Form

QB: quarterly borrowing and lending guidance notes

Updated 21 December 2020

Applies to England

Introduction

Please read all relevant guidance notes before completing the form.

The figures you provide will be used to compile Public Sector Net Borrowing and Public Sector Net Debt, key economic statistics of the Government’s fiscal policy. These are used by HM Treasury and Bank of England when setting fiscal and monetary policy for the UK, and are published in the Public Sector Finances Statistical Bulletin, by HM Treasury and the Office for National Statistics (ONS).

We ask you to provide data rapidly so that we can produce accurate estimates for all local authorities. These are delivered to the Office for National Statistics on the seventh working day of each month. The Public Sector Finances Statistical Bulletin is then published on the 15th day of the month.

Detailed breakdowns of information on investments in externally managed funds will be collected quarterly. We may use figures from individual authorities to answer Parliamentary questions, so please use the validation explanation boxes on the form to give details of any unusual events or changes which affect the figures for your authority.

General note

Borrowing and investments should be reported on an accruals basis. Under this method all transactions that are undertaken before and on the last day of the reporting period should be included in the form.

1. Borrowing

Borrowing is defined in paragraph 77 of the Prudential Code (2017). This is the unadjusted principle amount of all outstanding external borrowing. As such, you should include:

• All external borrowing by your local authority, both temporary and longer-term, for any purpose. When repayments are made, please deduct these from the principle and report the outstanding amounts.

• All external borrowing in consortium with or on behalf of another authority or authorities. Where authorities borrow as a consortium, the lead authority should report the total amount of the borrowing and report the on-lent amount as lending to “other LAs”. Other authorities in the consortium should report their share as borrowing from “other LAs”. Similarly, borrowing on behalf of other authorities should be shown as both borrowing and lending.

• All external borrowing in consortium with or on behalf of non-local government sector parties. As with borrowing with or for another authority or authorities, you should report the total amount of the borrowing and report the on-lent amount as lending to the appropriate sector. For example:

  • Pension funds – on-lending to pension funds should be reported as loans to “Other financial intermediaries”.
  • Local authority companies – on-lending to wholly or majority owned local authority companies should be reported as loans to “Public Corporations” while on-lending to minority-owned local authority companies should be reported as loans to “Private non-financial corporations”.

• Local Enterprise Partnerships (LEPs) – Funds invested on behalf of LEPs should be recorded as a loan ‘from local government’ (since the Office for National Statistics has classified LEPs as part of the Local Government sector). The correspnding amounts should also be reflected in the amounts invested in the appropriate investments categories.

You should exclude:

• Any accounting adjustments, such as premiums and discounts, transactions costs, amortisation, fair value, accrued interest and effective interest rate adjustments.

• Any internal borrowing, such as:

  • Billing authorities internal borrowing and lending between the General Fund and the Collection Fund.
  • Internal debt and repayments.

• Advances and repayments under the Housing Act 1985 (Home Improvement grants etc) are not regarded as external. These should not be recorded on the form.

Total borrowing as at 31 March reported in the borrowing and lending inquiries (Quarterly Borrowing 4, Monthly Borrowing 12) should match total borrowing as at 31 March in the capital collections (Capital Outturn Return, Capital Payments & Receipts 4).

Estimates for borrowing for current and future years should be calculated in the same manner.

1.1 Securities

1.1.1 Box 1: LA revenue bills

3-month bills.

1.1.2 Box 2: Commercial paper

Paper with a maturity of between 90 and 364 days.

1.1.3 Box 3: Medium term notes

Paper with a maturity of between 1 and 5 years.

1.1.4 Box 4: Negotiable bonds

Bonds issued under the Stocks and Bonds Regulations, which have same-day transferability in London.

1.1.5 Box 5: Other stock issues

These are other securities negotiable or tradable on secondary markets.

Local bonds and mortgages, sometimes called Town Hall or over-the-counter bonds, should be recorded as loans to the sector(s) holding the bonds, where possible, usually the households sector.

1.2 Temporary loans

Temporary means an original maturity of up to 364 days. Instruments with a 364-day break clause, or similar, where your authority can insist on repayment or be compelled to repay after each 364-day period are classified as temporary. Longer-term loans reaching the last year of their maturity should continue to be classified as longer-term.

1.3 Long-term loans

Longer-term means an original maturity of 1 year or over. Longer-term loans reaching the last year of their maturity should continue to be classified as longer-term.

2. Investments

Investments are defined in paragraph 82 of the Prudential Code (2017). This is the unadjusted principle amount of all outstanding external investment. As such, you should include:

• All external investments made by your authority, both short and longer-term, for any purpose. This should include:

  • All current and deposit accounts as well as overnight or longer-term deposits made with banks through the money markets.
  • All stocks, bonds, mortgages, equities, debentures, holdings of shares in wholly owned companies, airports etc.
  • All local authority funds and reserves, including those managed externally.

• All external investments made in consortium with or on behalf of another authority or authorities. Where authorities invest as a consortium, the lead authority should report the total amount of the investment and report the amount contributed by other local authorities as borrowing from “Local government”. Other authorities in the consortium should report their share as loans to “Local government”. Similarly, investment on behalf of other authorities should be shown as both investment and borrowing.

• All external investments made in consortium with or on behalf of non-local government sector parties. As with investments with or for another authority or authorities, you should report the total amount of the investment and report the contribution of the other party or parties as borrowing from the appropriate sector. For example:

  • Pension funds – Amounts invested in consortium with or on behalf of pension funds should be included in amounts invested, while the amount contributed by pension funds should be reported as borrowing from “Other financial intermediaries”.
  • Local authority companies - Amounts invested in consortium with or on behalf of local authority companies should be included in amounts investments, while amounts contributed by wholly or majority owned local authority companies should be reported as borrowing from “Public Corporations” and amounts contributed by minority-owned local authority companies should be reported as borrowing from “Private non-financial corporations”.

You should exclude:

• Any accounting adjustments, such as premiums and discounts, transactions costs, amortisation, fair value, accrued interest and effective interest rate adjustments. For example:
  • Impairments – where an event occurs making it likely that an impairment will be recognised in relation to an investment, then the full amount of the investment should be recorded. Do not deduct any prospective or actual impairment. The outstanding amount should continue to be recorded until such time as a final settlement is made.

At this time, please make a note on the form stating the amounts involved and the impairment or unrecoverable amount.

Total investments as at 31 March reported in the borrowing and lending inquiries (Quarterly Borrowing 4, Monthly Borrowing 12) should match total investments as at 31 March in the capital collections (Capital Outturn Return, Capital Payments & Receipts 4).

Estimates for investments for current and future years should be calculated in the same manner.

2.1 Externally managed investments

Money market funds should only include pooled investments where all unit holders in the fund jointly own all the investments in the fund.

Externally managed funds, other than money market funds, relates to funds placed with a fund manager to invest on behalf of the local authority.

The total value of externally managed funds at the end of period should be based on reports received from fund managers if available, but should be estimated if information from fund managers is not yet available.

Total cash invested in funds is the amounts paid into externally managed funds by the authority in the period, and total cash withdrawn from funds is the amounts taken out of externally managed funds by the authority in the period. These figures should be available from your own records.

3. Notes on economic sectors

3.1 Banks in UK

Banking data should be reported on the same basis as local authority bank statements. The figures should reflect the balances at the time the banks close on the last working day before the end of the month.

Where more than one account is maintained with the same bank and there is a formal agreement or legal right to treat the accounts as a single entity (i.e. set-off), the accounts should be treated as one account and only the overall balance or overdraft should be entered (in box 30 or box 07).

Where a joint account is maintained with a non-local government sector party (e.g. a pension fund), you should record the balance minus amounts attributable to that party.

Do not enter negative figures. The deposits or overdrafts on each account with each bank should be aggregated to give an overall overdraft and overall deposit level to be entered on the form.

Investments in banks and building societies in the form of, for example, share capital, Floating Rate Notes (FRNs) or loan stock, should be entered in box 38 “Other securities”.

Foreign currency deposits should be converted to sterling at the middle market closing rate on the reporting date. Please indicate the level of such deposits at the side of the form, in the original currencies.

A list of building societies can be found at: Which firms does the PRA regulate?

1. Banks incorporated in the United Kingdom’ should be classed as UK banks
2. Banks incorporated inside or outside the EEA but authorised or entitled to accept deposits through a branch in the UK should be classed as UK banks
3. Banks authorised in the EEA entitled to establish branches in the UK but not to accept deposits in the UK should be classed as rest of the world banks

3.2 Building societies

Building societies, and only building societies, have the words “Building Societies” in their titles.

As with Banks, deposits/loans with branches outside of the UK should be recorded as “Rest of the World”.

3.3 Other financial intermediaries

These are UK institutions specialising in granting credit and/or investing in securities, which are not banks or building societies. This sector includes, inter alia, pension funds, bank holding, certain mortgage and finance companies, LAMIT and insurance companies.

3.4 Public corporations

These are wholly or majority owned by institutions in central or local government and include: British Broadcasting Corporation, the Civil Aviation Authority, the Commonwealth Development Corporation and National Health Service Trust hospitals.

Also included are wholly or majority owned local authority companies, the New Towns Commission, Urban Development Corporations and Passenger Transport Executives.

3.5 Private non-financial corporations

This sector includes all UK non-financial commercial businesses. Minority-owned local authority companies, co-operative societies and partnerships are included as well as legally incorporated companies.

3.6 Central government

Include all transactions with central government, its departments and agencies, and non-departmental public bodies.

3.7 Other local authorities

All other UK local authorities, including police authorities, fire authorities, waste authorities passenger transport authorities.

3.8 Households

As well as private individuals, this sector includes housing associations, churches, universities, examination boards, clubs, trade unions and other non-profit-making bodies. Unincorporated businesses are included, except co-operative societies and partnerships.

3.9 Rest of the World

Include any transactions made directly with households or institutions with an address outside the UK. Also include here international organisations, e.g. European Investment Bank, Depfa Bank, International Monetary Fund. Households or institutions with an address in Channel Islands or Isle of Man are included here. Bank or Building Society deposits/loans with branches outside of the UK should be recorded as “Rest of the World”.

3.9.1 Icelandic banks

Investments with Icelandic banks should be recorded on the form using the above bank classification guidance. Please note that the following Icelandic banks should be classified as banks in UK:

• Heritable Bank Ltd
• Kaupthing Singer & Friedlander Ltd
• Glitnir Banki hf
• Kaupthing Bank hf
• Landsbanki islands hf

This applies to deposits and certificates of deposit held as internal investments or held in externally managed funds.

3.10 Source not known

All borrowing should be covered by sectors listed on the form. However, in some cases, such as borrowing from bank nominees, the source may not be identifiable.

If you are unsure of the appropriate sector, please consult the ONS Public Sector Classification Guide and Forward Work Plan.

Or contact [email protected].