Britain’s statistical watchdog set up a review into the official figures for public borrowing on Thursday after concerns that they artificially flatter the public finances.
Following a complaint by the Financial Times, the UK Statistical Authority said it would review the Office for National Statistics’s practice of treating the Treasury’s grab of money building up at the Bank of England as government revenue.
The move came as the monthly public finance figures for February gave George Osborne good news the day after the Budget, suggesting that borrowing could well fall in 2012-13. Retail sales data were also strong, with shoppers returning in February after a weak January.
The headline measures for borrowing and debt were improved last month after the ONS decided to treat as government revenue money transferred to the Treasury from interest payments accumulated under the BoE’s quantitative easing scheme.
Although the chancellor did not use the official measure of borrowing when he claimed the deficit would fall in 2012-13 and stripped out the raid on the BoE, the numbers make hitting his fiscal targets significantly easier, flattering the public finances by £6.4bn this year. Andrew Dilnot, UKSA chairman, said the FT “raised some important questions” in criticising the ONS and set up a review to report in April.
In the February public finance figures, public sector borrowing, excluding one-off measures, showed the government borrowed £101.3bn in the first 11 months of 2012-13, £2.9bn lower than in the same period of 2011-12.
The chancellor is not guaranteed, however, to get borrowing below the 2011-12 level for the full year as figures for March are notoriously volatile because government departments often rush to spend what is left of their budgets before the financial year ends in April.
The Institute for Fiscal Studies criticised Mr Osborne’s efforts to show borrowing was falling, with Paul Johnson, IFS director, saying “there is every indication that the [Budget] numbers have been carefully managed with a close eye on the headline borrowing figures for this year”.
“It is unlikely that this has led either to an economically optimal allocation of spending across years or to a good use of time by officials and ministers,” he added.
The ONS reported that the volume of sales rose by 2.1 per cent from January, and the amount spent by 1.8 per cent. The amounts bought and spent excluding fuel rose by 1.9 per cent and 1.4 per cent respectively.