Fixing the budget to fit the figures?
Gemma Tetlow
© Institute for Fiscal Studies
IFS hosts two ESRC Research Centres
Cutting the deficit?
£ billion
180
160
140
120
100
80
Budget March 2010
Autumn Statement 2010
Autumn Statement 2012
Budget 2013
60
40
20
© Institute for Fiscal Studies
Notes: Excludes Royal Mail and APF transfers.
2017–18
2016–17
2015–16
2014–15
2013–14
2012–13
2011–12
2010–11
2009–10
2008–09
2007–08
0
Big picture
• Changes to economic forecasts have weakened public finances
– Forecast for growth reduced: half of this expected to be temporary,
half expected to be permanent
– GDP deflator also lower
• Damage to the public finances since Budget 2008 has increased by
£7 billion to £135 billion (in today’s terms)
• Net effect on public borrowing of new measures announced
yesterday was very small
• Chancellor now aiming for slightly weaker medium-term fiscal
position than before
• Fiscal mandate still met but with less room for manoeuvre
– Deficit falling as share of national income in each year
• Supplementary target still on course to be missed
– Debt forecast to peak in 2016–17
© Institute for Fiscal Studies
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
AS 2012
Budget 2013
121.0
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
120.9
120
108
96
67
43
Notes: Numbers might not sum due to rounding. All figures for borrowing are on a basis that excludes the Asset Purchase Facility
and the impact of the transfer of Royal Mail Pension Plan assets.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
© Institute for Fiscal Studies
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
Forecasting
changes
4.4
8.6
7.8
11.6
13.1
13.6
Measures
–3.4
–0.3
2.1
2.9
–1.7
–1.3
120.9
120
108
96
67
43
AS 2012
Budget 2013
121.0
Notes: Numbers might not sum due to rounding. All figures for borrowing are on a basis that excludes the Asset Purchase Facility
and the impact of the transfer of Royal Mail Pension Plan assets.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
© Institute for Fiscal Studies
Forecasting changes since Dec 2012
Effect on public sector net borrowing, £ billion
Total
© Institute for Fiscal Studies
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
4.4
8.6
7.8
11.6
13.1
13.6
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Forecasting changes since Dec 2012
Effect on public sector net borrowing, £ billion
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
Total
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Forecasting changes since Dec 2012
Effect on public sector net borrowing, £ billion
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
Total
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Wages and salaries
0.0
0.9
1.5
2.0
2.2
2.4
Corp. profits (non–
financial)
0.0
0.5
1.4
2.0
2.8
3.4
North Sea production
0.2
2.0
1.6
1.8
1.7
2.0
Sterling oil and gas prices
0.0
–2.3
–1.8
–1.7
–1.7
–1.2
Equity prices
0.0
–0.8
–1.5
–1.6
–1.6
–1.7
IT and NICs receipts
modelling
3.6
6.8
5.8
6.0
6.0
6.0
Other
1.3
1.7
1.5
3.6
4.1
2.9
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
–3.4
–0.3
2.1
2.9
–1.7
–1.3
120.9
120
108
96
67
43
AS 2012
Forecasting
changes
Measures
Budget 2013
121.0
Notes: Numbers might not sum due to rounding. All figures for borrowing are on a basis that excludes the Asset Purchase Facility
and the impact of the transfer of Royal Mail Pension Plan assets.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
© Institute for Fiscal Studies
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
Measures
–3.4
–0.3
2.1
2.9
–1.7
–1.3
Tax
0.0
0.3
2.7
2.9
–1.7
–1.3
Spending (inc.
underspends)
–3.4
–0.6
–0.6
0.0
0.0
0.0
120.9
120
108
96
67
43
AS 2012
Forecasting
changes
Budget 2013
121.0
Notes: Numbers might not sum due to rounding. All figures for borrowing are on a basis that excludes the Asset Purchase Facility
and the impact of the transfer of Royal Mail Pension Plan assets.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
© Institute for Fiscal Studies
Effect of tax measures announced in Budget 2013
on public sector borrowing
Effect on public sector net borrowing, £ billion
Total
© Institute for Fiscal Studies
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
0.0
–0.3
–2.7
–2.9
1.7
1.3
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect of tax measures announced in Budget 2013
on public sector borrowing
Effect on public sector net borrowing, £ billion
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
0.0
–0.3
–2.7
–2.9
1.7
1.3
Giveaways
–0.8
–3.9
–4.6
–5.3
–5.7
Takeaways
0.5
1.4
1.8
7.1
7.0
Total
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect of tax measures announced in Budget 2013
on public sector borrowing
Effect on public sector net borrowing, £ billion
Total
Giveaways
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
0.0
–0.3
–2.7
–2.9
1.7
1.3
–0.8
–3.9
–4.6
–5.3
–5.7
–1.3
–1.4
–1.6
–1.7
–0.4
–0.8
–0.9
–1.1
–1.0
–1.1
–1.2
Employer’s NI: £2k
allowance
Corporation Tax main
rate reduced to 20%
Personal Allowance
Fuel Duty
–0.5
–0.8
–0.8
–0.9
–0.9
Beer Duty
–0.2
–0.2
–0.2
–0.2
–0.2
0.5
1.4
1.8
7.1
7.0
Takeaways
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect of tax measures announced in Budget 2013
on public sector borrowing
Effect on public sector net borrowing, £ billion
Total
Giveaways
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
0.0
–0.3
–2.7
–2.9
1.7
1.3
–0.8
–3.9
–4.6
–5.3
–5.7
–1.3
–1.4
–1.6
–1.7
–0.4
–0.8
–0.9
–1.1
–1.0
–1.1
–1.2
Employer’s NI: £2k
allowance
Corporation Tax main
rate reduced to 20%
Personal Allowance
Fuel Duty
–0.5
–0.8
–0.8
–0.9
–0.9
Beer Duty
–0.2
–0.2
–0.2
–0.2
–0.2
0.5
1.4
1.8
7.1
7.0
0.4
1.0
1.4
1.1
1.0
5.5
5.4
Takeaways
Anti-avoidance
Ending contracting out
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
Measures
–3.4
–0.3
2.1
2.9
–1.7
–1.3
Tax
0.0
0.3
2.7
2.9
–1.7
–1.3
Spending (inc.
underspends)
–3.4
–0.6
–0.6
0.0
0.0
0.0
120.9
120
108
96
67
43
AS 2012
Forecasting
changes
Budget 2013
121.0
Notes: Numbers might not sum due to rounding. All figures for borrowing are on a basis that excludes the Asset Purchase Facility
and the impact of the transfer of Royal Mail Pension Plan assets.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
© Institute for Fiscal Studies
Effect on public sector borrowing of spending
measures since December 2012
Effect on public sector net borrowing, £ billion
Total
© Institute for Fiscal Studies
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
–3.4
–0.6
–0.6
0.0
0.0
0.0
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect on public sector borrowing of spending
measures since December 2012
Effect on public sector net borrowing, £ billion
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
–3.4
–0.6
–0.6
0.0
0.0
0.0
Additional capital
spending from 2015–16
3
3
3
Dilnot social care
–
1
1
0.4
0.8
0.8
Total
Childcare
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect on public sector borrowing of spending
measures since December 2012
Effect on public sector net borrowing, £ billion
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
–3.4
–0.6
–0.6
0.0
0.0
0.0
Additional capital
spending from 2015–16
3
3
3
Dilnot social care
–
1
1
Childcare
0.4
0.8
0.8
Implicit cuts to other
current spending from
2015–16
–3.4
–4.8
–4.8
Total
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect on public sector borrowing of spending
measures since December 2012
Effect on public sector net borrowing, £ billion
Total
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
–3.4
–0.6
–0.6
0.0
0.0
0.0
3
3
3
1
1
Additional capital
spending from 2015–16
Dilnot social care
Childcare
0.4
0.8
0.8
Implicit cuts to other
current spending from
2015–16
–3.4
–4.8
–4.8
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect on public sector borrowing of spending
measures since December 2012
Effect on public sector net borrowing, £ billion
Total
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
–3.4
–0.6
–0.6
0.0
0.0
0.0
3
3
3
1
1
Additional capital
spending from 2015–16
Dilnot social care
Childcare
0.4
0.8
0.8
Implicit cuts to other
current spending from
2015–16
–3.4
–4.8
–4.8
0.0
0.0
0.0
Non–DEL spend measures
© Institute for Fiscal Studies
0.0
–0.3
0.0
Notes: Numbers might not sum due to rounding. DEL denotes
Departmental Expenditure Limits.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Effect on public sector borrowing of spending
measures since December 2012
Effect on public sector net borrowing, £ billion
Total
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
–3.4
–0.6
–0.6
0.0
0.0
0.0
3
3
3
1
1
Additional capital
spending from 2015–16
Dilnot social care
Childcare
0.4
0.8
0.8
Implicit cuts to other
current spending from
2015–16
–3.4
–4.8
–4.8
Non–DEL spend measures
0.0
–0.3
0.0
0.0
0.0
0.0
Changes to DEL during
SR2010 period
–3.4
–0.3
–0.6
–
–
–
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding. DEL denotes
Departmental Expenditure Limits.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
2013–14
2014–15
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
Feb 2012 Supplementary Estimates
–5.1
2013–14
2014–15
“Supplementary Estimates are
departments’ final spending
plans for the year and form an
absolute upper limit” (EFO, page
129)
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
Feb 2012 Supplementary Estimates
–5.1
Additional underspend forecast by
departments in Feb 2012
–5.3
2013–14
2014–15
“departments’ February
forecasts showed that they
nonetheless expected to deliver
further reductions of £5.3 billion
against their final plans” (EFO,
page 129)
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
Feb 2012 Supplementary Estimates
–5.1
Additional underspend forecast by
departments in Feb 2012
–5.3
Of which: “Exceptional inter–period
flexibility”
2013–14
2014–15
+0.8
+0.8
–1.6
“at least £1.6 billion of the further shortfall
in departments’ February forecasts is the
direct result of the Government’s actions to
reduce spending in 2012–13 by pushing
money forward into future years” (EFO, page
129)
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
Feb 2012 Supplementary Estimates
–5.1
Additional underspend forecast by
departments in Feb 2012
–5.3
Of which: “Exceptional inter–period
flexibility”
2013–14
2014–15
+0.8
+0.8
–1.6
“of the remaining £3.7 billion ... in practice
this will reflect a mixture of departments’
normal drive to remain safely below their
final spending limits, and the further results
of Government pressure to deliver further
underspends” (EFO, page 129)
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
Feb 2012 Supplementary Estimates
–5.1
Additional underspend forecast by
departments in Feb 2012
–5.3
Of which: “Exceptional inter–period
flexibility”
OBR’s assumed extra underspend against
latest dept forecasts
2013–14
2014–15
+0.8
+0.8
–1.6
–0.5
“departments usually underspend
against their February plans... Our
forecast ... assumes an additional
further underspend of only £0.5
billion” (EFO, page 129)
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Historical Underspends
Underspend relative to Plans (£bn)
12
11
10
9
8
7
6
5
4
3
2
1
0
10.9
6.4
5.3
2008–09
4.1
4.3
2009–10
2010–11
2011–12
Undespends relative to ‘final’ plans up to 2010-11, and relative to PESA plans after 2011-12.
Source: OBR March 2013 EFO Fiscal Supplementary Tables Table 2.15
© Institute for Fiscal Studies
2012–13
Underspends by Department in 2012-13
Underspend
(£bn)
Underspend
excluding Budget
Exchange
Underspend excluding Budget
Exchange as % of Department
Expenditure Limit (%)
NHS
Education
Defence
BIS1
Transport
2.2
1.0
3.0
0.8
0.9
2.2
0.3
1.4
0.4
0.4
2.06
0.54
4.06
2.42
3.28
Total DEL
10.9
7.0
–
Department
1
BIS spending excludes the Green Investment Bank.
Notes: Underspends are relative to plans as of Budget 2012, and exclude measures announced since Budget 2012.
Source: Budget 2013, Tables 2.4 and 2.5.
© Institute for Fiscal Studies
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
Feb 2013 Supplementary Estimates
Additional underspend forecast by
departments in Feb 2013
Of which: “Exceptional inter–period
flexibility”
OBR’s assumed extra underspend against
latest dept forecasts
2013–14
2014–15
+0.8
+0.8
–5.1
–5.3
–1.6
–0.5
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
Feb 2013 Supplementary Estimates
Additional underspend forecast by
departments in Feb 2013
Of which: “Exceptional inter–period
flexibility”
2013–14
2014–15
+0.8
+0.8
–0.8
–0.8
–5.1
–5.3
–1.6
Cuts to offset “Exc. inter–period flex.”
OBR’s assumed extra underspend against
latest dept forecasts
–0.5
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
2013–14
2014–15
+0.8
+0.8
Cuts to offset “Exc. inter–period flex.”
–0.8
–0.8
1% cut to unprotected resource DEL
–1.1
–1.2
Feb 2013 Supplementary Estimates
Additional underspend forecast by
departments in Feb 2013
Of which: “Exceptional inter–period
flexibility”
OBR’s assumed extra underspend against
latest dept forecasts
–5.1
–5.3
–1.6
–0.5
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
2013–14
2014–15
+0.8
+0.8
Cuts to offset “Exc. inter–period flex.”
–0.8
–0.8
1% cut to unprotected resource DEL
–1.1
–1.2
Ensuring ODA = 0.7% of GNI
–0.1
–0.2
Feb 2013 Supplementary Estimates
Additional underspend forecast by
departments in Feb 2013
Of which: “Exceptional inter–period
flexibility”
OBR’s assumed extra underspend against
latest dept forecasts
–5.1
–5.3
–1.6
–0.5
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
2013–14
2014–15
+0.8
+0.8
Cuts to offset “Exc. inter–period flex.”
–0.8
–0.8
1% cut to unprotected resource DEL
–1.1
–1.2
Ensuring ODA = 0.7% of GNI
–0.1
–0.2
Other DEL changes
–0.1
0.3
Feb 2013 Supplementary Estimates
Additional underspend forecast by
departments in Feb 2013
Of which: “Exceptional inter–period
flexibility”
OBR’s assumed extra underspend against
latest dept forecasts
–5.1
–5.3
–1.6
–0.5
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
© Institute for Fiscal Studies
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Expected departmental underspends relative to
March 2012 plans
DEL underspend (compared to original plans), £ billion
2012–13
2013–14
2014–15
+0.8
+0.8
Cuts to offset “Exc. inter–period flex.”
–0.8
–0.8
1% cut to unprotected resource DEL
–1.1
–1.2
Ensuring ODA = 0.7% of GNI
–0.1
–0.2
Other DEL changes
–0.1
0.3
–0.5
–3.5
–3.0
Budget 2013
–10.9
–4.8
–4.1
AS 2012
–7.5
–4.5
–3.5
Change between AS 2012 and B 2013
–3.4
–0.3
–0.6
Feb 2013 Supplementary Estimates
Additional underspend forecast by
departments in Feb 2013
Of which: “Exceptional inter–period
flexibility”
OBR’s assumed extra underspend against
latest dept forecasts
© Institute for Fiscal Studies
–5.1
–5.3
–1.6
Notes: Numbers might not sum due to rounding.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
Measures
–3.4
–0.3
2.1
2.9
–1.7
–1.3
Tax
0.0
0.3
2.7
2.9
–1.7
–1.3
Spending (inc.
underspends)
–3.4
–0.6
–0.6
0.0
0.0
0.0
120.9
120
108
96
67
43
AS 2012
Forecasting
changes
Budget 2013
121.0
Notes: Numbers might not sum due to rounding. All figures for borrowing are on a basis that excludes the Asset Purchase Facility
and the impact of the transfer of Royal Mail Pension Plan assets.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
© Institute for Fiscal Studies
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
Measures
–3.4
–0.3
2.1
2.9
–1.7
–1.3
Tax
0.0
0.3
2.7
2.9
–1.7
–1.3
Spending (inc.
underspends)
–3.4
–0.6
–0.6
0.0
0.0
0.0
120.9
120
108
96
67
43
AS 2012
Forecasting
changes
Budget 2013
121.0
Notes: Numbers might not sum due to rounding. All figures for borrowing are on a basis that excludes the Asset Purchase Facility
and the impact of the transfer of Royal Mail Pension Plan assets.
Source: HM Treasury; Office for Budget Responsibility; IFS calculations.
© Institute for Fiscal Studies
Changes in borrowing forecasts since Dec 2012
Public sector net borrowing, £ billion
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
119.9
112
99
81
56
31
4.4
8.6
7.8
11.6
13.1
13.6
Revenues
5.1
8.8
8.5
12.1
13.5
13.8
Spending
–0.7
–0.2
–0.7
–0.5
–0.4
–0.2
Measures
–3.4
–0.3
2.1
2.9
–1.7
–1.3
Tax
0.0
0.3
2.7
2.9
–1.7
–1.3
Spending (inc.
underspends)
–3.4
–0.6
–0.6
0.0
0.0
0.0
120.9
120
108
96
67
43
AS 2012
Forecasting
changes
Budget 2013
121.0
“From now on we will have to fix the budget to fit the figures, instead
of fixing the figures to fit the budget.”
(George Osborne, 14 June 2010)
© Institute for Fiscal Studies
Summary
• Big picture
– Borrowing forecast to be higher in each of next 5 years
– Partly permanent
– Budget measures reduced borrowing only very slightly in medium–run
– Chancellor therefore aiming for a slightly weaker fiscal position
– Fiscal mandate still met but less room for manoeuvre
• Fixing policy to fit the forecasts?
– Cash borrowing still forecast marginally to fall between 2011–12 and
2012–13: because departments expected to underspend significantly
– Achieving (or not) the objective of falling cash borrowing is
economically unimportant
– Spending time and effort to try to achieve it could have had real
economic costs