Today the Office for National Statistics and HM Treasury published Public Sector Finances July 2015. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first four months of financial year 2015–16.
Rowena Crawford, a Senior Research Economist at the IFS, said:
"Today's public finance figures contain a mixed bag of news for the government. On the one hand, receipts from corporation tax and income tax have continued to perform strongly, in a month when a relatively large proportion of these receipts are received. On the other hand, receipts from VAT are now estimated to have been smaller so far this year than previously thought, and so to have been performing less well than the Office for Budget Responsibility forecast for the year as a whole.
"Overall receipts have performed slightly more strongly over the past four months than the OBR forecast for the whole of 2015–16, though it is too early to judge whether this trend will continue for the rest of the financial year. Central government spending so far has grown less rapidly than forecast for the year as a whole, but is expected to pick up over the course of the year."
- Central government current receipts in July were 3.9% higher than in July 2014, and receipts between April and July have been 4.4% higher than over the same months last year. This compares favourably with the 3.8% growth in receipts over the year as a whole forecast by the OBR in its July 2015 Economic and Fiscal Outlook.
- Central government current spending was forecast to increase by 1.0% between 2014–15 and 2015–16 by the OBR in July. Over the first four months of this year central government spending has been 0.1% higher than over the same period in 2014, but this low growth is largely driven by changes in the timing of grants paid to local government, which should unwind as the year progresses. Central government current spending in July 2015 was 3.4% higher than in July 2014.
- Public sector net investment in July was £1.9 billion, £0.1 billion more was spent in July last year. Together, public sector net investment between April and July 2015 has been £4.9 billion. This is £0.4 billion less than over the same four months in 2014. The OBR’s July 2015 forecast was for net investment over the whole of 2015–16 to be £28.6 billion, which is 6.2% below last year’s level (£30.5 billion).
- The public sector finances were in surplus in July 2015, with public sector receipts being £1.3 billion greater than public sector spending. This is due to the timing of government revenues – a large proportion of corporation tax receipts and self-assessment income tax receipts are received in July each year.
Little can be inferred or extrapolated about the public finances in 2015–16 from information about only the first four months of the financial year. Bearing this in mind, the figures for receipts and spending in July 2015 show:
Central government current receipts
Receipts from income tax, capital gains tax and National Insurance contributions in July 2015 were 4.2% higher than the same month last year. July is an important month for these receipts, since it is one of the main months in which the government receives revenues from self-assessment. Self-assessment income tax receipts were 17.3% higher in July 2015 than July 2014, though it will be important to compare receipts from July and August together to get a fuller picture. Between April and July 2015 receipts from income tax, capital gains tax and NICs have been 5.1% higher than over the same months last year. In its July 2015 Economic and Fiscal Outlook the OBR forecast that these receipts would grow by 4.3% over the year as a whole.
Cash receipts of corporation tax in July 2015 were 5.2% higher than the same month last year. July is one of the four months in the year when a substantial proportion of corporation tax payments are made, so the strong performance of these receipts this month is particularly good news. Over the first four months of this financial year corporation tax receipts have been 9.5% higher than over the same period in 2014–15. This compares favourably to the 0.3% increase in corporation tax receipts over the year as a whole implied by the OBR’s July forecasts.
VAT receipts in July 2015 were 3.3% higher than the same month last year. Together the VAT receipts during the first four months of 2015−16 were 2.5% higher than in the same months of 2014−15. This represents lower growth over the year to date than estimated last month (when receipts in April to June were thought to be 6.3% higher than over the same three months last year), due to a downward revision to previous months’ receipts. The OBR forecast in July implied that VAT receipts would be 3.8% higher in 2015–16 than they were in 2014–15.
Central government current spending
Expenditure on net social benefits was 0.7% higher in July 2015 than in July 2014, while expenditure over the first four months of this year was 1.3% higher than over the same period last year. This is broadly in line with the OBR’s July forecast which implied that spending on net social benefits over the year as a whole would be 1.2% higher than last year.
Spending on debt interest was £4.2 billion in July 2015, higher than the £3.7 billion that was spent in July 2014. Spending on debt interest between April and July was £17.9 billion, which is 1.0% greater than the amount spent in the same months of last year. The OBR forecast at the time of the July 2015 Budget was that total debt interest spending by central government in 2015−16 would be £46.7 billion, £1.3 billion (or 2.8%) more was spent in 2014–15.
Other current spending by central government, including spending on the delivery of public services, was 3.9% higher in July 2015 than in July 2014. Over the period April to July 2015 this area of spending has been 0.6% lower than over the same period in 2014, but this low growth in spending is largely driven by changes in the timing of grants paid to local government, which should unwind as the year progresses. The OBR forecasts in the July 2015 Budget suggest other central government spending over the whole of 2015–16 will be 0.7% higher than in 2014–15.
Further information and contacts
For further information on today’s public finance release please contact: Rowena Crawford on 020 7291 4800, or email firstname.lastname@example.org.
Next month’s public finances release is due to be published on Tuesday 22nd September.
IFS analysis of the outlook for departmental spending over the next parliament based on the July 2015 Budget figures can be found at: http://www.ifs.org.uk/uploads/publications/budgets/Budgets%202015/Summer/Crawford_public_finances.pdf
Other IFS analysis of the July 2015 Budget can be found at: http://www.ifs.org.uk/tools_and_resources/budget/505
This, and previous editions of this press release, can be downloaded from http://www.ifs.org.uk/publications/pf
Office for National Statistics, Public Sector Finances, July 2015: http://www.ons.gov.uk/ons/rel/psa/public-sector-finances/july-2015/index.html
Office for Budget Responsibility analysis of Public Sector Finances, July 2015: http://budgetresponsibility.independent.gov.uk/category/topics/monthly-public-finance-data/
Office for Budget Responsibility, Economic and Fiscal Outlook, July 2015: http://budgetresponsibility.org.uk/economic-fiscal-outlook-july-2015/
Notes to Editors:
- All figures are on a basis that excludes the impact of temporary financial sector interventions.
- Central government current spending includes depreciation.
- Where possible we compare figures on an accruals basis with the Office for Budget Responsibility forecast.