Friday, September 21, 2012
Mixed news on public borrowing - and don't forget OSCAR
Posted by David Smith at 12:00 PM
Category: Thoughts and responses

Most of the commentary on the public finances will focus on the continued overshoot compared with last year. That was not the case in August - public sector net borrowing of 14.4 billion was identical to a year earlier - but remains the case on the cumulative numbers.

So public sector net borrowing in April-August (excluding the Royal Mail distortion) was 59 billion, compared with 48.4 billion in the corresponding period of 2011-12. All other deficit measures are up, for the simple reason that spending is rising faster than tax receipts.

The news, however, is not yet that bad. The Office for National Statistics also announced a big downward revision to 2011-12 borrowing, to 119.3 billion. That is not only 6.7 billion below the Office for Budget Responsibility forecast for the year, but below its forecast for the current year (119.9 billion).

It is also a reminder that these numbers get extensively revised, and often down. One attack on the coalition's fiscal strategy has been that its borrowing numbers have been consistently revised up. The latest outturn for 2011-12 is quite close to the OBR's initial forecast of 116 billion, made in June 2010. We may get down there in time.

The new numbers cast the coalition's stratagy in a better light. In its first two years, it reduced the deficit from 159 billion to 119 billion.

There is also an uncertainty concerning "OSCAR", the Treasury's new system for controlling and monitoring spending. According to the ONS:
"HM Treasury has replaced its COINS system for financial reporting with a new Online System for Central Accounting and Reporting (OSCAR) for 2012/13 onwards. This system collects public spending data from central government departments and the devolved administrations. August is the fourth month that the central government spending data for 2012/13 has been produced using this system. Although the data are for the most part of comparable quality to previous years, there are still some initial data and system issues. Resolving these issues may lead to larger than normal revisions in the central government expenditure data reported over the first half of 2012/13."

More here.