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Public sector finances – glossary

This glossary provides definitions of terms commonly used in the statistical releases: public sector finances and the government deficit and debt under the Maastricht Treaty.

For further clarification, amendments to the descriptions or if there are terms used in either of the 2 publications that are not included in the glossary, please email The public sector finances team will then provide further information.



Accruals/accrued recording Financial recording based on when ownership transfers or the service is provided (sometimes different to when cash is paid).


Public sector finances estimates are recorded on an accrued basis. This means that transactions are recorded when they occur and not necessarily when the cash transaction takes place. For example, when a good transfers ownership it is recorded, regardless of when the cash is received for that good.


Alignment describes the harmonising approach to produce consistent data across outputs and different measures. Alignment of data can produce revisions.

Two important instances where this takes place in the public sector finances are when public sector finances are aligned with national accounts data (and vice versa) and when the financial and non-financial accounts for public sector finances are aligned.

Asset protection scheme

HM Treasury’s asset protection scheme to protect the interest of the Royal Bank of Scotland’s financial assets against losses.

Asset purchase facility (APF)

See Bank of England asset purchase facility – an arm of the Bank of England able to purchase financial assets including government securities (gilts). The APF has earned interest that is periodically transferred back to central government. These payments are public sector borrowing neutral.

Bank of England asset purchase facility (BEAFF)

The purchase of high-quality assets (such as corporate bonds, commercial papers and gilts) financed by the issue of Treasury bills and the Debt Management Office (see DMO) cash management operations.

Capital transfers

Common capital transfers relate to assets such as shares or other forms of equity. Capital transfers are a component of net investment.

Cash receipts

Transactions taking the form of payment to UK Government involving cash.

Cash recording Financial recording based on when cash is paid or received. Net cash requirement is recorded on a cash basis and net debt is close to being a cash measure.

Central government

See “General government”.

Central government current budget

See “Current budget deficit/surplus”.

Credit guarantee scheme

This was part of government measures taken to ensure financial stability by providing liquidity in the short term to the banking system. It involved the provision of new capital to UK banks and building societies to strengthen their resources. This provided an opportunity to restructure their finances, while maintaining their support for the real economy. It also ensured that the banking system had the funds necessary to maintain lending in the medium term.

Current budget deficit/surplus

The current budget is the difference between the revenue (or receipts) (taxes, etc.) and its current expenditure, on an accrued basis – the gap between current expenditure and current receipts (having taken account of depreciation).

The current budget is in surplus when receipts are greater than expenditure. The current budget is in deficit when expenditure is greater than receipts.

The public sector current budget covers central and local government as well as public corporations. The current budget for central government is the largest component of the public sector current budget.

Current expenditure

Spending on government activities including social benefits, interest payments and other government department spending (excluding spending on capital assets).

Current receipts

Income mainly from taxes (e.g. VAT, income and corporation taxes) but also includes interest, dividend and rent income.

Debt Management Office (DMO)

The DMO is an Executive Agency of HM Treasury. It issues gilts (or bonds) on behalf of the UK Government as well as conducting cash management in sterling money markets.


The term deficit is used frequently with reference to the public sector finances. It can refer to the state of the current budget (see “Current budget”), but it is also commonly used to refer to net borrowing by some commentators.

When referring to net borrowing, a deficit exists when outward flows of expenditure on a current and capital basis exceed the current and capital inward flows.


A payment made to shareholders.

Environmental levies

These are cover schemes that have been administered to reduce emissions and are treated as taxes on production. Emissions trading system (ETS) and carbon reduction commitments (CRC) are 2 examples of environmental levies.

ESA 1995

European system of accounts 1995 that was the European legal requirement for the production of national accounts prior to September 2014.

ESA 2010

European system of accounts 2010 that is the European legal requirement for the production of national accounts from September 2014.

Excluding the temporary effects of financial interventions (“ex” measures)

During the economic downturn, the UK Government made a number of direct financial interventions in the economy. This led to the creation of estimates excluding these interventions. This allowed users to analyse the public sector finances without these interventions. The largest intervention was the impact of banking group activities.

Finance leases

A “lease” is when one institutional unit (A) owns durable goods and transfers the right to lease the goods to another institutional unit (B) in return for rental payments.

Financial account

The financial account shows the acquisition and disposal of financial assets and liabilities. It therefore records the movements in financial assets and liabilities that make up net lending/borrowing.

Conceptually, the net lending/borrowing position of the financial account should reflect the same net lending/borrowing position as the non-financial account. However, in practice, data for the 2 accounts does not always align (see “Alignment”).

Financial interventions

This is a term that refers to the impact of the banking groups.

Financial liabilities

A claim on an institutional unit by another body that gives rise to a payment or other transaction transferring assets to the other body.

Financial year

The financial year in the UK is different to a calendar year, unlike in other European countries. The financial year runs from April to March (also see “Year to date”).

Fiscal policy

Taxation and spending measures that allow the government to guide the economy.

General government

General government covers the sector including central and local government. Importantly, it excludes public corporations.

The following definitions are taken from the “European system of national accounts” manual ESA10.

“The general government sector (S.13) consists of institutional units which are non-mar­ket producers whose output is intended for individ­ual and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth.” (Para 2.111)

“The central government subsector includes all adminis­trative departments of the state and other cen­tral agencies whose competence extends normally over the whole economic territory, except for the administration of social security funds.” (Para 2.114)

“The local government subsector includes those types of public administration whose competence extends to only a local part of the economic territory, apart from local agencies of social security funds.” (Para 2.116)


A gilt is a UK Government security (or bond) issued by HM Treasury. They are marketable securities that can make interest as well as downfalls. A more comprehensive explanation can be found on the DMO website (see “Debt Management Office”).

Government guarantees

The most common type of government-guaranteed loan, which requires the government to repay any amount outstanding on a loan in the event of default for public or private sector entity.

Gross debt

Gross debt is the sum of all liabilities (see “Net debt”).

Illiquid assets

The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset.

Liquid assets

Liquid assets mainly comprise foreign exchange reserves and bank deposits.


The ease with which a financial instrument can be exchanged for goods and services.

Local government

See “General government”.

Maastricht debt

General government gross debt as defined within the Maastricht Treaty and Stability and Growth Pact (and as supplied to Eurostat).

Maastricht deficit

General government net borrowing as defined within the Maastricht Treaty and Stability and Growth Pact (and as supplied to Eurostat).

Net borrowing (PSNB)

Net borrowing refers to the difference between the income the government receives (in taxes, etc.) and its current and capital expenditure, on an accrued basis. Public sector net borrowing is derived by subtracting the public sector current budget from public sector net investment. The public sector borrowing may not balance over an economic cycle due to the capital investment.

Net borrowing is an accrued measure that is consolidated (i.e. intra-sector transactions are not recorded).

Net cash requirement (PSNCR)

Net cash requirement is the amount the government needs to raise to meet the shortfall in net borrowing. The figure is measured in real cash terms rather than accruals. The public sector net cash requirement is an approximation of the flow of the public sector net debt stock, i.e. public sector net debt is roughly the sum of all the historical public sector net cash requirements.

Note that PSNCR is unaffected by the government refinancing of banks and building societies, and so there is no "ex" measure.

Net debt (PSND)

Public sector net debt (often incorrectly referred to as national debt) is the total outstanding amount the government has borrowed (excluding capital expenditure). Net debt considers liquid assets whereas gross debt does not. Net debt is often expressed as a percentage of gross domestic product (GDP).

Public sector holdings of debt within the public sector consolidate (are cancelled out). The public sector net cash requirement is, approximately, the flows equivalent of PSND.

Net investment

Net investment refers to the balance of acquisition less disposals of capital assets and liabilities.

Non-financial account

The non-financial account records current expenditure, current revenue and capital transactions. It is used to calculate the net lending/borrowing position from non-financial transactions (see “Financial account” and “Alignment”).

Office for Budget Responsibility (OBR)

The Office for Budget Responsibility: see

The OBR was established in May 2010 and placed on a permanent, statutory footing in March 2011. As set out in the Budget Responsibility and National Audit Act 2011, the OBR has a duty to prepare fiscal and economic forecasts twice each year. The government has adopted the OBR’s forecasts as official forecasts used to inform policy decisions. The Charter for Budget Responsibility sets out the government’s intention to continue this practice.


A financial reporting system called Online System for Central Accounting and Reporting (OSCAR). This system collects public spending data from central government departments and the devolved administrations.

Outturn data

The estimates of actual spend for completed months. Commonly used to refer to data deliveries from central and local government.

Primary deficit

This is the difference between current expenditure and current revenue but importantly excludes interest payable. This term is similar in definition to current budget (but excludes interest payable).


Public sector current budget (see “Current budget”).


Public sector net borrowing (see “Net borrowing”).

Public finance initiative (PFI)

The creation of public–private partnerships through the funding of public projects with private capital.

Public sector net worth

This is the difference between total public sector assets and liabilities.

Quantitative easing

The intervention of the Central Bank in the financial markets where it buys financial assets – usually government bonds – to raise the money supply in an economy.


Reconciliation tables are produced to show how PSNB and PSND relate to their corresponding “ex” measure.

Seasonally adjusted

A technique for removing seasonal or calendar effects from time series data.

Special liquidity scheme (SLS)

This scheme was introduced to improve the liquidity position of the banking system by allowing banks and building societies to swap their high-quality mortgage-backed and other securities for UK Treasury bills for up to 3 years.

Year to date

Year-to-date statistics in the public sector finances statistical bulletin are presented on a financial year basis, i.e. from April to the current month.

Content from the Office for National Statistics.
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