Box sets » Data revisions » Classification changes
Where the Government uses off-balance sheet financing to deliver public services this results in a 'fiscal illusion', where the recorded measures of debt and deficit do not reflect economic reality. In this box we looked at the case of housing associations (HAs). These came onto the balance sheet after the Government was given significant controls over them. The Government then legislated just enough to move HAs off-balance sheet. Neither movement made any fundamental change to fiscal sustainability.
The accounting treatment for student loans changed dramatically in 2019 adding more than £10 billion to the deficit. This box summarised the history of this change and a review into the design of post-18 education financing.
The accounting treatment applied to the burgeoning stock of student loans has been the subject of much interest over the past year, with reports from the House of Lords Economic Affairs Committee, the House of Commons Treasury Select Committee and the Office for National Statistics. In July, we published our own contribution in Working Paper No. 12: Student loans and fiscal illusions. In this box we analysed the possible impacts of different accounting treatments on our estimate of the deficit.
The Pension Protection Fund is a significant part of the public sector, but as of March 2018 it did not appear in either outturn public finances data or in our forecasts. This box from our March 2018 EFO explained why that was the case, and why recent announcements from the Office for National Statistics meant that it represented a significant classification risk to our forecast.
In our November 2015 forecast, we anticipated the effect on the public finances of the ONS decision to reclassify private registered providers of social housing in England. This box outlined the policy measures which affect our forecast, the effect on the public finances and changes in these forecasts since November.
We always try to forecast the public finances consistent with how the ONS will measure them once it has implemented its classification decisions, so that our forecasts will be consistent with that eventual treatment. This box outlined the items included in our November 2015 forecast which the ONS had announced, but had yet to implement.
Public finances data are subject to regular classification and methodological changes. This box outlined the classification changes associated with the implementation of the new 2010 European System of Accounts (ESA10). Annex B of our March 2014 EFO explained these changes in more detail.
This box explored the implications of the new 2010 European System of Accounts (ESA10) on our public finances forecast, ahead of its incorporation in our December 2014 EFO. Annex B of our March 2014 EFO explained these changes in more detail.
Public finances data are subject to regular classification and methodological changes. This box outlined potential classification changes ahead of the PSF review. Annex B of our March 2014 EFO explained these changes in more detail.
In this forecast, we switched to using spending data from a new source, which was the Treasury’s new public spending database known as OSCAR (short for their ‘Online System for Central Accounting and Reporting’). This led to some switches between DEL and AME, which we treated as classification changes, because they affected our presentation of DEL and AME for all years, including outturn and forecasts. This box explained those changes.
During the financial crisis, both Bradford & Bingley (B&B) and Northern Rock (Asset Management) (NRAM) were transferred to public ownership. The ONS has announced that it will reclassify both bodies into the central government sector. This box outlined the impact of the reclassification on our fiscal forecast.
In this forecast there were two policy switches that shifted spending between RDEL and AME, which applied from 2013-14 onwards. These policies were for the 50 per cent retention of business rates for local authorities in England, and for localised council tax reduction schemes. This box outlined these changes and examined the subsequent impact these would have on our forecasts.
The majority of Private Finance Initiative (PFI) assets are held off the public sector balance sheet in the National Accounts. The running costs relating to existing PFI contracts are included within agreed departmental spending envelopes. This box explored the impact on our net debt projections if all capital liabilities relating to PFI contracts were included.
Data available at the time of our November 2010 Economic and fiscal outlook suggested that general government employment fell by 550,000 between 1992 and 1998. But some of this fall reflected the reclassification of further education colleges and sixth-form school employees from the public to the private sector in 1993. This box outlined a simple methodology which suggested that general government employment would have fallen by just over 400,000 over that period in the absence of this reclassification.