Public finance bulletin: May 2013

Today the Office for National Statistics and HM Treasury published Public Sector Finances April 2013. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first month of financial year 2013–14 and revised outturns for the whole of financial year 2012–13.

Rowena Crawford, a Senior Research Economist at the IFS, said:

“Today’s figures suggest that the public sector borrowed about £1.1 billion less in 2012–13 than suggested a month ago, largely due to an upward revision to receipts. Borrowing is therefore now estimated to have been £1.4 billion lower in 2012–13 than in 2011–12; with the bigger picture remaining that borrowing was essentially unchanged over this period.

Figures for April 2013 suggest that receipts grew faster last month than was forecast by the Office for Budget Responsibility back in March for the year as a whole, with rapid growth in income tax receipts more than offsetting weak growth in corporation tax receipts. However, little can be inferred from just April’s figures about the likely path of receipts over the whole of 2012–13, not least because receipts in April will have been boosted by high income individuals shifting income such as bonuses and special dividends from 2012–13 to 2013–14 in anticipation of the fall in the top rate of income tax from 50% to 45%. Central government spending grew more slowly in April 2013 than forecast by the OBR for the year as a whole, but again these figures alone give only a very limited indication of as to how things will turn out over the rest of the financial year. ”

Headline Comparisons

• The public sector current budget in 2012–13 is now estimated to have been in deficit by £97.3bn, excluding the impact of transfers related to the Asset Purchase Facility. This compares to the initial estimated outturn published last month of a deficit of £98.5bn and the Office for Budget Responsibility’s (OBR’s) forecast for 2012–13 from the March 2013 Budget of a £98.9bn deficit. The OBR’s March 2013 forecast is for the public sector current budget deficit to fall to £95.7bn this financial year.

• Public sector net borrowing in 2012–13 is now estimated to have been £119.5bn excluding the impact of transfers related to the Royal Mail Pension Scheme and the Asset Purchase Facility, compared to the initial estimated outturn published last month of £120.6bn and borrowing in 2011–12 of £120.9bn. The OBR’s March 2013 forecast is for the public sector to borrow £119.9bn this financial year, which would be more than was borrowed in 2012–13.
• Public sector net debt at the end of 2012–13 is now estimated to have been £1,186bn, or 75.4% of national income. The OBR’s March 2013 forecast is that this will rise to 79.2% by the end of this financial year.
• Central government current receipts in April were 0.2% lower than in the same month last year, after adjusting for the financial transfers related to the Asset Purchase Facility in April 2013. However, receipts in April 2012 were flattered by the closure of the Special Liquidity Scheme; also adjusting for this would imply underlying receipts in April 2013 were 5.2% higher than in April 2012. The OBR’s forecast at the time of the March 2013 Budget implied that central government current receipts for the whole of 2013–14, excluding the impact of transfers associated with the Asset Purchase Facility, would be 3.6% above 2012–13 levels.
• Central government current spending in April was 1.1% higher than in the same month last year. The OBR’s forecast at the time of the March 2013 Budget implied that central government current spending for the whole of 2013–14 would be 2.4% above 2012–13 levels.
• Public sector net investment in April was £0.7bn, the same as was spent in April 2012 (once the impact of transfers related to the Royal Mail Pension Plan is excluded). The OBR’s forecast at the time of the March 2013 Budget was that net investment over the whole of 2013–14 would be £24.2bn, 9.1% above last year’s level.