the public sector had:
- a current budget deficit of£0.2bn
and at the end of April:
- net debt was£413.4bn, equivalent to 34.2 per cent of gross
The main statistics released show, that in April 2005:
* the public sector current budget was in deficit by£0.2 billion;
this is a£2.1 billion lower deficit than in April 2004, when there
was a deficit of£2.3 billion;
* public sector net borrowing was£1.3 billion; this is£1.5 billion
lower net borrowing than in April 2004, when net borrowing was£2.8
* the public sector net cash requirement (see table PSF4) was -£1.6
billion (i.e. a repayment), a£0.6 billion higher net cash
requirement than in April 2004, when there was a net cash requirement
of -£2.2 billion (i.e. a repayment). N.B. rather than looking at the
cash measure, which can be misleading due to timing factors, it is
better to look at the other, accruals-based, statistics
* at the end of April 2005 public sector net debt was£413.4 billion
(equivalent to 34.2 per cent of GDP). This compares to£373.8 billion
(32.5%) as at the end of April 2004.
Revisions since last data release
(Please refer to National Statistics website for all tables mentioned
in this release)
Public Sector Current Budget and Public Sector Net Borrowing have
been revised from April 2004. There have been some minor revisions to
Public Sector Net Cash Requirement from September 2002. Table PSF8R
presents revisions to key aggregates.
It is usual for estimates to be revised in the months after they are
first released, as estimated and provisional data are replaced with
firmer information. This is the case in this dataset, where Central
Government receipts and expenditure estimates for February and March
2005 have been revised. 2004/05 receipts data have also been
reprofiled in earlier months.
There are possible further revisions to local government data in
2003/04, although at this stage the indication is that they will lead
to offsetting changes between receipts and expenditure components
rather then a change to the main fiscal aggregates.
The next tranche of regular revisions covering a longer time span
will be in July. This will include the data used in the annual
National Accounts publication, the Blue Book.
Details of the public sector statistics revisions policy, covering
this and the other public sector first releases, is available at
1. A guide to monthly public sector finance statistics is available
It explains the concepts and measurement of the monthly data, plus
those previously published, and gives some long runs of historical
data. It is also available as a paper publication, number 12 in the
GSS methodological guide series, ISBN 1 85774 296 6, (price£5).
These background notes explain the monthly data.
2. The current budget is derived, as net saving plus receipts of
capital taxes, from national accounts under the European System of
Accounts 1995 (ESA95). It is the key measure for assessing progress
against the golden rule, one of the Government's two main fiscal
rules. This states that, on average over the economic cycle, the
Government should borrow only to invest and not to fund current
expenditure. HM Treasury has stated that progress against the golden
rule will be measured by averaging the surplus on current budget,
when expressed as a percentage of GDP, over each year of the economic
cycle. So to accord with the rule, this average should be positive.
HM Treasury's provisional judgement is that the current economic
cycle began in 1999/2000 and is forecast to end in 2005/06. This was
set out in Budget 2005 (published by HM Treasury on 16 March 2005)
which gave the following forecasts of Public sector current budget
as a percentage of GDP: 2004/05 -1.4% and 2005/06 -0.5%.
3. Procedures for calculating net borrowing are discussed in the
methodological guide. The current budget is obtained by subtracting
net borrowing from an estimate of net investment. For central
government this is checked against some monthly data for some current
and capital transactions.
4. Net investment is defined as investment less depreciation.
Investment is capital formation (acquisition of fixed assets, stocks
and valuables net of any sales) plus net payments of capital grants.
Data sources are: Capital expenditure: for central government new
procedures have been established to collect capital expenditure
monthly from departments within a timetable needed for publication in
this First Release. For local government, monthly capital expenditure
data are not available, so estimates are made based on local
government's view of its expected capital expenditure for the year,
updated by actual quarterly outturn data, and monthly information on
asset sales. For public corporations there is a mixture of reported
monthly capital expenditure figures and estimates. Depreciation is
derived from a model that uses assumptions about asset lives and a
rolling estimate of the public sector's stock of capital assets
derived from capital expenditure data. The figures are reasonably
stable through time so adequate monthly figures can be estimated that
are consistent with the model's expected quarterly outputs.
5. Public sector net debt is built up by first calculating the public
sector's financial liabilities that are related to the financing
items of the public sector net cash requirement (PSNCR). These are
scored at face value. Liquid assets, mainly foreign exchange reserves
and bank deposits, are then subtracted to reach net debt. Net debt in
this First Release is calculated from the latest available
measurement of the stock of public sector financing liabilities and
liquid assets, and adding the change since then implied by PSNCR.
This method is refined by taking account of some other adjustments,
such as revaluation's of the foreign exchange reserves due to
currency exchange rate movements, and discounts/premia on the nominal
price of debt issued.
6. Public sector net debt is the key measure for assessing progress
against the Government's other main fiscal rule, the sustainable
investment rule. The Economic and Fiscal Strategy Report (1998)
states (page 5) that to meet this rule, 'Net public debt as a
proportion of GDP will be held over the economic cycle at a stable
and prudent level.' It also states (page 22) that 'The Government
believes that, other things equal, it is desirable that net public
debt be reduced to below 40 per cent of GDP over the economic cycle.'
>From Budget 2002 HM Treasury has also published a version of public
sector net debt excluding the effect of cyclical fluctuations, this
is referred to as 'core debt'. The GDP figure used to calculate the
net debt ratio is that for the 12 months centred on when the debt 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 the
periods where National Accounts outturn GDP data are not available,
and to produce monthly GDP figures. The procedure computes the
quarterly growth rate implied by HM Treasury's last published
forecast of financial year money GDP, and applies those growth rates
to the latest quarterly GDP figure published by National Statistics.
Monthly figures are derived by dividing the quarters by three.
7. Net borrowing is consistent with the definitions in ESA95. Public
sector net borrowing is the Government's preferred measure of the
short term impact of fiscal policy on the economy.
8. 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 28 February 2005. The definition of general government net
borrowing to be reported for the Excessive Deficits Procedure under
the Maastricht Treaty is 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 the Public Sector Finances 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 Finances First Release. Eurostat requires that
for the Excessive Deficits Procedure, they 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 Finances 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/
9. As detailed in: the 20 July 2004 Public Sector Finances First
Release, a new revisions policy was introduced for the the Public
Sector Finances that allows all periods to be open for comprehensive
revision. As a result of this the quarterly Public Sector Accounts
First Release, which was published with national accounts about 12
weeks after the end of the latest quarter reported was no longer
necessary and was discontinued.
An electronic dataset is made available three working days after
publication of the Public Sector Finances First Release. This
contains quarterly data previously published in the Public Sector
Accounts First Release and provides quarterly data, consistent with
the latest Public Sector Finances First Release, analysed by economic
category and sub-sector.
The new dataset is available at
10. The national accounts methodology for the new tax credits
introduced in April 2004, was announced in April 2003. It is
described in NACC decisions - Classification of Tax Credits available
at www.statistics.gov.uk. From their introduction, the new tax
credits (Working Tax Credit and Child Tax Credit) will count either
as negative tax (e.g. a deduction from income tax) for amounts within
the tax liability of the recipient or as a benefit (current
expenditure) for amounts that exceed the recipient 's tax liability.
Hitherto, tax credits (then the Working Families' Tax Credit and
Disabled Person's Tax Credit) were treated entirely as benefits and
this treatment is unchanged in the main National Accounts based
fiscal measures. The main effect of this change will be a reduction
in both current expenditure (net social benefits)and current receipts
(accrued income tax) by the amount of the tax deduction. The effect
on fiscal aggregates, such as the public sector surplus on current
budget and public sector net borrowing, is neutral because the effect
on receipts and expenditure nets out.
11. The monthly estimates of the split of receipts between Compulsory
social contributions and Income and capital gains tax are
provisional. Estimates are used for apportioning certain PAYE
payments during the fiscal year between income tax and national
insurance contributions. When employers' end-of-year tax returns are
received and processed, compensating adjustments can be made'.
12. Following the establishment of HM Revenue and Customs inApril
2005, table PSF6 will no longer be able to show separate payover
figures for the former two departments (columns 1 and 5). These have
been combined for the whole period covered by the table.
13. The Budget Report, (published by HM Treasury 16 March 2005) gave
the following forecasts for the financial year 2005/06:
- public sector surplus on current budget: minus£5.7 billion
- public sector net borrowing:£31.9 billion
- public sector net debt: 35.5 per cent of GDP at end March 2006
Table C23 in the Budget Report 2005 gives a forecast of the
components of net borrowing and the current budget, using the same
ESA95 concepts and definitions as in this First Release.
14. Data underlying the graphs in the First Release are available on
15. One indication of the reliability of the key indicators in this
release can be obtained by monitoring the size of revisions. The
table below is designed to show the size and pattern of revisions
from first publication to one year later. The ONS standard
presentation is to show the average of five years worth of revisions
(e.g. sixty monthly observations). However, as there are less than
five years worth of observations for one of these key series, the
analysis for current budget is based from when the monthly time
series began. The latest observations in this table (p.9 )are for the
March 2004 first estimates, the revision to the April 2004 first
estimate is excluded from the table. Please note that these
indicators only report summary measures for revisions, the revised
data may still be subject to measurement error.
A statistical test has been applied to find out if there is bias in
the estimates. An asterisk (*) indicates where statistically
significant bias was found. Net debt is rarely substantially revised,
so the bias in this series is from the GDP estimates and forecasts
used in the calculations.
The table covers sixty monthly estimates of Public Sector Net
Borrowing and Public Sector Net Debt as a percentage of GDP and fifty
four estimates of Public Sector Current Budget.
A spreadsheet giving these estimates and the calculations behind the
averages in the tables is available on the National Statistics
website at http:www.statistics.gov.uk/StatBase/Product.asp?vlnk=805
Table PSF8R presents the latest revisions to key aggregates. The
largest revisions normally occur in the month following first
release, when estimated and provisional data are replaced with firmer
More information about the revisions material in this Release can be
found on the National Statistics website:
16. The estimate for 2004/5 Public Sector Current Budget as a
percentage of GDP, given in the table on page 2, uses outturn GDP
data for the first three quarters of the 2004/5 financial year plus
an ONS projection for the remaining quarter. This projection is
calculated by taking the annualised seasonally adjusted GDP growth
rate from the first three quarters of the financial year and applying
it to the first quarter outturn for 2004. This projection will be
replaced by outturn GDP data in the 20 June 2005 Public Sector
Finances First Release.
17. On 24 September 2004 ONS announced that British Energy was being
classified as part of the public sector. This classification took
effect from September 2002. This release includes the
18. The United Nations Statistics Commission has approved the
comprehensive and parallel updating of the National Accounts and
related manuals, in order to ensure their consistency and achieve
greater harmonisation. These manuals are the: System of National
Accounts, 1993 (SNA93); Balance of Payments Manual, 5th edition
(BPM5); and the Government Finance Statistics, 2001 (GFSM2001). The
ONS has developed the following webpage to inform users of progress
and to invite their input :
19. Complete runs of series in this Release are available to download
free of charge at http:www.statistics.gov.uk/timeseries.
Alternatively, for low-cost tailored data call Online Services on 020
7533 5675 or email firstname.lastname@example.org