central government departments (such as health, education and defence), around a third on social benefits (such as pensions, unemployment payments, Child Benefit and Maternity Pay) with the remaining being spent on capital investment and interest on government’s outstanding debt.

Figure 2 summarises public sector borrowing by sub-sector for the current financial year-to-date and compares these measures to the same period in the previous financial year (April 2015 to January 2016).

This presentation splits PSNB ex into each of its 4 sub-sectors: central government, local government, public corporations and Bank of England.

A further breakdown (receipts, expenditure (both current and capital) and depreciation) is provided for central government, local government and public corporations; with current receipts and current expenditure being presented in further detail.

Figure 2: Contributions to public sector net borrowing (excluding public sector banks) in financial year-to-date (April 2016 to January 2017) compared to same period in the previous financial year

Source: Office for National Statistics

Notes:

1. PSNBex - Public sector net borrowing excluding public sector banks.
2. CGNB - Central government net borrowing.
3. LGNB - Local government net borrowing.
4. PCNB - Non-financial public corporations' net borrowing.
5. BoENB - Bank of England net borrowing.
6. L&P - Land and property.
7. I&W - Income and wealth.
8. NICs - National insurance contributions.
9. Contributions to EU - UK VAT, GNI and abatement contributions to the EU budget.

Download this image Figure 2: Contributions to public sector net borrowing (excluding public sector banks) in financial year-to-date (April 2016 to January 2017) compared to same period in the previous financial year

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Figure 3 illustrates that annual borrowing has generally been falling since the peak in the financial year ending March 2010 (April 2009 to March 2010).

In the financial year ending March 2016 (April 2015 to March 2016), the public sector borrowed £71.7 billion. This was £23.2 billion lower than in the previous financial year and less than half of that in the financial year ending March 2010 (both in terms of £ billion and percentage of gross domestic product (GDP)).

Figure 3: The amount borrowed by the public sector has been falling since the peak in the financial year¹ ending March 2010

UK public sector borrowing excluding public sector banks, April 1993 to January 2017

Source: Office for National Statistics

Notes:

1. Financial year 2016/17 represents financial year ending 2017 (April 2016 to March 2017).
2. Office for Budget Responsibility (OBR) full financial year forecast of £68.2 billion for public sector net borrowing excluding public sector banks (November 2016 Economic and Fiscal Outlook).

Download this image Figure 3: The amount borrowed by the public sector has been falling since the peak in the financial year^1^ ending March 2010

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Focussing on the current month

In January 2017, the public sector received more in taxes and other income than it spent. This meant it had a surplus of £9.4 billion; a £0.3 billion larger surplus than in January 2016.

January tends to be a month in which the public sector runs a surplus in borrowing due to increased self-assessed Income Tax receipts.

Figure 4 summarises public sector borrowing by sub-sector in January 2017 and compares this to the equivalent measures in the same month a year earlier (January 2016).

This presentation splits PSNB ex into each of its 4 sub-sectors: central government, local government, public corporations and Bank of England.

A further breakdown (receipts, current expenditure, capital expenditure and depreciation) is provided for central government, local government and public corporations, with receipts and current expenditure being presented in further detail.

Figure 4: Contributions to public sector net borrowing (excluding public sector banks) in January 2017 compared to January 2016

Source: Office for National Statistics

Notes:

1. PSNBex - Public sector net borrowing excluding public sector banks.
2. CGNB - Central government net borrowing.
3. LGNB - Local government net borrowing.
4. PCNB - Non-financial public corporations' net borrowing.
5. BoENB - Bank of England net borrowing.
6. L&P - Land and property.
7. I&W - Income and wealth.
8. NICs - National insurance contributions.
9. Contributions to EU - UK VAT, GNI and abatement contributions to the EU budget.

Download this image Figure 4: Contributions to public sector net borrowing (excluding public sector banks) in January 2017 compared to January 2016

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The amount of money owed by the public sector to the private sector stood at just below £1.7 trillion at the end of January 2017, which equates to 85.3% of the value of all the goods and services currently produced by the UK economy in a year (or gross domestic product (GDP)).

This debt figure of £1.7 trillion (or £1,682.8 billion) at the end of January 2017 represents an increase of £91.7 billion since the end of January 2016. This increase in net debt is largely a result of £58.0 billion of public sector net borrowing over that period plus cash transactions related to acquisition or disposal of financial assets (for example, loans or asset sales).

Figure 5 breaks down outstanding public sector net debt at the end of January 2017 into the sub-sectors of the public sector. In addition to PSND ex, this presentation includes the impact of public sector banks on debt.

Net debt is defined as total gross financial liabilities less liquid financial assets, where liquid assets are cash and short-term assets which can be released for cash at short notice without significant loss. These liquid assets mainly comprise foreign exchange reserves and bank deposits.

Figure 6 presents public sector debt (excluding public sector banks) at the end of January 2017 by sub-sector. Time series for each of these component series are presented in Tables PSA8A to D in the Public Sector Finances Tables 1 to 10: Appendix A dataset.

Figure 6: Sub-sector split of public sector net debt excluding public sector banks at January 2017 UK (£ billion)

Source: Office for National Statistics

Notes:

1. Cross-holdings between sub-sectors are removed in calculating public sector net debt, gross debt and liquid assets.
2. APF - Bank of England Asset Purchase Facility.

Download this image Figure 6: Sub-sector split of public sector net debt excluding public sector banks at January 2017 UK (£ billion)

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Figure 7 illustrates public sector net debt excluding public sector banks (PSND ex) from the financial year ending March 1994 to the end of January 2017.

Figure 7: Public sector debt increased rapidly following the banking crisis in the financial year¹ ending March 2008

UK public sector debt, March 1994 to the end of January 2017

Source: Office for National Statistics

Download this image Figure 7: Public sector debt increased rapidly following the banking crisis in the financial year^1^ ending March 2008

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Public sector net debt excluding public sector banks (PSND ex) increased at the time of the economic downturn. Since then, it has continued to increase but at a slower rate.

The net cash requirement is a measure of how much cash the public sector needs to raise from the financial markets (or pay out from its cash reserves) to finance its activities. This amount can be close to the deficit for the same period but there are some transactions, for example lending to the private sector or the purchase of shares, that need to be financed but do not contribute to the deficit. Similarly, repayments of principal on loans extended by government or sales of shares will reduce the level of financing necessary but not reduce the deficit.

Figure 8 presents public sector cash requirement by sub-sector for the financial year-to-date (April 2016 to January 2017). Time series for each of these component series are presented in Table PSA7A in the Public Sector Finances Tables 1 to 10: Appendix A dataset.

Figure 8: Sub-sector split of public sector net cash requirement excluding public sector banks, financial year-to-date (April 2016 to January 2017) UK (£ billion)

Source: Office for National Statistics

Notes:

1. Effects of cash transactions between sub-sectors are removed in calculating public sector total net cash requirement (and consolidated expenditure and income totals).
2. APF - Bank of England Asset Purchase Facility.

Download this image Figure 8: Sub-sector split of public sector net cash requirement excluding public sector banks, financial year-to-date (April 2016 to January 2017) UK (£ billion)

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Central government net cash requirement (CGNCR) is a focus for some users, as it provides an indication of the volume of gilts (government bonds) the Debt Management Office may issue to meet the government’s borrowing requirements.

CGNCR is quoted both including and excluding the net cash requirement of Network Rail (NR) and UK Asset Resolution LTD (UKAR) (who manage the closed mortgage books of both Bradford & Bingley and Northern Rock Asset Management). It is the CGNCR excluding NR and UKAR that is the particular focus of users with an interest in the gilt market.

CGNCR excluding NR and UKAR decreased by £3.9 billion to £56.5 billion in the current financial year-to-date (April 2016 to January 2017), compared with the same period in 2016.

Figure 9 brings together the borrowing components detailed in Figure 2 to illustrate how the differences between income and spending (both current and capital) have led to the accumulation of debt in the current financial year-to-date.

This presentation excludes public sector banks, focussing instead on the public sector net borrowing excluding public sector banks (PSNB ex) measure.

Figure 9: Changes in public sector finances (excluding public sector banks) financial year–to-date (April 2016 to January 2017) UK (£ billion)

Source: Office for National Statistics

Notes:

1. Cash transactions in (non-financing) financial assets which do not impact on net borrowing.
2. Timing differences between cash and accrued data.
3. Revaluation of foreign currency debt (for example foreign currency). Debt issuances or redemptions above or below debt valuation (for example bond premia/discounts and capital uplifts). Changes in volume of debt not due to transactions (for example sector reclassification).

Download this image Figure 9: Changes in public sector finances (excluding public sector banks) financial year–to-date (April 2016 to January 2017) UK (£ billion)

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The reconciliation between public sector net borrowing and net cash requirement is presented in more detail in Table REC1 in the Public Sector Finances Tables 1 to 10: Appendix A dataset.

The Office for Budget Responsibility (OBR) normally produces forecasts of the public finances twice a year (currently in March and November). The latest OBR forecast was published on 23 November 2016.

The government has adopted the OBR’s forecasts as its official forecast.

OBR estimated that the public sector would borrow £72.2 billion during the financial year ending March 2016. So, based on the latest estimate, borrowing in financial year ending March 2016 is £0.5 billion lower than OBR predicted.

OBR has estimated that the public sector will borrow £68.2 billion during the financial year ending March 2017; a reduction of £3.5 billion on the provisional outturn for the financial year ending March 2016.

Figure 10 presents the cumulative public sector net borrowing for the current and previous financial year-to-date. The figure also presents the OBR forecasts for both financial years-to-date.

Table 3 compares emerging financial year-to-date data against the OBR forecasts. Caution should be taken when comparing public sector finances data with OBR figures for the full financial year as data are not finalised until after the financial year ends. Initial estimates soon after the end of the financial year can be subject to sizeable revisions in later months. In addition, the monthly path of spending and receipts is not smooth within the year and also can vary compared with previous years, both of which can affect year-to-date comparisons with previous years.

There can also be methodological differences between OBR forecasts and outturn data. In its latest publication, OBR published a table within its Economic and fiscal outlook supplementary fiscal tables: receipts and other - November 2016 titled “Table: 2.45 Items included in OBR forecasts that ONS have not yet included in outturn”.

Revisions can be the result of both updated data sources and methodology changes. This month the reported revisions are largely the result of methodology changes.

Table 4 summarises revisions to the headline statistics presented in this bulletin and the previous publication (24 January 2017), while Figure 11 focuses solely on the revisions to public sector net borrowing excluding public sector banks (PSNB ex) in the current financial year-to-date between publications.

This bulletin presents revisions to public sector net borrowing in each financial year back to the financial year ending March 2001.

For central government, the changes to net borrowing prior to the current financial year-to-date are due to the introduction of improved methodology for the recording of Corporation Tax, Bank Corporation Tax Surcharge receipts and Bank Levy.

For non-financial public corporations, the changes to net borrowing prior to the current financial year-to-date are due to the inclusion of the housing associations of the devolved administrations of Northern Ireland, Scotland and Wales. In addition to this reclassification, the data underlying the estimates of net borrowing of English housing associations were also updated for the financial years ending March 2015 and 2016.

In addition to revisions to net borrowing, the implementation of the reclassification of the housing associations of the devolved administrations (and updating of the estimates for England) has impacted on both net debt and net cash requirement. The revisions to both net cash requirement and net debt reported in Table 4 are entirely attributable to this change.

Revisions to borrowing in the current financial year

Figure 11 compares the latest estimate of public sector net borrowing (excluding public sector banks) for the period April 2016 to December 2016, to that presented in the previous bulletin (24 January 2017).

This presentation splits PSNB ex into each of its 4 sub-sectors: central government, local government, public corporations and Bank of England.

Given that, in the current financial year-to-date, £43.1 billion of the £49.3 billion borrowed by the public sector was borrowed by central government, a further breakdown of central government current receipts and current expenditure is presented to reflect the significance of these components.

Figure 11: The latest estimate of public sector borrowing (excluding public sector banks) over the period April 2016 to December 2016, to that presented in the previous bulletin (24 January 2017)

Source: Office for National Statistics

Notes:

1. PSNBex - Public sector net borrowing excluding public sector banks.
2. CGNB - Central government net borrowing.
3. LGNB - Local government net borrowing.
4. PCNB - Non-financial public corporations' net borrowing.
5. BoENB - Bank of England net borrowing.
6. L&P - Land and property.
7. I&W - Income and wealth.
8. NICs - National insurance contributions.
9. Contributions to EU - UK VAT, GNI and abatement contributions to the EU budget.

Download this image Figure 11: The latest estimate of public sector borrowing (excluding public sector banks) over the period April 2016 to December 2016, to that presented in the previous bulletin (24 January 2017)

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The reporting of errors in the public sector finance dataset

It is important to note that revisions do not occur as a result of errors; errors lead to corrections and are identified as such when they occur.

As a result of the quality assurance of our recording of the Term Funding Scheme (TFS) as a part of the Bank of England Asset Purchase Facility (APF) we have updated our presentation in Table PSA9 to include the loan liability of TFS within the total loan liability of the APF.

This represents a presentational change only and has no impact on the calculation of public sector net debt or any other fiscal aggregate.

The UK government debt and deficit for Eurostat statistical bulletin is published quarterly (in January, April, July and December each year), to coincide with when the UK and other European Union member states are required to report on their deficit (or net borrowing) and debt to the European Commission.

On 18 January 2017, we published the latest UK Government Debt and Deficit for Eurostat statistical bulletin, consistent with the November 2016 public sector finance bulletin (21 December 2016). In this publication we stated that:

• general government gross debt was £1,652.0 billion at the end of March 2016, equivalent to 87.6% of gross domestic product (GDP); an increase of £47.9 billion on March 2015, or 0.2 % points as a ratio of GDP
• general government deficit (or net borrowing) decreased by £19.1 billion to £76.3 billion (equivalent to 4.0% GDP) in the financial year-to-date March 2016, compared with the previous financial year

The data in this statistical bulletin present a £1.4 billion downward revision to general government deficit (or net borrowing); now standing at £74.9 billion in the financial year ending March 2016. The estimate of general government gross debt remains unchanged since the 21 December 2016 publication.

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 for the Eurostat statistical bulletin, differs from that used within the public sector finances statistical bulletin.

An article, The use of GDP in public sector fiscal ratio statistics explains that for debt figures reported in the monthly public sector finances, a 12-month GDP total centred on the month is employed, while in the UK government debt and deficit for Eurostat statistical bulletin the total GDP for the preceding 12 months is used.

The public sector finances Quality and Methodology Information document contains important information on:

• the strengths and limitations of the data and how it compares with related data
• uses and users of the data
• how the output was created
• the quality of the output including the accuracy of the data

How are classification decisions made?

Each quarter we publish a forward workplan outlining the classification assessments we expect to undertake over the coming 12 months. To supplement this, each month a classifications update is published which announces classification decisions made, and includes expected implementation points (for different statistics) where possible.

Classification decisions are reflected in the public sector finances at the first available opportunity and, where necessary outlined in this section of the statistical bulletin.

The Monthly statistics on the Public Sector Finances: A methodological guide was last updated in August 2012. We are currently working to update this publication in 2017.

Further details on classification decisions and data changes that impact on this (and future) publications

Blue Book 2017

In September 2017, the public sector finances will incorporate methodological improvements being implemented for the annual UK National Accounts publication, the Blue Book 2017. These improvements will include updated estimates for gross fixed capital formation (GFCF), specifically with regard to estimates for the cost of transfer of fixed assets (such as legal costs incurred at point of sale of a property) and the net acquisition of entertainment, literary and artistic originals (such as film and TV recordings).

The first of these improvements will not impact the fiscal aggregates for the financial year ending March 2015 onwards (either net investment or net borrowing) as public sector data sources already include expenditure on costs of transfer. There will be revisions for earlier financial years as a result of removing existing negative estimates of transfer costs.

The second of these improvements is expected to impact the public corporations sub-sector by both increasing net investment and decreasing current budget deficit by equal and offsetting amounts (expected to be less than £0.5 billion) in recent years, with no impact, therefore, on public sector net borrowing. It will not impact general government estimates.

We have published an article, "National Accounts articles: Impact of Blue Book 2017 changes on current price gross domestic product estimates, 1997 to 2012" explaining these methodological improvements in more detail.

Nuclear Decommissioning

Eurostat, in its 2016 version of the Manual on Government Deficit and Debt, introduced new European statistical rules on the treatment of the transfer of an asset to government to be decommissioned. Such a transfer took place in the UK in 2005 when British Nuclear Fuels Limited (Ltd), then a public corporation, transferred all of its nuclear sites to the Nuclear Decommissioning Authority, a central government body.

In next month’s bulletin we will be introducing changes to the current statistical treatment of this 2005 transfer in order to be compliant with the new Eurostat guidance. The revisions as a result of this methodological change will be limited to the financial year ending March 2006 and the subsequent two or three financial years. There is expected to be no impact on public sector fiscal aggregates as the amended transactions to be recorded are between the central government and public corporations subsectors.

Corporation Tax, Bank Corporation Tax Surcharge and Bank Levy

In this month’s bulletin we have introduced a new methodology for the time of recording of Corporation Tax and Bank Corporation Tax Surcharge receipts for the first time.

As a result of this change in methodology we have introduced a number of new series into this (and future publications):

• series CPRN (accrued corporation tax gross of tax credits), replaces series N445 (cash corporation tax gross of tax credits)
• series CPSC (accrued on shore corporation tax), replaces series MF6Y (cash on shore corporation tax)
• series CPSB (accrued off shore corporation tax), replaces series BKNO (cash off shore corporation tax)

UK Statistics Authority assessment of public sector finances

On 8 November 2015, the UK Statistics Authority published its latest assessment report of public sector finances. The report confirmed the National Statistics status of the public sector finances bulletin subject to certain requirements being met.

Supporting documentation

Documentation supporting this publication is available in appendices to the bulletin.

• Appendix A – Public Sector Finances Tables 1 to 10
• Appendix B – Large impacts on public sector fiscal measures excluding financial intervention (one off events)
• Appendix C – Revisions analysis on several main components of the central government account (current receipts, current expenditure, net borrowing and net cash requirement)
• Appendix D – Public sector current receipts table
• Appendix E – Impact of the reclassification of housing associations into the public sector; the financial year ending March 2009 to the financial year ending March 2016
• Appendix F – Supplementary fiscal measures
• Appendix G – Revisions to the first reported estimates of financial-year public sector net borrowing (excluding public sector banks) by sub-sector

Public sector borrowing by sub-sector

Each month, at 9.30 am on the working day following the public sector finance statistical bulletin, we publish Public Sector Finances borrowing by subsector.This release contains an extended breakdown of public sector borrowing in a matrix format and also estimates of Total Managed Expenditure (TME).