ICAEW chart of the week: Criminal justice

My chart this week looks at how the criminal justice system in England and Wales is performing by examining how long cases are taking to make their way through the Crown Courts to completion.

Criminal justice

Line chart showing median time in days between offence and completion

210 days in 2014 Q1
rising and falling to 248 in 2015 Q2 242 in 2016 Q1
260 in 2016 Q2 and Q3
230 in 2017 Q4
245 in 2018 Q2
230 in 2018 Q3
254 in 2020 Q1

falling to 211 in 2020 Q2
rising sharply to 438 in 2021 Q3

falling to 351 in 2022 Q3
rising to 398 in 2023 Q1
falling slightly to 387 in 2023 Q2


2 Nov 2023.
Chart by Martin Wheatcroft FCA. Design by Sunday.
Source: Ministry of Justice, 'England and Wales criminal court statistics: Apr to Jun 2023'.

My chart this week is inspired by the Institute for Government (IfG) and CIPFA Performance Tracker 2023 published on 31 October 2023. Concluding that “government is stuck in a public service doom loop”, IfG and CIPFA together analyse how the performance of key public services has deteriorated in recent years, and not just because of the pandemic.

The chart (an expanded version of Figure 0.1 in the Performance Tracker) is based on the median time between an offence being committed and completion (conviction, acquittal or dismissal) in Crown Courts in England and Wales, according to Ministry of Justice statistics for the criminal justice system up to June 2023. 

This is a key metric in understanding how efficient the police, prosecutors and courts together are in bringing criminals to justice, as well as an indicator of just how long the lives of victims, their families, witnesses and defendants are being put on hold while cases work their way through the system.

Back in the first quarter of 2014, the median time from offence to completion was 210 days (6.9 months). This trended up to reach 248 days (8.2 months) in 2015 Q2, before hovering around that level in the years before the pandemic, with our chart highlighting how it fell to 242 in 2016 Q1, rose to 260 in 2016 Q2 and Q3, fell to 230 in 2017 Q4, rose to 245 in 2018 Q2, back to 230 the following quarter, before rising to 254 days (8.4 months) in the first quarter of 2020 at the start of the pandemic. 

The median fell to 211 days in 2020 Q2 as more complex cases were deferred during the first lockdown, increasing sharply to reach a peak of 438 days (14.4 months) by the third quarter of 2021. The time taken improved to 351 days (11.5 months) by the third quarter of 2022 as the courts started to clear the backlog, but then increased to 398 days (13.1 months) in the first quarter of 2023. The most recent data is for the second quarter, with a median average time taken of 387 (12.7 months) for cases completing in that quarter.

While there are inevitably going to be a number of complex criminal cases that are going to take a long time to be investigated and then come to trial, for the median average case to be taking more than a year to complete its journey through the justice system in England and Wales is not a good sign.

Read more:

This chart was originally published by ICAEW.

ICAEW chart of the week: US federal government deficit 2023

My chart this week looks at the federal deficit of $1.7trn reported by the US government for its recently completed financial year ended 30 September 2023.

Column chart split into three vertical sections: receipts, outlays and deficit. 

Actuals for the five years to the year ended September 2023, then budget for Y/E Sep 2024.

Y/E Sep 2019: $3.5trn receipts - $4.5trn outlays = -$1.0trn deficit
Y/E Sep 2020: $3.4trn - $6.5trn = -$3.1trn
Y/E Sep 2021: $4.0trn - $6.8trn = -$2.8trn
Y/E Sep 2022: $4.9trn - $6.3trn = -$1.4trn
Y/E Sep 2023: $4.4trn - $6.1trn = -$1.7trn
Y/E Sep 2024 (Budget): $5.0trn - $6.9trn = -$1.9trn

26 Oct 2023.   Chart by Martin Wheatcroft FCA. Design by Sunday.

Sources: US Department of the Treasury; US Office of Budget and Management.

The US Department of Treasury published on 20 October 2023 its final monthly treasury statement for the US government’s financial year ended 30 September 2023 (FY2023), enabling our chart this week to look at the actual numbers over the past five years and the budget for the new financial year that started on 1 October.

Our chart illustrates how the deficit increased significantly from the $1.0trn reported for FY2019 ($3.5trn receipts less $4.5trn outlays) to $3.1trn in FY2020 ($3.4trn-6.5trn) and $2.8trn in FY2021 ($4.0trn-$6.8trn) at the height of the pandemic, before falling to $1.4trn in FY2022 ($4.9trn-$6.3trn) as the US economy recovered. The deficit by $0.3trn increased to $1.7trn in FY2023 ($4.4trn-$6.1trn) and is budgeted to increase by a further $0.2trn to $1.9trn in FY2024 ($5.0trn forecast receipts-$6.9trn forecast outlays).

Not shown in the chart is the excess of financial liabilities over financial assets, which increased by $1.7trn from $22.3trn on 30 September 2022 to $24.0trn on 30 September 2023. This differs from ‘debt held by the public’ (the headline measure of federal debt), which increased by $2.0trn from $24.3trn to $26.3trn, more than the federal deficit because of movements in other financial assets and liabilities.

Receipts in FY2023 of $4,439bn comprised $2,176bn in individual income taxes, £1,614bn in social security and retirement contributions, $420bn in corporation income taxes, $80bn in customs duties, $76bn in excise taxes, £34bn in estate and gift taxes and $39bn in other receipts. Outlays for same period of $6,134bn comprised $1,737bn on health and Medicare, $1,354bn on social security, $821bn on defence, $774bn in welfare benefits, $659bn in interest, $302bn for veteran services and benefits, $127bn on transportation, $100bn on commerce, and $260bn on other outlays. 

The latter includes the administration of justice, agriculture, community and regional development, education, training, employment and social services, energy, general government, general science, space and technology, international affairs, natural resources and environment, and undistributed offsetting receipts.

These amounts are different from the accruals-based US GAAP federal government financial statements for FY2023 that are expected to be published next April, which will show a much larger accounting loss than the federal deficit reported here. For example, the FY2022 net operating cost (ie accounting loss) of $4.2trn was $2.8trn higher than the federal deficit of $1.4trn for last year, of which the largest difference of $2.6trn related to accruals for federal employee and veteran benefits.

These amounts appear astronomical, especially to those of us living in smaller (and unfortunately) less prosperous countries than the 335m people who live in the US, with its estimated GDP of $26.3trn in FY2023 – equivalent to around $6,600 per person per month.

Federal receipts and outlays in FY2023 represented 17% and 23% of GDP respectively or on a per capita basis were approximately $1,105 and $1,525 per person per month. The federal deficit was therefore equivalent to 6% of GDP or $420 per person per month. 

The excess of financial liabilities over financial assets and debt held by the public were 91% and 100% of GDP respectively, equivalent to an amount owed of around $71,500 or $78,500 per person, depending on which measure is used.

This chart was originally published by ICAEW.

ICAEW chart of the week: Inflation by month

My chart this week looks at how September’s inflation rate of 6.7% is made up by month, and why a big drop in the annual rate is predicted next month.

Inflation by month

Step chart showing monthly inflation from October 2022 to September 2022 adding up to annual inflation of +6.7% for the year to September 2023.

Oct 2022 +2.0%
Nov 2022 +0.4%
Dec 2022 +0.4%
Jan 2023 -0.6%
Feb 2023 +1.1%
Mar 2023 +0.8%
Apr 2022 +1.2%
May 2023 +0.7%
Jun 2023 +0.1%
Jul 2023 -0.4%
Aug 2023 +0.3%
Sep 2023 +0.5%

Year to Sep 2023 +6.7%


19 Oct 2023.
Chart by Marin Wheatcroft FCA. Design by Sunday.
Source: ONS, 'Consumer price inflation, UK: September 2023'.

The Office for National Statistics (ONS) reported on 18 October 2023 that the annual rate of consumer price inflation (CPI) for the year to September 2023 was 6.7%.

Our chart this week illustrates how this is made up of monthly inflation rates from October 2022 through September 2023 of +2.0%, +0.4%, +0.4%, -0.6%, +1.1%, +0.8%, +1.2%, +0.7%, +0.1%, -0.4%, +0.3% and +0.5% respectively.

As well as highlighting how the monthly inflation rate can bounce around from month to month, including a couple of times where prices went down, it shows how a big jump in the consumer prices index of +2.0% in October 2022 is a significant component in the annual rate reported for the year to September 2023.

This provides an insight into what is likely to happen to inflation when it is reported next month. Instead of a large rise in domestic energy prices (a 17% increase in the cost of electricity and a 37% increase in the cost of domestic gas between September and October 2022 according to the ONS) that drove the +2.0% reported a year ago, the expectation is that energy prices will drop between September and October 2023 following Ofgem’s decision to reduce the energy price cap by 7% for the current quarter.

When the +2.0% monthly increase from October 2022 drops out of the index to be replaced by a much smaller monthly increase for October 2023 (or even potentially a monthly decrease), the annual rate of inflation should reduce significantly – potentially to as low as the 5.3% ‘halved’ rate of inflation aspired to by the Prime Minister.

For a broader insight into the UK economy, read ICAEW’s economic update October 2023: where next for interest rates?

This chart was originally published by ICAEW.

ICAEW chart of the week: Greenhouse gas emissions

My chart this week looks at how greenhouse gas emissions increased again in 2022 after a big dip during the pandemic. Was that just a blip or will the downward trend resume?

Greenhouse gas emissions

Line chart showing million tonnes of CO2-equivalent emissions between 1990 and 2022.

The line starts at 843m tCO2e in 1990, rises to 853m tCO2e in 1991 and then gradually falls with a few upward blips until reaching 489m tCO2e in 2020 and then rising to 513m tCO2e in 2022.

12 Oct 2023.
Chart by Martin Wheatcroft. Design by Sunday.
Source: ONS, 'Greenhouse gas emissions: provisional estimates 2022'.

The Office for National Statistics (ONS) recently reported provisional numbers for greenhouse gas emissions in 2022, reporting that UK residents and UK-resident businesses emitted a total of 513m tonnes of carbon dioxide equivalents (tCO2e).

Our chart this week shows the overall trend since 1990 according to the ONS. Emissions were 843m tCO2e in 1990, rising to 853m tCO2e in 1991, from which point they have declined in most years since then apart from the odd upward blip.

The 513m tCO2e provisionally estimated to have been emitted in 2022 is up 2% over 2021 and just under 5% higher than the 489m tCO2e emitted during 2020, the first year of the pandemic when much of the country was locked down.

The good news is that this is still 7% lower than the 551m tCO2e emitted during 2019.

This disruption to the downward trend is primarily due to the pandemic, which saw emissions drop by a massive 11% in 2020 compared with 2019, before rising by 3% in 2021 and 2% in 2022.

The hope is that the downward trend will resume in 2023 and 2024 as decarbonisation efforts continue.

Most of the fall in emissions since 1991 has been delivered by the shift from coal to gas and renewable sources in electricity generation, combined with greater energy efficiency in appliances and equipment – what many commentators call “the easy bit”. The next stages of decarbonisation will be much harder as it involves switching everyone from fossil-fuel-powered vehicles to electric, completing the shift to renewable electricity generation, decarbonising most industrial processes and radically changing how we heat our homes and offices.

This chart was originally published by ICAEW.

ICAEW chart of the week: UK births and deaths

My chart this week looks at how deaths in the UK are expected to exceed births within just a couple of years – a major change in our demographic story.

UK births and deaths

Line chart showing projected births and deaths for years to June 2024 through to June 2044.

Births: 667,000 in the year to June 2024, falling slightly to 662,000 in the year to June 2031, before gradually rising to 718,000 in the year to June 2044. 

Deaths: 650,000 in the year to June 2024 rising to cross with the line for births in 2026 and continue to rise to 797,000 in the year to June 2044.

Source: ONS, '2020-based interim projections (June 2022) - UK births and deaths in the year to June'.

The big drivers of population change in the UK (and in many other developed countries) have been a declining birth rate and more people living longer, resulting in a growing population even before taking account of net inward migration.

However, that growth is starting to slow as the birth rate has declined as a proportion of the overall population – absent migration, it is expected to start to go into reverse as the death rate rises, driven by the bulge in the population constituted by the ‘baby boomer’ generation reaching their 60s and 70s.

As illustrated by my chart this week, the number of births is expected to fall slightly over the next few years (from 667,000 in the year to June 2024 and 668,000 in the year to June 2024 to 662,000 in the year to June 2031) before gradually rising to 718,000 in the year to June 2044. At the same time deaths are expected to rise throughout the period, from 650,000 in the year to June 2024 to 797,000 in the year to June 2044.

The projection is for births of 667,000 and deaths of 665,000 in the year to June 2026, a small net increase of 2,000, before reversing after that to reach 80,000 more deaths than births in the year to June 2044.

The population is still expected to grow, despite this shift from (to use the statistical terminology) ‘natural’ growth in the population (births exceeding deaths) to ‘natural’ contraction (deaths exceeding births). This is because the ONS has assumed net inward migration will continue at an average of 245,000 a year for most of the projection period, resulting in a projected growth in the population of 4.0m people or 6% (from 68.1m to 72.1m) over the next 20 years, in contrast with the 8.4m or 14% increase in the UK’s population over the past two decades.

Without inward migration, the likelihood is that the gap between deaths and births would be even larger than illustrated in our chart, given that a proportion of the children expected to be born will be the children of migrants.

This change in the demographics of the UK will have significant implications for the debate about migration over the coming decades, especially if the population absent migration is shrinking by 80,000 a year by 2044 as projected by the ONS. 

There are also implications for the public finances as, even with net inward migration, population growth is expected to be less than 0.3% a year over the next two decades instead of the 0.7% a year seen over the past 20 years. Not only will that reduce the potential for economic growth, but it will reduce the opportunities for efficiencies of scale in public spending that have been possible in previous decades.

The demographic tale of the 20th century in the UK was one of a rapidly growing population as many more children survived into adulthood, life expectancy increased significantly and migration offset a declining birth rate. The 21st century looks like being a very different story.

This chart was originally published by ICAEW.

ICAEW chart of the week: UK registered businesses

My chart this week looks at the 1.5% drop in the number of VAT- and PAYE-registered businesses in the year to 31 March 2023.

Column chart with two columns for March 2022 (left) and March 2023 (right).

Total registered businesses - 2,767,700 (March 2022) and 2,726,830 (March 2023).

Companies - 2,058,886 and 2,039,920

Sole proprietors - 427,710 and 413,160

Partnerships - 181,010 and 172,890

Non-profits & public sector - 100,095 and 100,860.

On 27 September 2023, the Office for National Statistics (ONS) published data on the 2,726,830 businesses that were registered for VAT and/or PAYE in the UK as of March 2023, a 1.5% fall from the 2,767,700 businesses that were registered a year previously. 

As illustrated by our chart this week, the number of VAT- and PAYE-registered companies fell by 0.9% from 2,058,885 to 2,039,920, sole proprietorships fell by 3.4% from 427,710 to 413,160, and partnerships fell by 4.5% from 181,010 to 172,890. 

Bucking the trend were non-profit bodies, mutual associations and public sector organisations, which rose by 0.8% from 100,095 to 100,860. The latter comprised 88,375 non-profit bodies and mutuals, 9,030 local authority entities, 3,280 central government entities and 175 public corporations and other publicly owned businesses, as of March 2023.

Not shown in the chart are in the order of 2.8m ‘unregistered’ businesses that are not registered for VAT or PAYE. Most of these are self-employed individuals, sole traders, or one-person companies that generate revenue below the VAT threshold of £85,000 and do not have any payrolled employees.

The number of registered businesses in March 2023 by industry group are comprised as follows: 

  • 415,250 professional, scientific and technical (down 3.7% on March 2022); 
  • 402,165 motor trades (-2.8%); 
  • 377,585 construction (+0.7%);
  • 226,285 business administration and support services (-1.1%); 
  • 187,360 information and communication (-4.5%); 
  • 184,420 arts, entertainment, recreation and other services (+2.0%);
  • 174,830 accommodation and food services (-0.2%); 
  • 151,710 production (-1.8%);
  • 141,390 agriculture, forestry and fishing (-0.8%)
  • 128,600 transport and storage including postal (-6.9%);
  • 113,785 (+2.8%) property, 109,095 health (+2.8%);
  • 59,210 finance and insurance (-2.0%);
  • 47,340 education (+1.3%); and
  • 7,805 public administration and defence (+0.4%).

There were 2,115,105 businesses with between zero and four employees as of March 2023, followed by 313,780 (five to nine employees), 157,955 (10-19), 86,285 (20-49), 27,660 (50-99). 15,135 (100-249) and 10,910 (250+).

By turnover band, the numbers as of March 2023 were: 445,020 (£0-£49,999); 563,610 (£50,000-£99,999); 846,615 (£100,000-£249,999); 367,315 (£250,000-£499,999); 222,155 (£500,000-£999,999); 123,995 (£1m-£2m); 85,655 (£2m-£5m); 32,100 (£5m-£10m); 29,080 (£10m-£50m); and 9,285 (£50m+).

The fall in the number of businesses in 2022/23 is perhaps not surprising given the significant amount of support provided to many businesses during the pandemic, which will have delayed the normal process of business closure during the previous two years. Meanwhile, the cost-of-living and energy crises will have also made it difficult for some businesses to survive in the year to March 2023. Even though energy prices have come down, the cost-of-living crisis and consequent reductions in consumer demand could see further businesses fail during 2023/24.

Find out more: ONS: UK business – activity, size and location 2023.

This chart was originally published by ICAEW.

ICAEW chart of the week: Home Office financial statements 2022/23

The Home Office spent £24.5bn in 2022/23 according to its recently published annual financial report, funded by £5.4bn in income and £19.2bn in net parliamentary funding.

Column chart showing main components of the Home Office financial statements 2022/23.

Column 1: Net parliamentary funding £19.2bn

Column 2: Income £5.4bn = Customer contracts £3.7bn + Other income £1.7bn 

Column 3: Expenditure (£24.5bn) = Police grants (£9.2bn) + Other grants (£5.6bn) + Goods and services (£4.3bn) + Staff costs (£2.4bn) + Other operating costs (£3.0bn)

21 Sep 2023.
Chart by Martin Wheatcroft FCA. Design by Sunday.
Source: Home Office, 'Annual Report and Accounts 2022/23'.

The Home Office published its Annual Report and Accounts for the year ended 31 March 2023 on 19 September 2023. 

Net expenditure in 2022/23 was £19.1bn, comprising expenditure of just over £24.5bn net of income of £5.4bn, while parliamentary funding net of other items amounted to £19.2bn.

The Home Office breaks down its income for the year of £5.4bn between revenue from contracts with customers of £3.7bn and other income of £1.7bn. The former includes £2.2bn from visa and immigration charges, £0.6bn in passport fees, £217m for the disclosure and barring service (DBS), and £0.7bn from other sources. Other income is primarily comprised of immigration health surcharges payable by foreign residents and visitors for the use of the National Health Service, a proportion of which is transferred to the Department of Health and Social Care and the devolved administrations.

As our chart this week illustrates, the majority of the Home Office’s spending is in the form of grants. The largest grants, totalling £9.2bn, are to local police forces across England to supplement the council tax precepts they raise locally. Other grants include £1.7bn to top up police pensions, £0.4bn to top up fire and rescue services pensions, £3.3bn in other operating grants (many of which also go to police forces, in addition to transfers to other government departments) and £209m in capital grants.

Purchases of goods and services of £4.3bn is dominated by the £3.1bn paid in relation to asylum and detention, together with £287m in facilities management and staff services, £229m on professional fees, £219m for media and IT, £169m for passport printing and stationery and £120m for visa and immigration commercial partners amongst other costs.

Staff costs of £2.4bn cover the costs of employing full-time equivalent averages of 41,607 permanent staff, seven ministers, seven special advisers, and 6,489 other staff during 2022/23. Wages and salaries amounted to £1.8bn, equivalent to an average full-time equivalent salary of £37,900. 

At 31 March 2023 there were 345 senior civil servants on salaries in excess of £70,000, of which 251 were between £70,000 and £100,000, 86 between £100,000-£150,000 and eight between £150,000 and £190,000. The average of seven government ministers who served during the year (a total of 22 different individuals!) earned the equivalent of an average annual salary not including pension entitlements of around £49,000 in addition to their parliamentary salary or House of Lords attendance allowances.

Other operating costs of £3.0bn include £1.6bn on IT and accommodation-related service charges, £0.7bn for depreciation and amortisation of assets, and £113m in asset recovery costs together with other costs.

Parliamentary funding net of other items of £19.2bn is reported in the consolidated statement of taxpayers’ equity and comprised £19.4bn in drawn-down parliamentary funding, £0.3bn in deemed funding less £0.5bn in amounts repayable.

Not shown in the chart is the Home Office’s consolidated balance sheet, which comprised £2.6bn in non-current assets, trade and other receivables of £0.7bn and cash and cash equivalents of £0.6bn less trade and other payables of £3.7bn, £0.6bn in lease liabilities and £0.5bn in provisions to give net liabilities of £0.9bn. 

Reported in the notes to the accounts are £0.8bn in capital additions, of which £374m was incurred on software and other intangible assets.

Find out more: Home Office annual report and accounts: 2022 to 2023.

This chart was originally published by ICAEW.

August public sector finances: fourth-highest monthly deficit on record

Deficit marginally better than had been expected according to the latest figures from the ONS, but costly public sector problems emerge.

 The monthly public sector finances for August 2023 were released by the Office for National Statistics (ONS) on Thursday 21 September 2023. These reported a provisional deficit for the fifth month of the 2023/24 financial year of £12bn, bringing the total deficit for the five months to £70bn, £19bn more than in the same period in the previous year.

Alison Ring OBE FCA, Public Sector and Taxation Director for ICAEW, said: “While August’s deficit was marginally better than expected, problems costly to the public sector continue to emerge, from crumbling concrete in public buildings to Birmingham Council’s recent bankruptcy, and are likely to weigh on the Chancellor’s mind as he considers November’s Autumn Statement. 

“Both main parties are rightly cautious about making new public spending commitments in the current economic environment, including whether or not to extend the state pension triple lock into the next parliament. Whether they can hold this position as they enter into the party conference season remains to be seen.”

Month of August 2023

The provisional shortfall in taxes and other receipts compared with total managed expenditure for the month of August 2023 was just under £12bn, being tax and other receipts of £84bn less total managed expenditure of £96bn – up 5% and 8% respectively compared with August 2022.

This was the fourth highest August deficit on record since monthly records began in 1993, following the deficits of £14bn in August 2021 and £24bn in August 2020 during the pandemic and £12bn in August 2009 during the financial crisis.

Five months to August 2023

The provisional shortfall in taxes and other receipts compared with total managed expenditure for the five months to August 2023 was £70bn, £20bn more than the £50bn deficit reported for the first five months of 2022/23. This reflected a widening gap between tax and other receipts for the five months of £428bn and total managed expenditure of £498bn, up 7% and 10% respectively compared with April to August 2022.

Inflation benefited tax receipts for the first five months compared with the previous year, with income tax and VAT receipts both up 12% to £104bn and £84bn respectively. However, corporation tax was only up 13% to £37bn despite the increase in the corporation tax rate from 19% to 25% from 1 April 2023, and national insurance receipts were down by 3% to £71bn because of the abolition of the short-lived health and social care levy last year. Stamp duty on properties was down by £2bn or 29% to £6bn and the total for all other taxes was up just 3% to £82bn as economic activity slowed. Non-tax receipts were up 12% to £44bn, primarily driven by higher investment income.

Total managed expenditure of £428bn in the five months to August can be analysed between current expenditure excluding interest of £418bn (up £34bn or 9% over the same period in the previous year), interest of £61bn (up £6bn or 11%), and net investment of £19bn (up £7bn or 57%).

The increase of £34bn in current expenditure excluding interest compared with the prior year has been driven by a £14bn increase in benefit payments, £9bn in higher central government staff costs, £5bn in additional central government procurement spending and £5bn in energy support scheme costs, plus £1bn in net other changes.

The rise in interest costs of £6bn to £61bn reflects a £14bn increase in interest on non-inflation linked debt to £38bn as the Bank of England base rate rose, offset by an £8bn fall in the interest payable on index-linked debt to £23bn as inflation is running at a lower level than it was for the same period last year.

The £7bn increase in net investment spending to £15bn in the first five months of the current year reflects high construction cost inflation among other factors that saw an £8bn or 23% increase in gross investment to £44bn, less a £1bn increase in depreciation to £25bn. 

Public sector finance trends: August 2023

Image of a table showing receipts, expenditure, interest, net investment, deficit, other borrowing and debt movement for the five months (cumulative) to Aug 2019, 2020, 2021, 2022 and 2023 respectively.

Receipts: £336bn (for the five months to Aug 2019(, £298bn, £355bn, £401bn, and £428bn (for the five months ended Aug 2023).

Expenditure excluding interest: (£323bn), (£428bn), (£386bn), (£384bn) and (£418bn).

Interest (£28bn), (£18bn), (£30bn), (£55bn) and (£61bn).

Net investment: (£13bn), (£30bn), (£18bn), (£12bn) and (£19bn).

(Subtotal) Deficit: (£28bn), (£178bn), (£79bn), (£50bn) and (£70bn).

Other borrowing: £13bn, (£74bn), £6bn, £2bn and £14bn.

(Total) Debt movement: (£15bn), (£252bn), (£73bn), (£48bn) and (£56bn).

Net debt: £1,792bn, £2,067bn, £2,226bn, £2431bn and £2,594bn.

Net debt / GDP: 79.8%, 98.8%, 96.2%, 96.5% and 98.8%,

Caution is needed with respect to the numbers published by the ONS, which are expected to be repeatedly revised as estimates are refined and gaps in the underlying data are filled. 

The latest release saw the ONS revise the reported deficit for the four months to July 2023 up by £2bn as estimates of tax receipts and expenditure were updated for better data, and it also reduced the reported deficit for the 2022/23 financial year by £1bn to £128bn for methodology changes in addition to new data. 

The methodology changes also saw small revisions in the reported deficits for previous periods back to 1999, most notably reductions of £1bn to the deficits in 2019/20 and 2020/21 and an increase of £2bn in the reported deficit for 2021/22.

Balance sheet metrics

Public sector net debt was £2,594bn at the end of August 2023, equivalent to 98.8% of GDP.

The debt movement since the start of the financial year was £56bn, comprising borrowing to fund the deficit for the five months of £70bn less £14bn in net cash inflows as loan repayments and positive working capital movements exceeded cash outflows for lending to students, business and others.

Public sector net debt is £779bn or 43% higher than it was on 31 March 2020, reflecting the huge sums borrowed since the start of the pandemic.

Public sector net worth, the new balance sheet metric launched by the Office for National Statistics this year, was -£618bn on 31 August 2023, comprising £1,604bn in non-financial assets, £1,038bn in non-liquid financial assets, £2,594bn of net debt (£339bn in liquid financial assets less public sector gross debt of £2,933bn) and other liabilities of £667bn. This is a £61bn deterioration from the -£557bn reported for 31 March 2023.

This new measure seeks to capture more assets and liabilities than the narrowly focused public sector net debt measure traditionally used to assess the financial position of the UK public sector. However, it excludes unfunded employee pension liabilities that amounted to over £2trn at 31 March 2021 according to the Whole of Government Accounts, although they are expected to be much lower today as discount rates have risen significantly since then.

This article was originally published by ICAEW.

ICAEW chart of the week: Smoking in the UK

My chart of the week looks at how the prevalence of smoking in the UK population has continued to decline over the past decade.

Column chart showing the proportion of adults in the UK who smoke cigarettes.

2011: 20.2%
2012: 19.6%
2013: 18.8%
2014: 18.1%
2015: 17.2%
2016: 15.8%
2017: 15.1%
2018: 14.7%
2019: 14.1%
2020: 14.0%
2021: 13.3%
2022: 12.9%

14 Sep 2023.
Chart by Martin Wheatcroft FCA. Design by Sunday.

Source: ONS, 'Adult smoking habits in the UK: 2022'.

The Office for National Statistics (ONS) has recently published its latest statistics on adult smoking habits in the UK, showing a continuing decline in the prevalence of smoking in the UK population over the past decade or so.

As my chart this week highlights, the proportion of those aged 18 or over in the UK who smoke cigarettes has fallen from 20.2% in 2011 to 19.6% (2012), 18.8% (2013), 18.1% (2014), 17.2% (2015), 15.8% (2016), 15.1% (2017), 14.7% (2018), 14.1% (2019), 14.0% (2020), 13.3% (2021) and 12.9% in 2022.

Over this period the decline is dramatic, with the respective proportion of men and women smoking down from 22.4% and 18.2% in 2011 to 14.6% and 11.2% in 2022.

The proportion of people smoking in all age groups has fallen over the past 11 years, with those aged 18-24, 25-34, 35-44, 45-54, 55-64 and 65+ who smoke declining from 25.7%, 25.8%, 23.3%, 21.6%, 18.5% and 10.2% in 2011 to 11.6%, 16.3%, 14.5%, 14.3%, 13.6% and 8.3% in 2022.

While the government and anti-smoking campaigners will be pleased by the continued progress in persuading people to give up smoking, they will be more concerned by the increase in the numbers vaping, particularly among those in their late teens and early 20s.

The proportion of those aged 16 or over in Great Britain who use e-cigarettes on a daily or occasional basis increased from 6.4% in 2020 to 8.7% in 2022. For those aged 16-24, 25-34, 35-49, 50-59 and 60+ the increase was from 7.0%, 8.6%, 7.5%, 7.9% and 3.5% in 2020 to 15.5%, 10.6%, 9.5%, 8.5%, 4.4% in 2022. (These percentages are not properly comparable with the smoking statistics as they are for a different comparator period, include those aged 16 and 17, are for different age bands, and exclude Northern Ireland.)

The continued decline in smoking has had a consequent impact on tobacco duty as despite a 70% rise in tobacco duty rates between 2011 and 2022, the amount collected has declined from £9.9bn in 2011/12 to £9.4bn in 2022/23, a drop in cash terms of 5% and in real terms of 26%.

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This chart was originally published by ICAEW.

ICAEW chart of the week: GDP revisions

This week’s chart takes a look at recent revisions to GDP that have caused some consternation in the world of statistics.

Combination of a column chart horizontally and a step chart vertically.

Top section: GDP reported in Blue Book 2022 for 2019, 2020 and 2021:

2019: £2,238bn -5.7% = 2020: £2,110bn +7.6% = 2021: £2,270bn

(2020 -5.7% nominal, -11.0% growth, 2021 +7.6% nominal, 7.6% growth)

Middle section: GDP revisions

 2019: -£4bn, 2020: -£6bn, 2021: +£14bn

Bottom section: GDP to be reported in Blue Book 2023

2019: £2,234bn -5.8% = 2020: £2,104bn +8.5% = 2021: £2,284bn

(2020 -5.8% nominal, -10.4% growth, 2021 +8.5% nominal, 8.7% growth)

Each year the Office for National Statistics (ONS) publishes the ‘Blue Book’ on the national accounts, its definitive analysis of economic activity over the course of the previous year. This analysis supersedes the preliminary and revised monthly and quarterly estimates issued up until that point, based on extensive analysis by the official statisticians.

The 2023 edition of the Blue Book is scheduled to be published on 31 October 2023. It will be eagerly pored over by economists in and outside government who will be eager to understand how the UK economy performed during 2022, and how this ‘final’ version of the 2022 numbers line up with those preliminary and revised estimates, just as they did last year when looking at GDP for 2021.

However, in the world of statistics numbers are never final. On 1 September 2023, the ONS announced methodological and data improvements to last year’s Blue Book – the numbers for 2021 and earlier years. These prior-period adjustments partly reflected a methodology change in the way the three different methods of calculating GDP (output, income and expenditure) are reconciled, but much more significant were revisions to the data used to calculate some of the key statistics, causing much wailing and gnashing of teeth by some prominent economic commentators as the narrative around the UK’s emergence from the pandemic changed.

As our chart this week illustrates, the revisions to GDP do not at first sight appear to be that significant. GDP for 2019 has been revised down by £4bn from the previously reported £2,238bn to a new official number of £2,234bn; GDP for 2020 is £6bn down from £2,110bn to £2,104bn; and GDP for 2021 has been revised up by £14bn from £2,270bn to £2,284bn. These seem relatively small changes when looking at trillions of pounds of economic activity.

Where the change really has an impact is in looking at the trends, especially after adjusting for inflation. On a nominal basis, a 5.7% nominal decrease in 2020 followed by a 7.6% increase in 2021 has changed to a 5.8% decrease and an 8.5% increase, but in real terms the previously reported economic contraction of 11.0% in 2020 followed by a 7.6% recovery has changed to a smaller contraction of 10.4% followed by a stronger recovery of 8.7%.

Of course, the devil is in the detail and some of the revisions at an industry level have been much more dramatic, with wholesalers and retailers now believed to have grown more strongly than previously believed, while the iron and steel industry changed from growth to contraction.

Many economic commentators have focused on the change in quarterly GDP (not shown in the chart) where the arithmetical changes have been more pronounced. The movement from the fourth quarter of 2019 (previously £568bn, now £566bn) and the fourth quarter for 2021 (previously £593bn, now £597bn) has gone from a 4.4% increase over two years to a 5.5% increase; in real terms from a 1.2% contraction in the economy to growth of 0.7%. Still anaemic, but at least in positive territory.

Despite this small improvement in the economic story portrayed by the GDP statistics, we should not get too carried away. Economic growth remains well below the pre-financial crisis levels and the public finances are in a significantly worse state than they were back in 2008.

In the meantime, the Office for Statistics Regulation has commenced a review into how these small revisions with big implications for our understanding of the economy were not identified at the time.

Further reading 

This chart was originally published by ICAEW.