The National Debt comprises the total liabilities of the National Loans Fund (NLF), together with nationalised industries’ stocks guaranteed by the government (as contingent liabilities of the government, these are not strictly part of the National Debt; but the markets, and the sources used for the estimates, do not generally distinguish them from government stocks, while the authorities carry out transactions in them in the same way as in government stocks).
The total excludes accrued interest (including index-linked increases) on National Savings, Consolidated Fund liabilities (including contingent liabilities, e.g. coin), funds lodged in courts, liabilities of other central government funds (notably the Northern Ireland government debt and stocks issued by certain government funds), and sundry other contingent liabilities and guaranteed debt.
Market holdings exclude holdings by other bodies within the central government sector (principally the Debt Management Office, the Exchange Equalisation Account and government departments - together called ‘official holders’). The term ‘market’ includes local government and public corporations as defined for national income statistics.
The sterling National Debt comprises:
British government stock: Sterling, marketable, interest-bearing securities issued by the United Kingdom Government. The nominal value of index-linked gilt-edged stocks has been raised by the amount of index-related capital uplift accrued to 31 March each year where applicable. The National Debt includes the whole nominal value of all issued stocks, even where there are outstanding instalments due from market holders; in such circumstances a counter entry is included in public sector liquid assets.
NILO stocks: In April 1981 a facility was introduced to allow non-marketable stocks - the terms of which reflect those on existing government stocks - to be issued to the National Debt Commissioners (NDC). This was intended to maintain the investment flexibility of the Commissioner, while at the same time reducing the possibility of conflict with the Bank’s objectives in managing the gilt-edged market.
Treasury bills: Short-term instruments generally with a maturity of 91 days. The bills, which can be traded on the secondary market, are sold at a discount and redeemed at par. The amount of discount will depend on the price previously accepted by the Bank and now accepted by the Debt Management Office at the tender.
National Savings securities: Non-marketable debt comprising of a variety of products available to the public. The National Debt excludes deposits in the ordinary account as well as accrued interest and indexing on national savings products.
Certificates of tax deposit: Non-marketable debt introduced in October 1975. It is available to tax payers generally and may be used in payment of most taxes. Its predecessors were the tax reserve certificates and tax deposit accounts (the latter could be used solely by companies to anticipate payments of corporation tax).
Ways and Means advances: Method through which government departments etc. lend overnight to the NLF.
IMF interest free notes: Non-marketable non-interest-bearing Treasury notes, issued by the Bank on the authority of warrants from HM Treasury. The warrants authorise various sums to be placed at the disposal of the International Monetary Fund (IMF) as a reciprocal facility for loans received by the United Kingdom. All transactions are initiated by the IMF. Although these remain liabilities of the NLF, they are not part of central government liabilities and are excluded from the market holdings of National Debt.
Temporary deposit facility: Deposits by central government bodies with the NLF.
Foreign currency National Debt is converted to sterling at end-March middle-market closing exchange rates and comprises:-
Government of USA loan and Government of Canada loan: Long-term post war loans from the governments of the USA and Canada.
Other foreign currency loans: Comprises lines of credit with the Export-Import Bank of America, Debt to Germany created on the liquidation of the European Payments Union, US$ loans with UK and non-resident clearing banks and the ECU5 bn loan facility (financed by a syndicate of international banks).
US dollar bonds and floating rate notes: HM Government have issued US$ bonds since 1978 and floating rate notes since 1985.
Euro Treasury bills: Short-term instruments, introduced in 1988, with a maturity of between one and six months. HM Government ceased to issue these bills in August 1999.
Euro Treasury notes and bonds: From January 1992, HM Government has issued three year Euro Treasury notes on a rolling programme. Euro2.5 bn of ten-year bonds was issued in 1991.
DM 5 bn bonds: Bonds issued in 1992 and maturing on 28 October 1997.
Other foreign currency bonds: In 1977, in order to reduce the international role of sterling as a reserve currency, the Government offered foreign currency bonds to non-resident official holders of sterling, in exchange for their sterling holdings.
Assigned debt: Other public sector debt which had been drawn from UK banks and non-resident lenders originally under the Exchange Cover Scheme (ECS). Prior to privatisation of these public corporations the debt outstanding was transferred to HM Government.
Valuation and Breaks