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PUBLIC SECTOR ACCOUNTS - 3RD QUARTER 2003

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In the third quarter of 2003 the public sector had: ...
In the third quarter of 2003 the public sector had:

- a current budget deficit of £3.5bn

- net borrowing of £6.3bn

and at the end of the quarter its

- net debt was equivalent to 32.0 per cent of gross domestic product

Current budget = Current receipts (including capital taxes)

- current expenditure

- depreciation

Net borrowing = Net investment

- Current budget

Main Statistics

The main statistics released show, that in the third quarter of 2003:

- the public sector current budget was in deficit by £3.5bn ,

this is a £2.2b higher deficit than in the corresponding

quarter of 2002, when there was a deficit of £1.3bn;

- public sector net investment was £2.8bn, this is an increase

of £0.9bon the corresponding quarter of 2002, when public

sector net investment was £1.9bn;

- public sector net borrowing was £6.3bn; this is £3.1bn

higher net borrowing than in the corresponding quarter of 2002,

when public sector net borrowing was £3.1bn;

- at the end of the quarter public sector net debt, expressed as a

percentage of GDP, was 32.0 per cent, an increase from 30.3 per

cent at the end of the corresponding quarter of 2002;

- at the end of the quarter the level of Public sector net debt, at

nominal value, was £355.3bn, compared with a level of £320.4

billion at the end of the corresponding quarter of 2002.

Revisions since last data release

The period from the first quarter of 2002 has been open to

comprehensive revisions in this release (table PSAT5R).

There are numerous reasons for the revisions to the public sector

accounts, and these have different effects in different time periods.

In 2002 there is new information on whether spending on public

corporations is current or capital expenditure. The quarterly profile

of 2002/03 central government current expenditur e has been revised

with more expenditure in 2002 than before, and less in 2003 q1.

Improved NDPB data have also revised down 2002/03 central government

current expenditure. Estimates of local government current

expenditure have been revised down for 2003 q1, following new

information that some of this expenditure will now occur in later

quarters.

The main revisions to the second quarter of 2003 reflect improved

departmental data on international transfers and education grants.

For the third quarter of 2003 information on the non-financial

accounts of local government and public corporations are now

available, previous estimates of net borrowing were compiled from

financial account information.

The table PSAT5R shows revisions, to calendar year, financial year

and quarterly data, since the last publication of Public sector

finance statistics on 18 December 2003, except for those series

indicated.

Details of the revisions policy for this and the other public sector

statistics releases is available at

http://www.statistics.gov.uk/about/Methodology_by_theme/

Public_sector_accounts/default.asp

BACKGROUND NOTES

1. This First Release is consistent with data from thenational

accounts released today.

2. The statistics in the First Release are based on the UK national

accounts. These are compiled in accordance with the European System

of Accounts 1995 (ESA95). Presentations of public sector finances on

an ESA95 basis also appear in Financial Statistics and the monthly

Public Sector Finances First Release. A guide to monthly public

sector finance statistics is available from

http://www.statistics.gov.uk/downloads/theme_other/GSSMethodology

_No_12_v2.pdf It explains the concepts and measurement of the monthly

data. It is also available as a paper publication, number 12 in the

Government Statistical Service methodology guide series, ISBN 1 85774

296 6, (price £5).

3. The presentation is con sistent with the format for public finances

in The Pre-Budget Report 2003 (HM Treasury, 10 December 2003). The

public sector current budget is equivalent to net saving in national

accounts plus capital tax receipts. A positive current budget is a

surplus; a negative current budget is a deficit. Net investment is

capital expenditure, including net stockbuilding, net acquisition of

land, and payments of investment grants, less sales of capital assets

and capital consumption. Public sector net borrowing is as defined in

national accounts.

4. Data in this First Release are not seasonally adjusted but

seasonally adjusted series are available electronically via the

National Statistics Time Series Data Service. There are plans to

discontinue this data set, although items such as seasonally adjusted

borrowing will still be available via alternative datasets.

5. The public sector consists of central government, local

authorities and public corporations. General government comprises

central government and local authorities. Details of which

organisations are in each sector can be found in (The National

Accounts Sector Classification Guide) at www.statistics.gov.uk/psa

6. General government net borrowing reported in this release forms

the basis of the reports of Government Deficit under the Maastricht

Treaty. The most recent release of government debt & deficit data was

on 29 August 2003. However, the definition of general government net

borrowing is slightly different to that used for National Accounts. A

regulation requires that payments on Swaps are treated as interest

payments; for all other purposes, including the national accounts and

Public Sector Accounts First Release, such payments are shown as

financing items, consistent with ESA95. The Government Debt and

Deficit under the Maastricht Treaty First Release now includes three

versions of the deficit. It starts with the deficit consistent with

the definition of net borrowing used in this release, then shows the

effect of the alternative treatment of swaps and finally shows an

alternative treatment of the government's receipts for allowing the

use of spectrum by third generation mobile phone companies. UK

interpretation of ESA95 is that these receipts should be treated as

rents, which is the treatment used in the preparation of the Public

Sector Accounts First Release. Eurostat requires that for the

Excessive Deficits Procedure, they will be reported as being for the

sale of assets; cash receipts of £22.5 billion were paid to

government by the mobile phone companies during the second and third

quarters of 2000. These are treated in Public Sector Accounts as

pre-payments of rent at the rate of £1 billion per annum over the

life of the licences. For more detail please refer to the PSA

homepage under Articles www.statistics.gov.uk/psa/. The data released

on 29th August 2003 also includes the reclassification of NHS Trusts,

from public corporations to central government. The reclassification

will not be included in Public Sector Accounts until June 2004.

7. The release of Public Sector Accounts data leads to revision of

the data previously published in Public Sector Finances. Monthly

versions of the revised data, consistent with the quarterly Public

Sector Accounts First Release, are released electronically as soon as

possible, often at the same time as the Public Sector Accounts First

Release. They are also published in Financial Statistics early in the

following month.

8. In July 2003 the ONS announced that NHS Trusts were being

reclassified from public corporations to central government. More

details are available from the National Statistics website at

http://www.statistics.gov.uk/nhsfoundationtrusts The reclassification

will be implemented into National Accounts, and hence into this

release, in June 2004. For the purposes of the Excessive Deficit's

procedure it ha s already been implemented. More information on this

can be found in the Government Deficit and Debt under the Maastricht

Treaty First Release at

http://www.statistics.gov.uk/Statbase/Product.asp?vlnk=3766

9. Table PSAT4 refers to financial transactions that determine the

net cash requirement. These fall into two broad groups: the net

acquisition of financial assets, and accruals adjustments. The net

acquisition of financial assets includes transactions undertaken for

policy reasons (rather than to manage liquidity): for example lending

to students and privatisation proceeds. Such transactions are

regarded, as determining the public sector's need for funds rather

than financing that need. Accruals adjustments include the difference

between accrued transactions and their cash counterparts: it includes

adjustments for accruing interest as well as the ESA95 category

'accounts/payable receivable'. This adjustment is necessary because

net borrowing is measured on an accruals basis whereas the net cash

requirement measures cash flows.

10. 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. Within public sector net debt,

the gross liabilities of general government are consistent with the

definition of General Government Gross debt reported to the European

Commission under the Maastricht Treaty.

11. Further information on the public sector is available on request.

This includes tables equivalent to PSAT4 for each of the component

sectors (central government, local government and public

corporations).

12. The data underlying any of the graphs in this First Release are

available on request.

13. The complete run of data in the tables of this First Release are

also available to view and download in other electronic formats free

of charge using the ONS Time Series Data website service. Users can

d ownload the complete release in a choice of zipped formats, or view

and download their own selections of individual series. The Time

Series Data service can be accessed at

http://www.statistics.gov.uk/timeseries

14. Details of policy governing the release of new data are available

from the National Statistics Press Office, including a description of

the release categories featured on the front page of National

Statistics releases.

15. National Statistics are produced to high professional standards

set out in the National Statistics Code of Practice. They undergo

regular quality assurance reviews to ensure that they meet customer

needs. They are produced free from any political interference.

(c)Crown copyright 2003.

CONTENTS OF TABLES

Summary tables

PSAT1. Key indicators from public sector accounts:

a) surplus on current budget, net investment, net cash requirement

and net debt from 1994,

b) surplus on current budget, and net borrowing, by sector from

1990.

PSAT2 Public sector transactions by sub-sector and economic category

2002-2003.

PSAT3 Public sector transactions by sub-sector and economic category

2003Q3.

Tables PSAT2 and PSAT3 are consistent with the presentation of public

finances in table B22 in the Pre-Budget Report 2003 (HM Treasury 10

December 2003). The tables make use of national accounts data in a

way that enables the consolidation of the public sector to be shown,

and some receipts are subtracted from expenditure to show current

General Government Expenditure (current GGE). An explanation of how

these tables relate to statistical series in national accounts is

available from ONS on request.

PSAT4 Public sector detailed annual and quarterly information on

current and capital transactions, and a summary of financial

transactions.

PSAT4 is in four parts, linked as follows:

Current resources - current uses = net saving

Net saving + capital ta x receipts = surplus on current budget =

- deficit on current budget.

Deficit on current budget + net investment = net borrowing

Net borrowing + financial transactions that are net cash requirement

determinants

= net cash requirement

= financial transactions that finance the net cash requirement.

PSAT5R Revisions since last publication to public sector aggregates

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