Special factors in March
March included proceeds from the sale of part of the Student Loans Book (£1.0bn). This transaction reduced net departmental outlays.
The main accruals adjustments in March were:
Inland Revenue taxes: accruing taxes were higher than cash Consolidated Fund receipts due to tax on end year bonuses not being received until April.
Customs and Excise: accruing taxes were higher than cash taxes as March is a low month in the VAT quarterly cycle; and tobacco duty cash receipts were low due to forestalling in November before duty Increases.
National non-domestic rates (NNDR): which is assumed to accrue evenly over 12 months, while cash receipts are low in March.
Interest payments: accruing gilt interest was higher than cash payments because June and December are now the main months for paying gilt coupon interest.
1. On 19 January 1999 the ONS published a guide to monthly public sector finance statistics. It explains the concepts and measurement of the new monthly data, and gives some long runs of historical data. It is number 12 in the GSS methodological guide series, ISBN 1 85774 296 6, and is available from the ONS Direct, Room D140, Government Buildings, Cardiff Road, Newport, NP9 1XG telephone 01633 812078.
2. Public sector net debt consists of the public sector's financial liabilities at face value minus its liquid assets - mainly foreign exchange reserves and bank deposits. Net borrowing in this First Release is calculated from the latest available measurement of the stock of public sector financial liabilities and liquid assets, and then adds the change in total net debt since then implied by the public sector net cash requirement. This method is refined by taking account of some other adjustments such as revaluations of the foreign exchange reserves due to currency exchange rate movements, and discounts/premia on the nominal price of debt issued. The estimate of the level of net debt includes the effect of the reclassification of the Issue Department from central government to the central bank sector in accordance with the introduction of the European System of Accounts 1995 (ESA95). Methodological work is underway to assess whether any other ESA95 changes or reclassifications should have an impact on the measurement of public sector net debt.
3. The sustainable investment rule - one of the government's two strict fiscal rules - is stated in terms of net debt as a percentage of GDP, where GDP is centred on the point where the debt level is measured. Hence this requires an estimate of GDP to be available covering the period from six months before to six months after. An entirely mechanical procedure is used to derive GDP figures for those periods where national accounts outturn data are not available, and to produce monthly GDP figures. The procedure computes the quarterly growth rate implied by treasury's latest published forecasts of financial year money GDP, and applies those growth rates to the latest quarterly GDP figure published by ONS. Monthly figures are the quarters divided by three.
4. Net borrowing is consistent with the definitions in the European System of Accounts 1995 (ESA95). Net borrowing differs from the net cash requirement in that it is measured on an accruals basis whereas the net cash requirement is mainly a cash measure which includes some financial transactions - the most important of these are public sector lending to other sectors of the economy and privatisation proceeds.
5. General government net borrowing was previously known as general government financial surplus/deficit. This is reported under the European System of Accounts 1979 (ESA79) rules for submitting estimates to the European Commission under the requirements of the Maastricht Treaty.
There are some differences between general government net borrowing on a UK basis and on an ESA79 basis. These are discussed in the ONS First Release 'Government deficit and debt under the Maastricht Treaty' ONS (99) 75 published on 26 February 1999. Now that national accounts has moved onto ESA95 there will be further differences between the figures in UK national accounts and those reported to the European Commission. These differences will continue until February 2000 when the deficit and debt returns will be required on an ESA95 basis for the first time, rather than ESA79, and will be completely consistent with UK national accounts.
6. Current and capital accounts leading to net borrowing are available quarterly. These appear in Public Sector Accounts which is published with national accounts about 12 weeks after the end of the latest quarter reported and Provisional Public Sector Accounts published about 8 weeks after the end of the latest quarter reported. Presentations of public sector finances also appear in Financial Statistics.
7. The Budget Report, (published by HM Treasury 9 March 1999) gave the following forecasts for the financial year 1998-99:
* public sector net borrowing: minus£2.8bn, (minus£1.0bn excluding windfall tax receipts and associated spending)
* public sector net cash requirement: minus£5.2bn, (minus£3.4bn excluding windfall tax receipts and associated spending).
public sector net debt: 40.6 percent of GDP
HM Treasury estimate windfall tax associated spending to be #0.7bn. Public sector net borrowing for the financial year 1998-99
was minus #5.2bn compared to the Budget 99 forecast of minus #2.8bn, (and minus #3.3bn compared to the Budget 99 forecast of minus #1.0bn excluding windfall tax receipts and associated spending). Public sector net cash requirement for the financial year 1998-99 was minus #7.4bn compared to the Budget 99 forecast of minus #5.2bn, (and minus #5.5bn compared to the Budget 99 forecast of minus #3.4bn excluding windfall tax receipts and associated spending). Public sector net debt at the end of the financial year 1998-99 was 40.6 percent of GDP as it was in the Budget 99 forecast.
8. Figures in this First Release are not seasonally adjusted. Comparison with equivalent figures in earlier periods can be misleading because the monthly pattern of spending and receipts can vary between years. Reasons for this include privatisation proceeds and changes in the administrative arrangements for collecting taxes.
9. Data underlying any of the graphs in the First Release and details of the financing of the central government net cash requirement are available on request from the ONS.
10. The data in this First Release can be obtained in computer readable form via the ONS Databank service which provides macro-economic time series data on magnetic tape or disk. Details of the service offered and the Schedule of Charges may be obtained from:
The ONS Sales Office, Office for National Statistics, B1/06, 1 Drummond Gate, London SW1V 2QQ (telephone 0171-533 5675).
11. ONS does not offer direct on-line access for these data but a list of host bureaux offering such a facility is available on request from ONS. Key figures in the First Release can also be obtained from Reuters (pages TREA to TREF), Telerate Monitor (pages 22494 to 22499), Bridge News formerly known as Knight-Ridder Financial News - (pages 171 onwards) and Bloomberg (pages NI UK and ALLX UKPS).
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release with HM Treasury. The Public Sector Finances Team (PSF) in the Treasury working on the data have access to them at all stages, and certain other individuals in the Treasury may have access to them earlier than would be the case with most ONS releases. A list of those outside the ONS and the PSF Team with pre-publication access to the contents of this release is available on request.
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