Public Expenditure in the UK: How Measures Matter

Abstract

Summary: Studying spending over time requires reliable data. It is not clear that such data exist in the UK, however. The two published sources of functional spending numbers—the Office for National Statistics's ‘blue book’ and Her Majesty's Treasury's Public Expenditure Statistical Analyses (PESA)—rely on estimates of past spending, using a link year method, rather than recalculating actual spending figures when functional definitions change. We assess the various measures of spending in the UK. Specifically, we do two things. First, we present a new, third, set of spending numbers applying temporally consistent functional definitions to PESA microdata. Second, we compare the three measures. Our analyses indicate that the Office for National Statistics and PESA data differ quite markedly, especially for certain functions, i.e. in some cases the two measures imply completely different histories. The differences between the original PESA data and our new measures are less pronounced on average, though significant differences are evident, especially year by year.