National Statistical

The UK public sector finance statistics help measure the UK’s performance against government fiscal targets. An integral part of the National Accounts, they provide fiscal yardsticks that align with internationally agreed definitions to show how much we are borrowing and how indebted we are. But the ONS is not standing still – here Jessica Barnaby gives an update on recent work investigating the use of local authority financial reports to compile localised breakdowns of public spending.

In June 2023 I blogged about the early work we were doing on improved methods and data in the public sector finance figures, and said that with further work, these figures could support the estimation of lower-level geographical breakdowns of local government expenditure. Since then, we’ve been doing just that work, but first a bit of background is needed.

Local government and its data

Here, I should remind people that the public sector covers not only central government but also local government, public corporations and other entities such as the Bank of England. The local government subsector consists of public authorities with responsibilities limited to specific areas within the UK; these are primarily local councils but includes other entities such as police and fire authorities and national parks. There are also other aspects of the public sector finances which fall into the local government subsector too, such as housing benefits paid by the Department for Work and Pensions.

Around 70% of local government expenditure data are available at a local authority level in financial reports produced by the UK and devolved governments. These reports provide detailed geographical breakdowns of public spending and are a potentially clear and logical source for local government expenditure information. However, they have some conceptual or coverage differences from the public sector finance statistics which we produce following National Accounts concepts.

Our work

In the first phase of our work, we demonstrated that it was possible to construct localised breakdowns of public sector spending that were consistent with our national public sector spending statistics. We achieved this by applying a series of definitional adjustments to local authority financial reports. This approach also allows us to include information on how expenditure at the local level varies across the type of service provided.

We recently completed the second phase of this work, expanding coverage into financial year 2021-22, and applying further methodological improvements. These improvements have increased the coverage of the local government subsector, allowing us to produce estimates of expenditure even more consistent with public sector finance statistics.

These novel official statistics in development will be published on 9 April and will enable users to generate new insights into local government expenditure.

 Next steps

This new dataset could be just the tip of the iceberg, so we welcome feedback on how these statistics are being used and ideas for how they can be further improved. We will continue to investigate how the use of administrative data such as local financial reports can be used further to enhance public sector finance statistics.

Jessica Barnaby is Deputy Director of Public Sector division at the Office for National Statistics, leading the measurement and analysis of public sector finances and output.