Box sets » Public sector balance sheet
Broader measures of the balance sheet are useful to consider when thinking about fiscal sustainability. However, under the national accounts framework even the broadest measures fail to recognise natural assets – the very assets affected by climate change. The box discussed the frameworks under which the ONS produces the environmental and natural capital accounts, and which bodies are working to address the gaps in these frameworks. The box also discussed key messages from the Dasgupta Review and Treasury’s response.
Government debt liabilities can be valued in various ways. In recent years market and face values have diverged sharply reaching 15% of GDP. In this box we explained why this has happened and why we use face value in our analysis.
When discussing the potential impact of fiscal risks on the public sector balance sheet in our 2017 Fiscal risks report, we focused on the Government’s target measure of public sector net debt and its broader, but less-well-known counterpart, public sector net financial liabilities. In this box we considered some of the pros and cons of three even broader measures of the public sector balance sheet.
At Autumn Statement 2016 the Government asked us to forecast two new balance sheet metrics: PSND excluding the Bank of England and public sector net financial liabilities (PSNFL), a broader measure covering all the public sector’s financial assets and liabilities recorded in the National Accounts. This box presented our long-term projections for these two new balance sheet metrics with particular focus on PSNFL as PSND with and without the Bank of England tended to converge in our medium-term forecast and were expected to continue to do so over the long-term.
Depending on ONS classification assets relating to PFI contracts can be on the public sector or the private sector balance sheet. This box outlined the accounting of PFI contracts in the National Accounts and WGA.
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.