Corporate report

Accountability report

Published 20 October 2022

This was published under the 2022 Truss Conservative government

Purpose of the Accountability report

The Accountability report sets out how the Department meets the key accountability requirement to Parliament. It comprises of the 3 report below.

The Corporate governance report

• provides names of ministers and directors with oversight for the Department
• explains the governance structures in place and activities during the year

The Staff and remuneration report

• presents staff numbers and costs, and other employee matters
• discloses the remuneration of our ministers and directors

Parliamentary accountability and audit report

• presents the Department’s expenditure against the budgets set by Parliament
• presents the Auditor’s report and opinion on the financial statements

Corporate governance report

Statement of Accounting Officer’s responsibilities

Under the Government Resources and Accounts Act 2000 (the GRAA), HM Treasury has directed the Department for Business, Energy and Industrial Strategy to prepare, for each financial year, consolidated resource accounts detailing resources acquired, held or disposed of, and the use of resources, during the year by the Department (inclusive of its Agencies) and its sponsored non-departmental public bodies and other arm’s-length public bodies designated by order made under the GRAA by Statutory Instrument 2021 No. 1441 (together known as the ‘Departmental Group’, consisting of the Core Department and sponsored bodies listed at note 27 to the accounts).

The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Department and Departmental Group, and of the income and expenditure, Statement of Financial Position and cash flows of the Departmental Group for the financial year.

In preparing the accounts, the Accounting Officer of the Department is required to comply with the requirements of Government Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by the Treasury, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
• ensure that the Department has in place appropriate and reliable systems and procedures to carry out the consolidation process
• make judgements and estimates on a reasonable basis, including those judgements involved in consolidating the accounting information provided by non-departmental and other arm’s-length public bodies
• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the accounts
• prepare the accounts on a going concern basis
• confirm that the Annual Report and Accounts as a whole is fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable

HM Treasury has appointed the Permanent Head of the Department as Accounting Officer of the Department for Business, Energy and Industrial Strategy.

The Accounting Officer of the Department has also appointed the Chief Executives (or equivalents) of its sponsored non-departmental and other arm’s length public bodies as Accounting Officers of those bodies.

The Accounting Officer of the Department is responsible for ensuring appropriate systems and controls are in place to ensure any grants the Department makes to its sponsored bodies are applied for the purposes intended and that such expenditure and the other income and expenditure of the sponsored bodies are properly accounted for, for the purposes of consolidation within the resource accounts. Under their terms of appointment, the Accounting Officers of the sponsored bodies are accountable for the use, including the regularity and propriety, of the grants received and the other income and expenditure of the sponsored bodies.

The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the assets of the Department or non-departmental or other arm’s length public body for which the Accounting Officer is responsible, are set out in Managing Public Money published by HM Treasury.

Accounting Officer’s confirmation

As Accounting Officer, I have taken all the steps I ought to have taken to make myself aware of any relevant audit information and to establish that the Department for Business, Energy and Industrial Strategy’s auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware.

I also confirm that this annual report and accounts is fair, balanced and understandable.

Sarah Munby
Permanent Secretary and Principal Accounting Officer

18 October 2022

Report of the lead non-executive director

Since my appointment in January 2021 as the Lead Non-Executive Board Member for BEIS, I continue to be impressed by the breadth of the Department’s wide-ranging portfolio. After managing a highly successful vaccine acquisition programme, the Department produced a high-level net zero plan which was delivered ahead of COP26. In addition, BEIS played a key role in the successful Global Investment Summit designed to attract international players to invest in Britain. This continues to ensure that billions are invested in British innovation through UK Research and Innovation. The Department remains committed to digital Britain through the Help to Grow programme - a plan to retrain and retool the UK’s small to medium businesses to compete on the global stage.

The challenges faced as the country recovered from the pandemic took resilience from colleagues. The Department pushed ahead with its levelling up agenda, recruiting a Director General in Salford and an additional 410 roles outside London since January 2020. The Department had some success with Green Home Grants through local authorities. However, it decided to limit further expenditure on this project due to challenges around supply chain capacity and capability. The programme was closed swiftly and cleanly in a matter of months saving the taxpayer significant expense. At the same time the war in the Ukraine introduced fresh challenges to energy supply and security. The new Investment Security Unit, set up by BEIS to ensure that threats introduced through acquisitions of UK companies are being properly managed, has proved to be an early success.

The Secretary of State has recognised the need for the Department to put its best foot forward in delivering on the national mission to ensure the UK’s clean energy independence. In March 2022 Peter Mather was appointed as the Non-executive board member to lead on this portfolio. I am delighted to welcome Peter to the Board and look forward to working with him as we deliver on this essential goal.

The Non-executive board members and I want to thank colleagues across BEIS for their continued hard work and dedication over the last 12 months and congratulate them for their achievements during such as difficult time. We are committed to working together as a Board, as well as individually providing advice to policy teams, to support the Department as it begins to deliver on its diverse portfolio.

Directors’ report

The Directors’ report provides names and ministerial titles of all our ministers in the year. It also lists names of senior officials, (which refers to members of the executive committee), and non-executive directors (NEDs).

Joiners and leavers are those who left the relevant posts. In the case of senior officials, they may not have left the Department, particularly if they held interim posts.

The report also includes joiners and leavers after year-end 31 March 2022, and up to the date of publication of the annual report and accounts.

Conflicts of interest

Board members are required to declare personal or business interests which may influence their judgement, or be perceived to, when performing their duties.

BEIS has an established conflicts of interest procedure, including declaring interests at the start of board meetings. No conflicts of interests were declared during board meetings in 2021-22.

A register of board members’ interests is available on GOV.UK.

Ministers

• Rt Hon Kwasi Kwarteng MP, Secretary of State for Business, Energy, and Industrial Strategy
• Lord Callanan, Parliamentary Under Secretary of State, Minister for Climate Change and Corporate Responsibility
• Lord Grimstone, Minister of State, Minister for Investment
• Paul Scully MP, Parliamentary Under Secretary of State, Minister for Small Business, Consumers and Labour Markets
• Rt Hon Greg Hands MP, Joiner in-year, 15 Sep 2021; Minister of State, Minister for Energy, Clean Growth and Climate Change
• George Freeman MP, Joiner in-year, 17 Sep 2021; Parliamentary Under Secretary of State, Minister for Science, Research and Innovation
• Lee Rowley MP, Joiner in-year, 17 Sep 2021; Parliamentary Under Secretary of State, Minister for Industry
• Amanda Solloway MP, Leaver in-year, 15 Sep 2021; Parliamentary Under Secretary of State, Minister for Science, Research, and Innovation
• Nadhim Zahawi MP, Leaver in-year, 14 Sep 2021; Parliamentary Under Secretary of State, Minister for Business and Industry
• Rt Hon Anne-Marie Trevelyan MP, Leaver in-year, 14 Sep 2021; Minister of State, Minister for Business, Energy and Clean Growth

Joiners post year-end

• Rt Hon Jacob Rees-Mogg MP, 06 Sep 2022
• Graham Stuart MP, 06 Sep 2022
• Jackie Doyle-Price MP, 07 Sep 2022
• Nusrat Ghani MP, 07 Sep 2022
• Dean Russell MP, 20 Sep 2022

Leavers post year-end

• Paul Scully, 06 Jul 2022
• Lee Rowley, 06 Jul 2022
• George Freeman, 07 Jul 2022
• Lord Grimstone, 07 Jul 2022
• Rt Hon Kwasi Kwarteng MP, 05 Sep 2022
• Rt Hon Greg Hands MP, 06 Sep 2022
• Jane Hunt MP, 08 Jul 2022 to 08 Sep 2022

Senior officials

• Sarah Munby, Permanent Secretary
• Simon Hulme
• Alice Hurrell
• Ashley Ibbett
• Madelaine McTernan
• Dan Micklethwaite
• Paul Monks
• Jo Shanmugalingam
• Tom Taylor
• Joanna Whittington
• Freya Guinness, Joiner in-year, 19 Apr 2021
• Lee McDonough, Joiner in-year, 7 Jun 2021
• Ben Rimmington, Joiner in-year, 28 Jun 2021
• David Bickerton, Joiner in-year, 2 Aug 2021
• Abigail Morris, Joiner in-year, 1 Aug 2021
• Gavin Lambert, Joiner in-year, 13 Dec 2021
• Caleb Deeks, Joiner in-year, 13 Dec 2021
• Doug Watkins, Leaver in-year, 31 Mar 2022
• Mike Keoghan, Leaver in-year, 16 Jan 2022
• Jaee Samant, Leaver in-year, 31 Oct 2021
• Craig Woodhouse, Leaver in-year, 14 Jul 2021
• Ben Golding, Leaver in-year, 28 Jun 2021
• Cath Bremner, Leaver in-year, 1 Jun 2021

Joiners post year-end

• Jonathan Mills, 06 Jun 2022

Leavers post year-end

Non-executive directors

• Ann Cairns, Lead NED, Board, NGC Chair
• Nigel Boardman, Board, ARAC Chair
• Elaine Clements, ARAC
• Bryan Ingleby, ARAC
• Alison Rodwell, ARAC
• Jane Whittaker, ARAC
• Vikas Shah, Joiner in-year, 04 May 2021; Board, ARAC
• Stephen Hill, Joiner in-year 6 May 2021; Board
• Peter Mather, Joiner in-year 30 Mar 2022; Board, ARAC
• Catherine Pridham, Leaver in-year 19 Feb 2022; PIC

Joiners post year-end

• Andrew Jamieson, 01 May 2022
• Vikas Shah, ARAC Chair from 24 Jun 2022

Leavers post year-end

• Nigel Boardman, 23 Jun 2022

Governance statement

Overview

The governance statement sets out how the Department was governed by management during the year. It provides an outline of our governance structure, a summary of the board and committee activities, and a risk assessment. It ends with a conclusion by the Accounting Officer.

Our governance structure

Departmental board

Chair

Rt Hon Kwasi Kwarteng MP, Secretary of State and Chair, Departmental Board

Meeting attendance

Total number of meetings held, 4

(x/x = number attended /number eligible to attend.)

Ministers

Members	Number of meetings attended
Rt Hon Kwasi Kwarteng MP	4/4
Lord Grimstone of Boscobel Kt	3/4
Rt Hon Ann-Marie Trevelyan MP	0/1
Rt Hon Greg Hands MP	1/3

Senior officials / executive directors

Members	Number of meetings attended
Sarah Munby	4/4
Joanna Whittington	4/4
Tom Taylor	4/4

Non-executive directors

Members	Number of meetings attended
Ann Cairns	4/4
Stephen Hill (from 6 May 2021)	4/4
Vikas Shah (from 1 May 2021)	3/4
Nigel Boardman (on secondment from Apr to Sep 2021)	2/3

Role and discussions during the year

The departmental board (the board) provides strategic and operational leadership of the Department, from which ExCo derives its vision to deliver. The board has been integral to the Departments response to COVID-19 and other challenges such as winter preparedness. The board met 4 times. Where members were unable to attend meetings in person, they were able to share their views in advance with the chair.

Key areas of discussion were:

• crisis management, lessons learnt
• outcome Delivery Plan
• enterprise strategy
• strategic planning post the Spending Review
• global energy markets
• major projects deep-dives

Board appointments

The board was refreshed with 3 new non-executive (NED) board members appointed in 2021-22. Stephen Hill and Vikas Shah joined the departmental board in May 2021 and took on the Union and science portfolios respectively. At the end of 2021-22, Peter Mather was appointed to focus on climate and energy security.

Quality of data used by the board

The papers received by the Board have been of high quality. Meetings were held either virtually or as hybrid meetings and were efficiently chaired. Challenge and discussion were encouraged.

BEIS’s governance team provided a comprehensive secretariat service to the board and committees. This ensured the effective and efficient administration of the board and its activities.

Compliance with the corporate governance code

Our approach to governance is in line with ‘the code’ – Corporate Governance in Central Government Departments: Code of Good Practice. We were partially compliant in one area - carrying out an annual board effectiveness evaluation.

Due to the effects of the pandemic on the functioning of the board in 2020-21, and the number of new appointments to the board at the start of 2021-22, BEIS decided that an external board evaluation would be more valuable in 2022-23 when the new Board and its members would be more established. Instead, an informal and light touch evaluation of the board and its committees (including Exco and its sub-committees) took place in 2021-22. This resulted in small changes to their format and content, and an overhaul of the format of Exco.

The Department is responsible for corporate governance and champions women on boards and wants to lead by example in this area. At end of the 2020-21, the board’s gender diversity was at 30% and BAME members at 20%.

Biographies of board members

Biographies of our board members.

Nominations and Governance Committee

Chair

Ann Cairns, Lead Non-executive and Chair, Nominations and Governance Committee

Meeting attendance

Total number of meetings held, 2

(x/x = number attended /number eligible to attend.)

Senior officials / executive directors

Members	Number of meetings attended
Sarah Munby	2/2
Alice Hurrell	2/2

Non-executive directors

Members	Number of meetings attended
Ann Cairns	2/2

Role and discussions during the year

The Nominations and Governance Committee (NomCo) is an advisory committee of the departmental board. It provides assurance on the Department’s strategies and plans for talent, succession and capability management of senior staff. It also considers whether the people related processes are effective in helping BEIS achieve its goals.

Following a hiatus for NomCo in 2020-21, with most decisions being taken by correspondence, the committee was refreshed in membership and scope. This was to ensure that it was delivering on its remit and could effectively advise the board. The committee met twice in 2021-22. Where members were unable to attend meetings in person, they were able to share their views in advance with the chair.

Key areas of discussion were:

• senior talent pipeline
• capability strategy
• rewards strategy
• senior performance and remuneration

Audit and Risk Assurance Committee

Chair

Vikas Shah, Non-executive and Chair, Audit and Risk Assurance committee

Meeting attendance

Total number of meetings held, 6

(x/x = number attended /number eligible to attend.)

Senior officials / executive directors

Members	Number of meetings attended
Sarah Munby	6/6
Kim Humberstone	5/6
Freya Guinness	6/6
Simon Hulme	2/6

Non-executive directors

Members	Number of meetings attended
Vikas Shah (from 1 May 2021)	6/6
Nigel Boardman (on secondment from April to Sep 2021 and to 23 June 2022)	3/3
Bryan Ingleby	6/6
Elaine Clements	6/6
Alison Rodwell	6/6
Jane Whittaker	6/6

Role and discussions during the year

The Audit and Risk Assurance Committee (ARAC) is an advisory committee of the Departmental Board. It provides advice and assurance to the board and Accounting Officer on matters of financial accountability, assurance, and governance. It provided expert challenge to the Department, helping to focus on what was important, and how best to manage risk. The committee met 6 times in 2021-22. Where members were unable to attend meetings in person, they were able to share their views in advance with the chair.

Key areas of discussion were:

• the management of departmental risk and the risk management framework
• improvement to assurance processes, including the roll out of the Controls and Assurance Framework, alignment with risk and assurance mapping
• director generals’ group management of risk and assurance
• cyber security and security risk management and behaviours
• the work of internal and external audit
• the preparation of the annual report and accounts including on the treatment for COVID-19 loan and grant schemes
• anti-fraud policies and practices
• compliance including with the Business Appointment Rules
• partner organisation risk assurance. Including continued engagement with partner organisations (POs) by attending their ARAC meetings and welcoming observers to BEIS ARAC meetings

Executive Committee

Chair

Sarah Munby, Permanent Secretary and Chair, Executive Committee

Meeting attendance

Total number of meetings held, 24

(x/x = number attended /number eligible to attend.)

Senior officials / executive directors

Members	Number of meetings attended
Sarah Munby	22/24
Joanna Whittington	21/24
Tom Taylor	20/24
Freya Guinness	23/24
Simon Hulme	20/24
David Bickerton	9/15
Cath Bremner	3/3
Ben Golding	5/5
Alice Hurrell	23/24
Ashley Ibbett	22/24
Craig Woodhouse	7/9
Dan Micklethwaite	20/24
Doug Watkins	16/23
Jaee Samant	14/15
Jo Shanmugalingam	21/24
Mike Keoghan	13/19
Paul Monks	19/24
Lee McDonough	16/21
Ben Rimmington	17/19
Abigail Morris	12/17
Caleb Deeks/ Gavin Lambert	3/3
Madelaine McTernan *	0/0

Notes

*0/0 is with agreement of the permanent secretary.

Role and discussions during the year

The executive committee (Exco) is responsible the day-to-day management of BEIS and the delivery of the its strategic objectives. Exco sits at the heart of the Department and is the forum to discuss key cross cutting issues impacting the entire organisation.

Following the increased frequency of Exco last year, in response to the COVID-19 pandemic, Exco has resumed its more regular rhythm to respond to high profile challenges and deliver key government priorities. This included coordinating the business response to COVID-19 variants of concern, winter preparedness and most recently the Russia-Ukraine war.

Emerging from the COVID-19 response, the executive team recognised that ExCo needed to grow into a forum which can catalyse the Department’s pivot from policy to delivery and set the strategy to deliver government priorities such as energy security. In March 2022 Exco underwent a reform which saw changes to rhythm and structure to home in on issues with a more strategic lens whilst remaining agile to evolving challenges. Where members were unable to attend meetings in person, they were able to share their views in advance with the chair.

Key areas of discussion were:

• key departmental risks and mitigation
• response to COVID-19, its emerging variants of interest and recovery
• financial implications of Places for Growth
• the Department’s delivery on the net zero and innovation strategies
• COP26 delivery and legacy
• winter preparedness and the impact of storms
• implementation of the government Science Plan
• increased living costs and the impact of inflation
• business planning

Executive Committee sub-committees

Performance and Risk Committee

Freya Guinness, Co-chair, Performance and Risk Committee
Lee McDonough, Co-Chair, Performance and Risk Committee

Role and discussions during the year

Performance & Risk Committee (P&R) is a delegated committee of Exco. It reviews the overall performance of the department. It also monitors emerging risks through the monthly Performance & Risk report. Following a review in summer 2021, the committee has sought to maintain focus on overarching issues facing the Department, identifying the common threads between emerging risks identified in monthly reporting. This more holistic approach will enable P&R to support the Exco more effectively. The committee met 11 times in 2021-22.

Key areas of discussion were:

• providing assurance over the updated risk framework
• agreeing to a coordinated process of reporting by partner organisations
• continuing to monitor departmental responses to ongoing issues such as Public Sector Equality Duty Monitoring and response to the COVID-19 pandemic
• continuing to monitor departmental risks and agreeing to escalations of risks from group level and updating existing risks

Projects and Investments Committee

Joanna Whittington, Co-chair, Project and Investments Committee
David Bickerton, Co-chair, Project and Investments Committee

Role and discussions during the year

Project and Investment Committee (PIC) is a delegated Committee of Exco. It considers investment proposals over £20 million or those deemed novel, contentious or repercussive. The committee has ensured all investment proposals are aligned with BEIS’ strategic priorities. Lessons learnt are being used to drive improvement across the Department and across government. It also ensures the departmental assurance framework and assurance plans are robust and effective. PIC has continued to provide a high standard of support to the Accounting Officer, BEIS, and its partner organisations through its governance process.

PIC has focused on:

• supporting long terms business growth through enterprise projects and programmes
• enabling science advances through innovation projects and programmes such as the Fusion Industry Programme and Diamond Light Source
• tackling delivery of the net zero strategy through projects and programmes such as the Green Heat Network Fund and the Net Zero Hydrogen Fund
• continued COVID-19 response and recovery through the COVID-19 Vaccine Taskforce

People and Operations Committee

Ashley Ibbett, Co-Chair, People and Operations Committee
Jo Shanmugalingam, Co-Chair, People and Operations Committee

Role and discussions during the year

People and Operations Committee (Popco) is a delegated committee of Exco and considers matters relating to human resources, accommodation, security, diversity and inclusion, and IT.

Popco has developed into a strong decision-making body and the authority on people and operations topics within the Department. It has been pivotal in delivering the Department’s ambition to grow a presence in all areas of the UK. It also set the strategy and guided delivery of staff returning to the office after a prolonged period of working from home due to COVID-19.

Key areas of discussion were on:

• Places for Growth
• return to the office following COVID-19
• people survey results and actions
• development and tracking of the Corporate scorecard
• ensuring BEIS remains an inclusive place to work
• career progression and staff retention

Net zero governance

The Climate Change Integrated Review Implementation Group (IRIG) provides a whole of government approach to domestic and international climate policy with oversight at DG level and reports into 3 Cabinet committees – Climate Action Implementation committee, Climate Action Strategy Committee and Government Priorities Delivery committee.

Within BEIS, the permanent secretary chairs 2 boards. The Net Zero Delivery Board which oversees the department’s portfolio of initiatives that contribute to the 2050 net zero goal, and the Net Zero Strategy Board which discusses the policy actions BEIS should bring forward to meet our ambitions. Both boards are supported by a number of portfolio, programme and project boards, which also report to PIC and P&R. If needed, the 2 boards have Exco as a point of escalation. Both net zero boards manage climate-related risks, with the former focussing on delivery risks within BEIS, and the latter, strategic risks relevant to net zero as a whole.

Management of outside interests

Register of interests for directors

See directors’ report.

Process for managing outside interests

The Department has a policy in place for the declaration and management of interests for all staff.

It provides a framework to deal with any conflicts of interest between staff, suppliers, and other stakeholders. This includes actual, potential, or perceived conflicts of interest. It provides a guide to identify, monitor and manage conflicts of interest that could arise.

All staff must ensure they make a declaration at the earliest opportunity once they have become aware that a conflict of interest may exist. As soon as a declaration has been made, line management must ensure they review all declarations and agree any mitigating actions if required. The Conflicts of Interest policy and declaration form are available to all staff on the departmental intranet pages.

All director generals (SCS3) and directors (SCS2) are required to fill out a Conflicts of Interest Declaration Form annually. This is the case whether they are or are not engaged in activities that might create a conflict of interest or not. Nil returns should also be declared. In addition, Deputy Directors (SCS1) are required to at least annually discuss with their line managers whether they have any conflicts of interest. They must complete a return to HR confirming that they have done so and provide any declarations. SCS Conflict of Interest declaration forms are reviewed by the BEIS Conflicts Officer where an interest has been declared.

The policy also provides guidance on employees holding paid positions external to BEIS. From the latest return in 2021-22, no SCS in BEIS holds a remunerated position or has other interests outside government which might conflict with their obligations under the Civil Service Code.

Special advisers

In line with the current Declaration of Interests policy for special advisers, all special advisers have declared any relevant interests or confirmed they do not consider they have any relevant interests. The permanent secretary has considered these returns and there are no relevant interests to be published.

Application of Business Appointment Rules

The Business Appointment Rules apply to civil servants who intend to take up an appointment or employment after leaving the Civil Service. It is important that when a former civil servant takes up an outside appointment or employment there should be no cause for justified public concern, criticism or misinterpretation.

For members of the Senior Civil Service (SCS) and equivalents, including special advisers of equivalent standing, the Rules continue to apply for 2 years after the last day of paid Civil Service employment. For those below SCS and equivalents, including special advisers of equivalent standing, the Rules continue to apply for one year after leaving the Civil Service, unless, exceptionally, the role has been designated as one where a longer period of up to 2 years will apply.

Before accepting any new appointment or employment, individuals must consider whether an application under the Rules is required.

If it is required, they should not accept or announce a new appointment or offer of employment before it has been approved. Applications that have been signed by an appropriate person within the individual’s line management chain are sent to the BEIS Human Resources function for assessment and action. All SCS3 and above applications are referred to the Advisory Committee for Business Appointments (ACOBA) which is a non-departmental public body that consider applications under the business appointment rules about new jobs for former ministers, senior civil servants and other Crown servant. The Business Appointment Rules have been discussed at audit and risk committees.

In compliance with the Business Appointment Rules, the department is transparent in the advice given to individual applications for senior staff, including special advisers. Advice regarding specific business appointments has been published on BEIS’s website.

Information on Business Appointment Rules is also available to all staff on the departmental intranet pages.

Risk management

Risk management responsibilities

The Department is responsible for having a risk management framework and reviewing its effectiveness. The framework includes the standard process of - identify, assess, address, review and report risks. Effectiveness reviews take the form of regular engagement with risk champions, and an annual consultation of the framework. This brings about continuous improvement.

Processes and structure

Our principal risks in 2021-22 are disclosed in the Performance report under Risks affecting delivery of our objectives on page 34. The process to identify these risks involves horizon scanning by the Exco on an annual basis, and escalations as appropriate throughout the year. The risks are evaluated and managed using an online reporting system. These processes were in place in 2021-22.

Monitoring and assurance

The output from the online reporting system is reported monthly to governance boards. This is also supported at group level by risk champions. They review the group level risks being mitigated by directorates within the group. They consider and flag potential escalations to the group leadership team.

Effectiveness reviews

P&R review and monitor the Departmental risks. During the year we continued to improve the online risk management tool to ensure risks were being reported regularly. We also improved league tables of compliance to assess the quality of the updates. In Q4 we commenced a more targeted review of project capability and compliance.

Compliance

During the year, we updated our Risk Management Framework and Risk Appetite Statement to ensure consistency with government best practice in the Orange Book. Improvements have been made to both guidance documents to make them more accessible in terms of layout and language. Screen-reader accessible versions have also been produced.

Internal controls mechanism

During 2021-22 the Department continued to improve the efficiency and effectiveness of internal controls environment. The internal audit review noted well-designed processes and controls were in place during the year.

We established the Future Workplace programme to oversee the Department’s response to Places for Growth, which is the government’s strategy to grow Civil Service presence outside London. This programme also oversaw the implementation of hybrid working during 2021-22. We have recently closed the formal Future Workplace programme governance and manage the discrete work packages as business-as-usual work across Corporate Services.

In the past year, the Department has been able to respond in a very effective and timely manner to volatility in the energy sector. At the onset of the fuel crisis in autumn 2021, the Department initiated its contingency plans to successfully deploy its reserve tanker fleet and military personnel to support fuel deliveries around the country. When rising global wholesale energy prices pushed the major energy supplier Bulb into administration, BEIS initiated its Special Administration Regime. This was a pre-planned response that was successfully delivered to ensure continuity of supply to consumers (note 4.1).

Progress also continued to ensure audit actions were implemented in a timely fashion. By the end of March 2022, 91% of actions from 2020-21 internal audits were completed. In addition, 75% of 2021-22 audit actions were completed.

Looking ahead, as the Core Department becomes more delivery focussed, efforts to improve internal controls and assurance will need to be directed to where they can have the most impact.

The BEIS Partnership Assurance Framework is now in its second year and continues to provide a systematic assurance assessment of all BEIS’s 43 partner organisations.

There remain corporate challenges regarding compliance and contingent labour. This includes leavers offboarding and the volumes of contingent labour engaged in the Department. To incentivise compliance, new management information is being put in place to help senior management act, including charging for equipment that is not returned on time. To reduce spend on contingent labour, a target-based strategy is being considered.

Government Internal Audit Agency

The Government Internal Audit Agency (GIAA) provides the internal audit service for BEIS. For 2021-22, the Group Chief Internal Auditor provided a “Moderate” opinion.

GIAA concluded that BEIS had maintained an adequate system of governance, risk management and internal control, taking the opportunity to build on and enhance processes through a system of continuous improvement and in response to audit recommendations. This is commendable during another year of significant pressure on resources in response to the continued COVID-19 pandemic and more recently the war in Ukraine. At the same time, the Department has pressed ahead with delivering key government policies.

However, GIAA highlighted that the increasing shift towards delivery work (for what has traditionally been a policy Department) is adding to the pressures on Departmental capability and capacity. This has resulted in a tension between operationalising promptly new schemes, grants and loans and putting in place robust processes and controls to mitigate the risk of loss through fraud and error. While GIAA has not reported any significant errors to date, there is an elevated level of inherent risk that needs appropriate action to ensure losses are minimised in future years.

National Audit Office and the Public Accounts Committee

BEIS led on several key COVID-19 interventions and continued to lead on the government’s net zero commitment. Given the significance of these priorities, there was a continued increase in the quantity and pace of the National Audit Office’s BEIS non-financial audit activity. This also resulted in more frequent attendance at the Public Accounts Committee (PAC) to provide further evidence. There were 5 PAC hearings involving BEIS witnesses between January and March 2022.

BEIS provides responses to the PAC after each hearing via the HM Treasury minutes process, and twice a year via the HM Treasury minutes progress updates. These are published on gov.uk: Treasury minutes and Treasury minutes: progress on implementing recommendations of Public Accounts Committee.

BEIS also provided responses to NAO recommendations, which are published on the NAO website.

Project assurance

A project assurance review is a key requirement within the Department before submitting a business case for approval.

In 2021-22, programmes and projects continued to follow the Department’s ‘Integrated Assurance and Approvals Framework’. This provided the right level of assurance on internal programmes and projects, and those within the Government Major Projects Portfolio (GMPP), overseen by the Infrastructure and Projects Authority (IPA). In 2021-22, the Department had 23 projects on GMPP (an increase of 13 from last year). During 2021-22 there were 69 assurance reviews held.

The Department remains in a strong position to continue to embed project assurance across projects. A refresh and review of the Integrated Assurance Framework has taken place which will be launched in 2022-23. To support better data sharing we have developed a PowerBI Assurance and Approvals report which will show live data.
We are well placed to fully support the changes being introduced by the IPA, to manage and review all GMPP projects across government.

Quality assurance of analytical models

We use analytical models to inform our core business of policy making, evaluation and operations. We quality assure our models to ensure they are fit for purpose and comply with the government’s AQuA (Analytical Quality Assurance) Book. The ‘2022 NAO Value for Money Report Financial Modelling in Government’ cited BEIS’ processes as good practice. In 2021-22, ~90% of the 119 registered analytical models had the required level of assurance. Teams with non-compliant models have plans to achieve the required level of assurance in 2022-23.  

We require partner organisations undertaking modelling to assure us that they have AQuA Book compliant QA processes.

Data protection

BEIS notified the Information Commission’s Office (ICO) of 2 personal data breaches assessed to have met the ICO’s reporting guidelines. The ICO determined that regulatory action was not appropriate in both cases.

This figure represents the total for the BEIS data Controllership, made up of the Core Department and 5 Executive Agencies – UK Space Agency, Met Office, UK Intellectual Property Office, Insolvency Service (excluding Official Receiver Offices & Office of the Adjudicator), and Companies House (excluding the Registrar function).

No significant cyber breaches were reported in 2021-22. Our centrally managed IT services continued to meet government cyber security standards. We evolved our defences, processes, monitoring and resilience to meet the growing cyber threat. We continued to work with the Government Property Agency to ensure adequate security at sites where we have staff. We developed our approach to personnel security to meet the demands of new ways of working. We took on responsibility from another government department for aspects of the National Security Vetting process for our staff.

All our staff play their part in ensuring strong security. The contract for online commercially developed and hosted training in place for most of the year will be replaced in 2022-23 by training to supplement that available from Civil Service Learning.

Ministerial directions

Ministerial directions are formal, technical instructions from the Secretary of State which allow the Department to proceed with a spending proposal in a situation where the Accounting Officer has raised an objection.

The Accounting Officer is accountable to Parliament for ensuring that all expenditure meets the standards under Managing Public Money (MPM). They have a duty to seek a direction if they believe one of the 4 Accounting Officer standards cannot be met - regularity, propriety, value for money and feasibility.

There were no ministerial directions during 2021-22.

Effectiveness of our whistle blowing arrangements

Internal whistle blowing

We encourage our employees to speak up and raise a concern where something does not feel, look or sound right. Our procedures for raising concerns are accessible to all BEIS employees. We continue to offer 6 different routes to do this, including via an external whistleblowing hotline.

In 2021-22 we had no whistleblowing concerns raised by BEIS employees. The 2021 People Survey once again showed that most staff had confidence that any concerns raised under the Civil Service Code would be properly investigated.

External whistle blowing

In the 2020-21 annual report, we noted that we had received nearly 2,000 reports from members of the public relating to the fraudulent acquisition or misuse of COVID-19 support funds provided through guaranteed loans and grants. These reached us through a government wide fraud hotline, supported by Crimestoppers. The Cabinet Office now coordinates the triage process of the COVID-19 reports and disseminates them to the most appropriate organisation to consider them. In 2021-22, NATIS were sent 1768 reports relating to COVID-19 schemes by the Cabinet Office.

On non-COVID-19 related issues we did not receive any reports during 2021-22. We are confident our current whistleblowing policies and procedures are adequate, however we are undertaking a review to ensure we continue to provide suitable ways to report potential wrongdoing and malpractice.

Governance of BEIS’ public bodies

BEIS has a large number and diverse range of public bodies. In 2021-22, BEIS worked with 43 public bodies, which covered various sectors, policy and operational responsibilities. These public bodies are uniquely known within BEIS as partner organisations (POs).

Most of our POs are governed by their own independent boards and have their own governance and internal assurance structures. Details of this can be found in their individual annual reports and accounts. The management agreement for each PO requires them to have an annual assessment of their board performance. It also informs the process of the potential reappointment of board members. The 27 bodies consolidated into the Department’s accounts are all individually reviewed by the Core Department as part of the process to prepare the annual accounts.

In 2021-22, the Core Department received assurance on risks and delivery within the POs in the following ways:

• policy colleagues via a sponsorship model
• POs governance statements
• BEIS Partnership Assurance Framework
• advice and challenge from ARAC on assurance processes
• non-executive directors of the Core Department’s ARAC attended ARAC meetings of significant partner organisations - chairs from partner organisation ARACs are invited to observe the Core Department’s ARAC in return
• providing assurance to the Executive Board on the Core Department’s relationship with its bodies

Some POs have carried additional risks in terms of board appointments. The Core Department is looking at improvements which can be made to the process to mitigate this risk.

BEIS is also implementing the new Cabinet Office review programme across its arm’s length bodies. This replaces the former tailored review process.

POs continued to provide data to the Partnerships team in the Core Department on the operational impacts on COVID-19 until February 2022, when the government guidance changed. This data provided information on operational impacts, absence rates and return to the office statistics. It was shared with directors general and used in response to commissions for information.

Fraud and error analysis in the COVID-19 business support schemes

Background

The counter fraud strategy within BEIS gained momentum due the launch of the COVID-19 business support loans and grants. BEIS has developed the counter fraud policy and strategy for its internal and external partners. The standards set by the Cabinet Office fraud profession are implemented and complied with. The department’s counter fraud function are experts that are brought in across different policies to be consulted with and feed into scheme design.

To assess the risks of fraud and error on the schemes, we completed fraud risk assessments (FRAs). These assessments have been embedded within the department and the launch of new schemes. FRAs have been completed for new schemes including the Post Office Historical Shortfall, the Energy Rebate scheme and Green Home Grants schemes.

Counter Fraud strategies on the COVID-19 support schemes

In May 2020, BEIS submitted an action plan for the COVID-19 support schemes, which the Ministerial Implementation Group requested from all departments. The action plan was made up of separate assurance plans for each type of scheme (for example, grants, loans). The plan included details of how we would identify, measure and recover irregular payments (payments from fraud and error). The schemes differ in size, scope and the nature of the fraud and error risks to be managed. The action plan focussed on common themes and issues – governance, responsibilities, timescales and information to be collected, tested and analysed. They also included work to develop guidance, tools, monitor and report arrangements.

In 2020-21, BEIS provided a progress update on the action plans, and a summary of the testing plans for the highest risk schemes. BEIS is completing a post-award assurance. This is quality assurance done after a grant has been given, to check for fraud and error. The Counter-Fraud Strategy board and programme support boards will oversee this work.

Fraud and error estimates

The estimates for fraud and error have been refined as further intelligence across the COVID-19 schemes has been completed. The fraud and error estimates, methodology and data limitations to the data can be seen in the regularity section.

Recovery of irregular loan payments

The Bounce Back Loan (BBLS) counter fraud strategy will be published shortly to GOV.UK and will highlight the importance the department is placing on recovery of fraudulent loans paid.

BEIS objectives include to:

• Deter and disrupt crime, including by prosecuting those committing fraud and financial crime and 
• Minimise loss and maximise recoveries related to fraud and take a fair and appropriate approach to ensure borrowers fulfil financial covenants.

BEIS is therefore working with lenders and its enforcement partners to achieve these objectives.

Lenders are responsible for undertaking recovery action once it becomes due in the first instance, assisted by data analytics provided by the Cabinet Office. Where evidence of fraud exists borrowers are liable to further action brought by BEIS’s enforcement arm, the National Investigation Service (NATIS), other law enforcement or the Insolvency Service (INSS) the impact of which is to achieve recoveries in those cases but also encourage repayment by those who intend to default.

Further details are provided in the “Working With Others” section.

Recovery of irregular grant payments

As at 31 March 2022, when the business support grants closed, £22.6 billion had been made to local authorities across all COVID-19 business support grant schemes since March 2020. (The allocation of expenditure was £26.9 billion. The difference is due back to the department with the receivable due back disclosed in note x). Based on a Post-Payment Assurance Process for the Cohort 1 schemes (Small Business Grant Fund, Retail, Hospitality, Leisure Grant Fund and the Local Authority Discretionary Grant Fund), the central estimate irregular grant payments is £990 million. Further information on this and the limitations to this can be seen in regularity statement.

The department’s debt recovery policy has been published online.

The first line of recovery are the local authorities, and we are at the start of this process. Work is ongoing within local authorities and BEIS to identify and recover irregular grant payments. Local authorities must take all reasonable and practicable steps to recover all irregular grant payments. Unsuccessful recoveries are referred to BEIS to consider appropriate next steps. A summary of the total findings so far is below:

Finding	Sum	Note
Grant payments notified by local authorities as irregular (identified as coming from fraud or error)	£5.4m	BEIS expects the value irregular grants, which local authorities notify to BEIS to increase. An increase will reflect the forecast error and fraud rate.
Of which
Recovered by local authorities	£4.2m	Local authorities have repaid £3.2m of this to HM Treasury. The outstanding amount to be repaid in the next few months.
Attempted to recover by local authorities but unsuccessful	£1.2m	Referred to BEIS as debt.

The debt recovery work stream within the department is gaining momentum with further recoveries expected throughout 2022-23. As erroneous payments are identified by local authorities and recovered, the gap between the estimate and recoveries will decrease. However, due to prioritisation of getting money out of the door the majority of payments made in error are unlikely to be recovered by the Department.

Working with others

The Department works closely with various stakeholders. These include partner organisations, Cabinet Office, lenders, local authorities and others. NATIS investigate fraud on behalf of BEIS and National Anti-fraud Network (NAFN) provide local authority intelligence to BEIS and NATIS for investigation.

NATIS

NATIS supplements our capacity to investigate the most serious cases of fraud. They are a law enforcement agency that specialise in fraud and financial crime. They have been partnered with BEIS since September 2020. NATIS provides intelligence gathering, investigation, and prosecution capabilities. In 2021-22, they made 81 arrests (49 BBLs, 32 grants) and over 62 investigations (43 BBLs, 19 grants). The amount they recovered is shown below.

Recovered by NATIS	£5.4m	£3.8m on BBLs £1.1m on grants £2.6m of BBLs has been returned direct to lenders and £1.2m returned to HM Treasury.

National anti-fraud network

BEIS has invested in the National Anti-fraud Network (NAFN). NAFN send rapid intelligence alerts to all local authorities as part of the prevent strategy for grants support the recovery of money. This has prevented at least £17 million in attempted fraud in 20/21.

Cabinet Office

A key tool used by BEIS and local authorities in conjunction with the Cabinet Office is Spotlight, which is software used to support prepayment checks.

The Cabinet Office data analytics programme on the COVID-19 loans has analysed various data sets to highlight potentially fraudulent cases. The data sets include - Companies’ House data, HMRC records, information via the informant hotline and links to serious organised fraud. In line with the FRAs, some examples of businesses they identified were – businesses incorporated after the inception of the schemes, businesses that were dormant prior to the schemes’ opening, business that fabricate turnover figures.

INSS

We used Insolvency Service’s (INSS) resource to investigate misconduct in relation to insolvency and corporate abuse. INSS publish their enforcement outcomes. The 2021-22 report shows there were 802 director disqualifications. Of those 751 were disqualifications on the grounds the director was unfit to be concerned with the management of a company (s6 Company Directors Disqualification Act 1986) including 140 where an allegation of Covid-19 abuse was made. These were predominantly BBLs but also Eat out To Help Out.

Insolvency Service enforcement outcomes: monthly data tables 2021-22.

We also took steps to prevent companies from dissolving with an outstanding BBL. This included blocking such applications, forcing companies to use legitimate liquidation processes, thus improving recovery prospects.

Accounting Officer’s conclusion

I have considered the evidence provided regarding the annual governance statement and the independent assurance provided by ARAC. BEIS received a “moderate” opinion on the framework of governance, risk management and control within the Department for 2021-22 from GIAA which was the same as the previous year.

It has been a challenging year for the Department, which has focussed on supporting businesses and households to manage the consequences and recover from COVID-19; boosting enterprise and innovation; continuing to make progress on BEIS’ net zero ambitions and energy security as well as responding to Russia’s invasion of Ukraine. The Department has demonstrated its adaptability and agility through successful redeployment of staff and prioritisation of effort and resources.

The Department has continued to maintain and develop strong and effective executive governance arrangements, supporting the Department’s priorities and increasing delivery focus. Following the hiatus of some non-executive governance processes during the COVID-19 pandemic, these were re-established and strengthened through the introduction of fresh skills to align with the Department’s focus, and renewed enthusiasm.

The Department made improvements in the control environment as noted by the GIAA. However, there are some areas for development, namely continuing to:

• improve the culture of compliance and work on better aligning the values of the organisation with compliance values
• adapt to the Department’s shift towards delivery, including strengthening and developing capability to support such objectives
• ensure there is good net zero governance across relevant parts of government to deliver a co-ordinated and effective effort in delivering increasingly challenging targets
• develop and embed reporting to support risk, governance and performance oversight arrangements and assurances
• strengthen cyber security to minimise risk in an increasing area of threat
• continue to develop strong and effective relationships with BEIS POs through a programme of reviews and adaption to the new Cabinet Office Sponsorship Code
• focus on debt recovery and prosecutions for fraud in relation to the COVID-19 grant and loan schemes

Overall, I am satisfied that the Department has continued to embed an appropriate system of internal control and risk management during this reporting period and to improve and adapt its governance arrangements in light of the risks being managed. The Department will continue to develop and embed processes to further facilitate and strengthen assurances to enable the Department to move towards a delivery department and respond to current and emerging challenges.

Sarah Munby
Permanent Secretary and Principal Accounting Officer

18 October 2022

Staff report

Overview

The staff report includes staff numbers, workforce cost and composition, consultancy expenditure, off-payroll engagements and exit packages.

Introduction

Our key people focus this year has been on supporting our workforce returning to the office and hybrid working and implementing the government’s living with COVID-19 plan. In addition, during the latter part of 2021-22, prioritising resourcing BEIS work on Ukraine and challenges in the energy market. We continue strive for an inclusive and high-performing culture and our people engagement score continues to show improvement. We achieved a score of 87% for ‘Inclusion and Fair Treatment’ making BEIS, the joint highest scoring department across the Civil Service.

COVID-19 adjustments

We have continued to adapt the Department’s workplace to latest government COVID-19 guidance during 2021-22. As restrictions have allowed, we have encouraged more of our staff to work in a hybrid way, with 40-60% of time spent in an office setting, making the most of face-to-face collaboration with colleagues and stakeholders.

Health, safety, and wellbeing

The health, safety and wellbeing of our people is paramount to BEIS. We have a strong record in providing a safe and supportive work environment.

The Department strives to ensure staff offices are safe, offer suitable equipment are accessible and enhance wellbeing. Staff activities requiring risk assessments have appropriate, proportionate controls and risk management.

In 2021-22, there were no reported accidents within ‘Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013’.

The Wellbeing Strategy covers culture, leadership, support and ownership. The strategy launched with follow up events ensure it has been embedded within the Department.

The Wellbeing offer includes training in resilience, stress management, mental health, health campaigns and disability awareness. Staff have access to the Employee Assistance Programme for confidential counselling and advice for work and life issues. Additionally, 341 Mental Health First Aiders providing first support to those who seek help.

Shared parental leave

During 2021-22, 64 of our employees took advantage of our internal HR Shared Parental Leave (SPL) policy and the flexibilities it offers - just under a 94% rise on last year. Our policy enables our employees to take time off work to share in the care of their baby. They may also be eligible for full pay for some or all the leave - this is an enhancement to the SPL Statutory Pay entitlement.

Most employees who took time off were partners of the birth mother or primary adopter, and this is a similar profile to previous years.

	2021-22	2020-21	2019-20	2018-19
No. of BEIS employees who took SPL under our internal HR ‘Shared Parental Leave Policy’	64	33	35	35

Gender pay gap

The gender gap for the Department has reduced from 2020. Our analysis suggests that the increase in the proportion of women in higher grades and a growth in the number of men at more junior grades (such as, EO) was the main driver reducing the Department’s pay gap figures in 2021. For the full background please see our full Gender Pay Gap Report for 2021.

	Pay gap / Bonus gap
Gender pay gap (mean)	The mean pay of male employees vs mean pay of female employees had a difference of 8.8%.
Gender pay gap (median)	The median gender pay gap was 7.1%.
Bonus gap (mean)	The mean bonus pay to relevant male employees vs mean bonus pay to relevant female employees had a difference of 14.7%.
Bonus gap (median)	The median bonus gap was 13.9%.
Bonus proportions	Men who received a bonus: 85.9% Women who received a bonus: 84.6%
Quartile pay bands	Lower Quartile: Women 61% Men 39% Upper Quartile: Women 43% Men 57%

The Department has undertaken several activities to focus on closing the Gender Pay Gap since first reporting in 2017. We continue to analyse salary, talent, and recruitment data, monitoring progress to identify trends early. BEIS is committed to developing and embedding a truly inclusive culture where diversity and inclusion are a core part of the Department’s working environment.

Staff policies applied for disabled staff

BEIS has a disability leave policy under which paid leave may be granted to employees if they are fit for work but need time off to attend appointments for treatment, rehabilitation, assessment, or in exceptional circumstances, if an individual is not able to work safely or effectively until workplace adjustments are put in place.

Applications

Supporting disabled people at recruitment and throughout their employment is important to BEIS – we are accredited under the Disability Confident Leader scheme.

Continuing employment

We offer reasonable adjustments where practical for both office and home working environments. We support disabled staff or staff with long-term health conditions by carrying out assessments, providing equipment and training. We work closely with our ‘Capability Action’ staff network.

Training and development

Disabled participants of the Future Leaders Scheme (FLS) are offered additional support through the DELTA scheme. DELTA is an accelerated development programme aimed at supporting disabled participants.

Staff engagement

	Engagement score
2021	67%
2020	65%
2019	62%

Source: Civil Service People Survey, Release schedule: annual

In the People Survey 2021, BEIS achieved a response rate of 87%.

We had an engagement index of 67%, an improvement to the People Survey 2020, up by 2 percentage points. The outcomes for all 9 themes that underpin our engagement index were maintained or improved, notably Inclusion and Fair Treatment (up by 2 percentage points, making BEIS the joint highest scoring department across the Civil Service). BEIS is focused on improving the lowest scoring area, which is Learning and Development (60%, maintained from 2020).

This is a positive result given the context the Department continues to operate in, supporting the response to the Ukraine Crisis and COVID-19, and considering that in most areas BEIS scores well above the Civil Service average. The Department has put in place People Survey action plans aligned with the new BEIS Vision to drive forward engagement work over the remainder of the year. We have used hosted conversations led by Senior Civil Servants and all staff meetings to increase engagement with our people throughout the year, and particularly as we have worked remotely. Our ongoing change programmes will provide greater opportunity for growth and development across all our locations.

Diversity and inclusion

Diversity and Inclusion matter to BEIS. We make the most of differences to solve important and complex policy issues facing the country, business and the environment. In doing so, we also continue to make BEIS a great place to work.

During the year we have:

• increased the diversity of our workforce - particularly the representation of Black and ethnic minority staff
• become a Beacon for the Employers Initiative on Domestic Abuse, supporting and encouraging other government departments and business to join us
• launched a new module as part of BEIS Camp to develop D&I skills for line managers
• completed delivery of our race and disability action plans in partnership with our diversity networks
• in the 2021 People Survey, increased to a score of 87% for ‘Inclusion and Fair Treatment’ – ‘see staff engagement’

Staff resource on EU Exit and COVID-19

EU Exit

	2021-22	2020-21	2019-20
Average approximate FTE staff engaged on activities relating to EU Exit	500	1,090	1,130

COVID-19

	2021-22	2020-21
Average approximate FTE staff redeployed onto activities relating to the COVID-19 pandemic response	380	1,290

Trade union facility time

Facility time is time off for employees who are trade union (TU) representatives to carry out their TU roles. TU roles may be duties or activities. Reps are entitled to paid time off to carry out trade union duties. They are not entitled to paid time off for trade union activities. However, an employer can choose to pay for time off for activities.

Relevant union officials

	Core Department and Agencies	Other Agencies not consolidated in the group accounts [Note 1]	Total
Number of trade union representatives employed	57	40	97
Full-time equivalent	53	37	90

Percentage of time spent on facility time

Working hours each representative spent on facility time.

	Core Department and Agencies	Other Agencies not consolidated in the group accounts [Note 1]	Total
0% of working hours	2	3	5
1 - 50% of working hours	55	37	92

Percentage of pay bill spent on facility time

Pay bill refers to the total for all employees, not union representatives only.

	Core Department and Agencies	Other Agencies not consolidated in the group accounts [Note 1]	Total
Total cost of facility time (£)	£129,037	£100,328	£229,365
Total pay bill (£)	£531,720,417	£203,892,000	£735,612,417
Facility time as a % of pay bill	0%	0.1%	0%

Paid trade union activities ^{[Notes 2,3]}

	Core Department and Agencies	Other Agencies not consolidated in the group accounts [Note 1]	Total
(Hours spent on paid trade union activities ÷ total paid facility time hours) * 100	0%	3.8%	1.4%

Notes

1. UK Intellectual Property Office (IPO) and Met Office.
2. Only IPO permitted paid trade union activities (that is internal Union business). This was 123 hours of their total facility time of 1345 hours (9.14%). Activities overlapped with TU duties (that is work directly supporting the workforce).
3. Figure is 0% in BEIS and all other agencies, who permitted paid facility time for trade union duties only.

Staff turnover percentage

The table below shows the staff turnover percentage in 2021-22 for BEIS core and relevant agencies.

Departmental turnover refers to employees who either left the department or the civil service. Turnover refers only to employees who left the civil service.

Turnover is actively monitored. BEIS workforce has seen further expansion, with much of the additional resource focused on net zero. The Department continues to look for ways to improve the employee experience using feedback from the People Survey and learning and development opportunities.

	Departmental turnover 2021-22	Turnover 2021-22	Departmental turnover 2020-21	Turnover 2020-21
Core Department	14.9%	6.1%	11.5%	4.5%
ACAS	10.7%	6.1%	5.3%	9.3%
Companies House	11.3%	7.4%	5.3%	3.8%
Insolvency service	10.4%	5.4%	7.0%	4.3%
UK Intellectual Property Office	6.5%	4.4%	4.3%	2.8%
Met Office	10.2%	10.2%	4.5%	4.5%
UK Space Agency	26.9%	13.8%	21.0%	3.8%

Notes

1. The list of BEIS partner organisations above are consistent with those in the Annual Civil Service Employee Survey (ASCES), as determined by the Cabinet Office.

Sickness absence data

The table below shows average working days lost to sickness absence.

	2021-22	2020-21
Core Department	3.4	2.4
Companies House	7.2	4.2
Insolvency Service	6.6	5.6
UK Space Agency	7.0	7.4

Staff composition

The table below shows staff composition as at 31 March 2022. ^{[Notes 1,2]}

The figures reflect the criteria below:

• Headcount as at 31 March 2022
• Permanent and fixed term contracts
• Active and inactive workers - inactive workers were those on maternity leave, outward loans, etc
• Civil Service fast streamers on BEIS payroll

Gender

	2021-22	2020-21	2019-20
All employees	6,009	5,210	4,309
Men	50%	51%	53%
Women	50%	49%	47%
Senior civil servants	336	313	242
Men	51%	56%	55%
Women	49%	44%	45%
Executive committee [Note 3]	19	16	16
Men	58%	63%	63%
Women	42%	38%	38%

Disability

	2021-22	2020-21	2019-20
Declaration rate	87%	83%	75%
representation for staff who have declared:
No	83%	83%	84%
Yes	11%	11%	10%
prefer not to say	6%	6%	6%

Ethnicity

	2021-22	2020-21	2019-20
Declaration rate	92%	89%	79%
representation for staff who have declared:
White	71%	73%	78%
BAME	24%	22%	18%
prefer not to say	5%	5%	4%

Sexual orientation

	2021-22	2020-21	2019-20
Declaration rate	92%	89%	80%
representation for staff who have declared:
Straight	81%	80%	84%
LGBO	9%	10%	8%
prefer not to say	10%	10%	8%

Notes

1. The figures differ from staff numbers on page 97 [Staff numbers (audited information)]. They align with staff numbers in the Annual Civil Service Employee Survey (ACSES), based on ONS definitions.
2. 2019-20 figures excluded inactive employees.
3. For the gender table only, prior year figures were FTE, and from 2021-22 changed to headcount. But this does not have a significant impact on the overall % splits.

Number of senior civil servants by band

The table below shows the number of senior civil servants (SCS), grouped by their salary bands.

Salary bands represent actual salary rates. Bonuses are not included. The figures reflect the criteria below:

• FTE as at 31 March 2022
• Permanent and fixed term contracts
• Active workers only - inactive workers were those on maternity leave, outward loans etc

The remuneration of senior civil servants is based on performance ratings. These ratings are determined by the permanent secretary and directors general. Names of those in post during the year are listed below.

	Number of SCS staff as at 31 March 2022	Number of SCS staff as at 31 March 2021
Below £55,000	-	2
£55,000-£59,999	-	-
£60,000 - £64,999	1	12
£65,000 - £69,999	1	8
£70,000 - £74,999	137	135
£75,000 - £79,999	57	49
£80,000 - £84,999	24	18
£85,000 - £89,999	11	6
£90,000 - £94,999	39	27
£95,000 - £99,999	11	14
£100,000 - £104,999	8	7
£105,000 - £109,999	4	3
£110,000 - £114,999	3	2
£115,000 - £119,999	1	1
£120,000 - £124,999	6	3
£125,000 - £129,999	1	3
£130,000 - £134,999	3	4
£135,000 - £139,999	3	1
£140,000 - £144,999	1	1
£145,000 - £149,999	1	-
£150,000 - £154,999	1	2
£155,000 - £159,999	-	-
£160,000 - £164,999	2	2
£170,000 - £174,999	-	-
£180,000 - £184,999	2	2
Total	317	302

Permanent secretary

• Sarah Munby

Directors general

• David Bickerton (from 2 Aug 2021)
• Caleb Deeks (to 13 Dec 2021)
• Freya Guinness (Chief Operating Officer, from 19 Apr 2021)
• Ashley Ibbett
• Gavin Lambert (from 13 Dec 2021)
• Lee McDonough (from 7 Jun 2021)
• Madelaine McTernan
• Professor Paul Monks (Chief Scientific Adviser)
• Ben Rimmington (from 28 Jun 2021)
• Jo Shanmugalingam
• Joanna Whittington
• Cath Bremner (acting to 1 Jun 2021)
• Ben Golding (acting to 28 Jun 2021)
• Jaee Samant (to 31 Oct 2021)

Staff numbers (audited information)

The table below shows staff numbers in 2021-22. The figures reflect the criteria below.

• FTE average for 2021-22.
• Permanent and fixed term contracts.
• Active workers only – inactive workers are excluded such as those on maternity leave, outward loans etc.
• Civil Service fast streamers on BEIS payroll

	Permanent employed staff 2021-22	Others 2021-22	Ministers 2021-22	Special advisers 2021-22	Total 2021-22	Total 2020-21
Core Department	5,625	230	7	3	5,865	4,884
Agencies	2,978	50	-	-	3,028	3,026
Sub total	8,603	280	7	3	8,893	7,910
Non departmental public bodies (NDPBs)	14,011	2,282	-	-	16,293	15,701
Total	22,614	2,562	7	3	25,186	23,611

Staff costs (audited information)

During the year, £23,831,552 of staff costs were capitalised, (2020-21: £15,972,717) and 510 employees (2020-21: 338 employees) in the Departmental Group were engaged on capital projects.

Staff severance costs for current and prior year are included in wages and salaries. Further detail on exit packages is included on page 99 [Exit packages - Civil Service and other compensation schemes - audited information].

Included within the total net costs of other staff shown below are ministers’ total net costs of £280,833 (2020-21: £284,739).

	Permanent employed staff 2021-22 £m	Others 2021-22 £m	Total 2021-22 £m	2020-21 restated Total £m
Wages and salaries	1,098	123	1,221	1,111
Social security costs	158	-	158	108
Other pension costs	280	-	280	242
Sub total	1,536	123	1,659	1,461
Less recoveries in respect of outward secondments	(10)	(17)	(27)	(7)
Total net costs	1,526	106	1,632	1,454
Of which:
Core Department and Agencies	522	38	560	497
NDPBs and other designated bodies	1,004	68	1,072	957
Total net costs	1,526	106	1,632	1,454

Principal Civil Service Pension Scheme

Nuclear site licence companies are not included in these pension schemes.

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS), known as ‘Alpha’, are an unfunded multi-employer defined benefit scheme in which the Department is unable to identify its share of the underlying assets and liabilities. The scheme actuary valued the PCSPS as at 31 March 2016. Further details can be found in the resource accounts of the Cabinet Office Civil Superannuation.

For 2021-22, employer contributions of £155,482,772 were payable to the PCSPS (2020-21: £140,041,099) at 1 of 4 rates in the range 26.6% to 30.3% (2020-21: 26.6% to 30.3%) of pensionable pay, based on salary bands.

The scheme’s actuary reviews employer contributions usually every 4 years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2021-22 to be paid when the member retires and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employers’ contributions of £1,387,160 (2020-21: £1,390,271) were paid to one or more of the panel of 3 appointed stakeholder pension providers. Employer contributions are age-related and range from 8% to 14.75%. Employers also match employee contributions up to 3% of pensionable earnings. In addition, employer contributions of £22,482 (2020-21: £19,066), 0.5% (2020-21: 0.5%) were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service and ill health retirement of these employees.

Contributions due to/ (from) the partnership pension providers at 31 March 2022 were £-1,589 (2020-21: £26,147). Contributions prepaid at that date were £nil (2020-21: £nil).

Ill-health retirement

In 2021-22, 30 persons (2020-21: 31 persons) across the Departmental Group retired early on ill-health grounds; the total additional accrued pension liabilities in the year amounted to £1,094,226 (2020-21: £1,962,034).

Other pension schemes

Employer contributions to other pension schemes in 31 March 2022, amounted to £295,072,090 (2020-21: £254,056,970). Employer contributions include employers’ contributions, current service costs and where appropriate past service costs of funded pension schemes. Further details can be found in the accounts of the Department’s NDPBs and other designated bodies. A list of these bodies is provided in note 29.

Nuclear site licence companies: staff numbers and costs (audited information)

Staff costs for nuclear site licence companies (SLCs) are disclosed separately, as they are included in the amounts shown for utilisation in NDA’s nuclear decommissioning provision in note 18 rather than being reported as staff costs in the Statement of Comprehensive Net Expenditure.

	Permanent employed staff 2021-22	Others 2021-22	Total 2021-22	Total 2020-21 (restated)
Number of staff (full time equivalent)	14,481	1,108	15,589	15,194
Costs
Wages and salaries (£m)	802	67	869	871
Social security costs (£m)	91	-	91	89
Other pension costs (£m)	172	-	172	144
Total costs (£m)	1,065	67	1,132	1,104

Exit packages - Civil Service and other compensation schemes - audited information

Redundancy and other departure costs have been paid in accordance with the provisions of the Civil Service Compensation Scheme (CSCS), a statutory scheme made under the Superannuation Act 1972.

Where the Department has agreed early retirements, the additional costs are met by the Department and not by the Civil Service pension scheme. Ill-health retirement costs are met by the pension scheme and are not included in the table.

The table below shows the total cost of exit packages agreed and accounted for in 2021-22. £5,436,515 exit costs were paid in 2021-22, the year of departure (2020-21: £7,976,011).

By amount

	2021-22 Number of compulsory redundancies	2021-22 Number of other departures agreed	2021-22 Total number of exit packages by cost band	2020-21 Number of compulsory redundancies	2020-21 Number of other departures agreed	2020-21 Total number of exit packages by cost band
Less than £10,000	3	16	19	12	22	34
£10,000‑£25,000	6	33	39	19	27	46
£25,000‑£50,000	3	17	20	13	40	53
£50,000‑£100,000	3	17	20	3	38	41
£100,000‑£150,000	-	-	-	-	7	7
£150,000‑£200,000	-	1	1	-	-	-
Total number	15	84	99	47	134	181

By group

	2021-22 Number of compulsory redundancies	2021-22 Number of other departures agreed	2021-22 Total number of exit packages by cost band	2020-21 Number of compulsory redundancies	2020-21 Number of other departures agreed	2020-21 Total number of exit packages by cost band
Core Department and Agencies	-	8	8	-	1	1
NDPBs and other designated bodies	15	76	91	47	133	180
Total number	15	84	99	47	134	181

Total cost

	2021-22 Cost of compulsory redundancies	2021-22 Cost of other departures agreed	2021-22 Total cost of exit packages by cost band	2020-21 Cost of compulsory redundancies	2020-21 Cost of other departures agreed	2020-21 Total cost of exit packages by cost band
Total cost (£)	416,253	2,765,946	3,182,199	1,035,715	6,120,516	7,156,231
Of which: Core Department and Agencies	-	452,940	452,940	-	69,000	69,000
Of which: NDPBs and other designated bodies	416,253	2,313,006	2,729,259	1,035,715	6,051,516	7,087,231

Staff redeployments

The table below shows the number of outward and inward staff loans as at 31 March 2022.

Staff loaned (outward staff loans) refer to staff permanently employed by the Core Department, who were on loan to another organisation.

Staff hosted (inward staff loans) refer to people attached to the Core Department, who were on loan from other organisations.

As the home department, costs that related to outward staff loans which were short-term, were charged to the administration budget, if the Core Department paid the cost.

As the host department, costs relating to inward staff loans which were short-term, were charged to the administration budget if the Core Department did pay the cost.

The Department does not currently hold information centrally to support disclosure of average likely durations of redeployments.

Loans into the Core Department

Staff grade	Short term	Long term	Short term Non-payroll	Short term Payroll	Long term Non-payroll	Long term Payroll
AO	-	1	-	-	1	-
EO	-	8	-	-	7	1
FAST	1	-	-	1	-	-
HEO	1	14	-	1	8	6
SEO	1	19	1	-	7	12
G6	1	17	1	-	9	8
G7	-	35	-	-	14	21
SCS1	-	6	-	-	2	4
SCS2	-	5	-	-	3	2
Total	4	105	2	2	51	54

Loans out of the Core Department

Staff grade	Short term	Long term	Short term Non-payroll	Short term Payroll	Long term Non-payroll	Long term Payroll
AO	-	1	-	-	1	-
EO	1	11	1	-	11	-
FAST	2	5	2	-	4	1
HEO	1	36	-	1	35	1
SEO	-	21	-	-	21	-
G6	-	15	-	-	15	-
G7	3	48	1	2	48	-
SCS1	-	12	-	-	12	-
SCS2	-	2	-	-	2	-
Total	7	151	4	3	149	2

Consultancy and temporary staff expenditure

The Departmental Group’s expenditure on consultancy in 2021-22 was £174.3 million (2020-21: £137.3 million). The consultancy expenditure of executive agencies was £8.2 million (2020-21: £8.4 million) and the consultancy expenditure relating to arm’s length bodies was £67.2 million (2020-21: £46.9 million) of which £27.5 million (2020-21: £32.2 million) was related to SLCs.

Consultants are hired to work on projects in a number of specific situations:

• where the Department does not have the skills set required
• where the requirement falls outside the core business of civil servants
• where an external, independent perspective is required

When used appropriately, consultancy can be a cost effective and efficient way of getting the temporary and skilled external input that the Department needs.

The Departmental Group’s expenditure on temporary staff in 2021-22 was £106.3 million (2020-21: £100.5 million), as detailed in the staff costs note below. We are committed to the consistent application of the Cabinet Office’s 2010 controls on consultancy and other spending.

Off-payroll engagements

Off-payroll engagements refer to workers paid off-payroll, without deducting tax and national insurance at source, typically contractors.

The tables below show the number of off-payroll engagements which earned £245 per day or more.

Table 1a: Highly paid off-payroll worker engagements as at 31 March 2022, earning £245 per day or greater

Core Department and Agencies

	Total number	Existed less than 1 year	Existed 1-2 years	Existed 2-3 years	Existed 3-4 years	Existed 4 years or more
Core Department[Note 1]	129	66	33	2	28	-
Companies House	57	37	11	6	0	3
Insolvency Service	23	14	8	-	1	-
UK Space Agency	20	16	3	1	0	0

Consolidated in the Departmental Group accounts, (excluding nuclear site licence companies)

	Total number	Existed less than 1 year	Existed 1-2 years	Existed 2-3 years	Existed 3-4 years	Existed 4 years or more
Advisory, Conciliation and Arbitration Service	9	8	1	-	-	-
British Business Bank plc	23	19	4	-	-	-
British Business Financial Services Ltd	23	19	4	-	-	-
Civil Nuclear Police Authority	10	4	3	-	1	2
Coal Authority	5	4	-	1	-	-
Competition Appeal Tribunal and Competition Service	2	-	-	-	1	1
Diamond Light Source Ltd	6	4	1	1	-	-
Low Carbon Contracts Company Ltd	-	-	-	-	-	-
Nuclear Decommissioning Authority	22	18	2	1	1	-
Oil and Gas Authority	3	2	-	-	-	1
Salix Finance Limited	3	3	-	-	-
UK Atomic Energy Authority	287	119	54	42	27	45
UK Research and Innovation	184	118	47	9	3	7
UK Shared Business Services Ltd	9	3	5	1	-	-

Not consolidated in Departmental Group accounts

	Total number	Existed less than 1 year	Existed 1-2 years	Existed 2-3 years	Existed 3-4 years	Existed 4 years or more
Groceries Code Adjudicator	1	-	-	-	1	-
Pubs Code Adjudicator	1	-	-	-	-	1
Small Business Commissioner	3	-	-	-	3	-

All

	Total number	Existed less than 1 year	Existed 1-2 years	Existed 2-3 years	Existed 3-4 years	Existed 4 years or more
Total	820	454	176	64	66	60

Notes
1. The number of highly paid off-payroll contingent worker engagements in the Core Department decreased between 2020-21 and 2021-22 due to the changing resource requirements in managing the COVID-19 emergency response and Vaccines Taskforce. The basis of calculation for the length of off-payroll contingent worker engagements was revised in 2021-22. This results in nil workers within the 4 or more years category for 2021-22.

Table 2a: All highly paid off-payroll workers engaged at any point during the year ended 31 March 2022, earning £245 per day or greater

Core Department and Agencies

	No. of temporary off-payroll workers engaged during the year ended 31 March 2022	Of which: Not subject to off-payroll legislation	Of which: Subject to off-payroll legislation and determined as in-scope of IR35	Of which: Subject to off-payroll legislation and determined as out-of-scope of IR35	No. of engagements reassessed for compliance or assurance purposes during the year	Of which: No. of engagements that saw a change to IR35 status following review
Core Department[Note 1]	304	157	18	129	-	-
Companies House	130	69	-	61	-	-
Insolvency Service	109	-	100	9	109	-
UK Space Agency	37	0	20	17	0	0

Consolidated in the Departmental Group accounts, (excluding nuclear site licence companies)

	No. of temporary off-payroll workers engaged during the year ended 31 March 2022	Of which: Not subject to off-payroll legislation	Of which: Subject to off-payroll legislation and determined as in-scope of IR35	Of which: Subject to off-payroll legislation and determined as out-of-scope of IR35	No. of engagements reassessed for compliance or assurance purposes during the year	Of which: No. of engagements that saw a change to IR35 status following review
Advisory, Conciliation and Arbitration Service	14	10	-	4	-	-
British Business Bank plc	63	-	59	4	3	-
British Business Financial Services Ltd	60	-	57	3	3	-
The Start-up Loans Company	3	-	2	1	-	-
Civil Nuclear Police Authority	10	-	2	8	5	-
Coal Authority	10	10	-	-	-	-
Competition Appeal Tribunal and Competition Service	2	2	-	-	-	-
Diamond Light Source Ltd	6	-	6	-	1	-
Low Carbon Contracts Company Ltd	1	-	1	-	-	-
Nuclear Decommissioning Authority	37	25	12	-	12	-
Oil and Gas Authority	5	-	-	5	-	-
Salix Finance Limited	3	-	3	-	-	-
UK Atomic Energy Authority	329	313	-	16	5	-
UK Research and Innovation	350	-	285	65	161	2
UK Shared Business Services Ltd	9	-	-	9	9	-

Not consolidated in Departmental Group accounts

	No. of temporary off-payroll workers engaged during the year ended 31 March 2022	Of which: Not subject to off-payroll legislation	Of which: Subject to off-payroll legislation and determined as in-scope of IR35	Of which: Subject to off-payroll legislation and determined as out-of-scope of IR35	No. of engagements reassessed for compliance or assurance purposes during the year	Of which: No. of engagements that saw a change to IR35 status following review
Groceries Code Adjudicator	1	-	-	1	1	-
Pubs Code Adjudicator	1	-	-	1	-	-
Small Business Commissioner	3	-	-	3	-	-

All

	No. of temporary off-payroll workers engaged during the year ended 31 March 2022	Of which: Not subject to off-payroll legislation	Of which: Subject to off-payroll legislation and determined as in-scope of IR35	Of which: Subject to off-payroll legislation and determined as out-of-scope of IR35	No. of engagements reassessed for compliance or assurance purposes during the year	Of which: No. of engagements that saw a change to IR35 status following review
Total	1,487	586	565	336	309	2

Notes
1. The number of highly paid off-payroll contingent worker engagements in the Core Department decreased between 2020-21 and 2021-22 due to the changing resource requirements in managing the COVID-19 emergency response and Vaccines Taskforce.

Table 3a: For any off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2021 and 31 March 2022

Core Department and Agencies

	No. of off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, during the financial year	Total no. of individuals on payroll and off-payroll that have been deemed “board members and/or senior officials with significant financial responsibility”, during the financial year.
Core Department	-	22
Companies House	-	7
Insolvency Service	-	11
UK Space Agency	-	15

Consolidated in the Departmental Group accounts, (excluding nuclear site licence companies)

	No. of off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, during the financial year	Total no. of individuals on payroll and off-payroll that have been deemed “board members and/or senior officials with significant financial responsibility”, during the financial year.
Advisory, Conciliation and Arbitration Service	-	8
Central Arbitration Committee	-	1
Certification Office for Trade Union and Employers’ Associations	-	1
British Business Bank plc	-	10
British Business Aspire Holdco Ltd	-	2
British Business Finance Ltd	-	10
British Business Financial Services Ltd	-	10
British Business Investments Ltd	-	5
BBB Patient Capital Holdings Ltd	-	2
British Patient Capital Limited	-	4
Capital for Enterprise Fund Managers Ltd	-	3
Capital for Enterprise (GP) Ltd	-	2
Capital for Enterprise Limited	-	2
The Start-up Loans Company	-	2
Civil Nuclear Police Authority	9	14
Coal Authority	-	14
Competition Appeal Tribunal and Competition Service	2	6
Diamond Light Source Ltd	-	6
The Financial Reporting Council Ltd	-	2
UK Accounting Standards Endorsement Board Limited	-	2
Low Carbon Contracts Company Ltd	-	10
Nuclear Decommissioning Authority	-	16
Nuclear Decommissioning Authority Archives Ltd	-	3
Radioactive Waste Management Ltd	-	-
Oil and Gas Authority	-	9
Salix Finance Limited	-	5
UK Atomic Energy Authority	-	14
AEA Insurance Ltd	3	4
UK Research and Innovation	–	25
UK Shared Business Services Ltd	–	2

Not consolidated in Departmental Group accounts

	No. of off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, during the financial year	Total no. of individuals on payroll and off-payroll that have been deemed “board members and/or senior officials with significant financial responsibility”, during the financial year.
British Hallmarking Council	–	1
Committee on Climate Change	–	12
Groceries Code Adjudicator	–	2
Pubs Code Adjudicator	–	1
Small Business Commissioner	3	4

All

	No. of off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, during the financial year	Total no. of individuals on payroll and off-payroll that have been deemed “board members and/or senior officials with significant financial responsibility”, during the financial year.
Total	17	266

Details of the exceptional circumstances that led to the off-payroll engagement of board members/ senior officials with significant financial responsibility.

Competition Appeal Tribunal and Competition Service

The President of the Tribunal has a statutory duty to provide training to members of the Tribunal. One off-payroll member was appointed as a training provider. The individual has been a member of the Tribunal since its inception and has knowledge of its processes and case histories. The individual was appointed in 2013, the contract has been renewed and currently ends in March 2023.

The second off-payroll member assists the first member in preparing training and is planned to succeed the first member on their departure. The individual was appointed in 2019, and their contract runs to January 2024.

AEA Insurance Ltd

From 2002 and 2005 respectively:

AEAIL is a captive insurance company registered in the Isle of Man and subject to their tax and NI legislation. AEAIL does not employ anyone. AEAIL directors are off-payroll by default and are paid a small fee by AEAIL.

From October 2019:

A quarter off-payroll director of AEAIL is a director of UKAEA and on UKAEA payroll and included in the UKAEA line.

Civil Nuclear Police Authority

The figures represent board members who sit on the board as part of the required governance process. They are remunerated by the parent company, hence why they are not part of the payroll within the Civil Nuclear Police Authority.

One individual’s contract ended in December 2021. One was interim Chair from 01 January 2022 to 12 October 2022 - they are now on payroll. Two were in post for the final 3 months of the 2021-22 financial year. The remaining 5 were on appointment for the full 12 months.

LLW Repository Ltd

The 1 off-payroll post holder was supplied by the parent body organisation as required by contractual arrangements with NDA (since 1 Dec 2015). This arrangement stopped on 12th July 2021 due to LLWR becoming a subsidiary of the NDA.

Small Business Commissioner

The Office of the Small Business Commissioner has 3 non-executive directors (Ned) for the Audit & Risk Assurance Committee (ARAC) & Board Meetings. They are contracted to work with the Small Business Commissioner for 8 days a year and paid a daily rate. All 3 Neds started in 2019 and are contracted up to 2023.

SLCs: off-payroll engagements

SLCs fall within the Departmental accounting boundary and are subsidiaries of the NDA they deliver work for NDA but operate with a high degree of autonomy.

SLCs high number of off-payroll workers, represent a small proportion of the overall workforce. There is a need to bring in unique skills and experience which cannot be found in house, due to the specialised and project driven nature of their work.

Table 1b: Highly paid off-payroll worker engagements as at 31 March 2022, earning £245 per day or greater

	Total number	Existed less than 1 year	Existed 1-2 years	Existed 2-3 years	Existed 3-4 years	Existed 4 or more years
Dounreay Site Restoration Ltd	2	2	-	-	-	-
LLW Repository Ltd	19	8	4	1	4	2
Magnox Ltd	43	3	8	5	11	16
Sellafield Ltd	192	59	24	15	31	63
Total	256	72	36	21	46	81

Table 2b: All highly paid off-payroll workers engaged at any point during the year ended 31 March 2022, earning £245 per day or greater

	No. of off-payroll workers engaged during the year ended 31 March 2022	Of which: Not subject to off-payroll legislation	Of which: Subject to off-payroll legislation and determined as in-scope of IR35	Of which: Subject to off-payroll legislation and determined as out-of-scope of IR35	No. of engagements reassessed for compliance or assurance purposes during the year	Of which: No. of engagements that saw a change to IR35 status following review
Dounreay Site Restoration Ltd	2	-	-	2	-	-
LLW Repository Ltd	26	26	-	-	-	-
Magnox Ltd	65	-	48	17	43	4
Sellafield Ltd	279	27	174	78	-	-
Total	372	53	222	97	43	4

Table 3b: For any off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2021 and 31 March 2022

	No. of off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, during the financial year	Total no. of individuals on payroll and off-payroll that have been deemed “board members and/or senior officials with significant financial responsibility”, during the financial year.
Dounreay Site Restoration Ltd	0	9
LLW Repository Ltd	1	16
Magnox Ltd	-	2
Sellafield Ltd	-	1
Total	1	28

Details of the exceptional circumstances that led to the off-payroll engagement of board members/ senior officials with significant financial responsibility.

LLW Repository Ltd

The one off-payroll post holder was supplied by the parent body organisation as required by contractual arrangements with NDA (since 1 Dec 2015). This arrangement stopped on 12th July 2021 due to LLWR becoming a subsidiary of the NDA.

Remuneration report

Overview

The remuneration report sets out the remuneration policy and the amounts awarded to BEIS ministers and directors. Just like the staff report, it is fundamental to demonstrating transparency and accountability to Parliament.

Service contracts

The Constitutional Reform and Governance Act 2010 requires Civil Service appointments to be made on merit on the basis of fair and open competition. The Recruitment Principles published by the Civil Service Commission specify the circumstances when appointments may be made otherwise.

Unless otherwise stated below, the officials covered by this report hold appointments which are open-ended. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Further information about the work of the Civil Service Commission.

Remuneration policy

Ministers

Remuneration of ministers is determined in accordance with the provisions of the Ministerial and other Salaries Act 1975 (as amended by The Ministerial and other Salaries Order 1996) and the Ministerial and other Pensions and Salaries Act 1991.

Executive directors/ senior officials

The Senior Salaries Review Body provides independent advice to the Prime Minister on the remuneration of senior civil servants. The review body considers economic considerations such as local variations in labour markets and funds available to departments. Further information about the work of the Senior Salaries review body.

Ministers - single total figure of remuneration (audited information)

The table below shows each component, and the single total figure of remuneration for each minister in 2021-22.

Where ministers have moved to or from another department during the year, details of any remuneration relating to their subsequent or prior roles will be in that department’s remuneration report. Ministers who transfer from another department continue being paid at the appropriate rate of pay with effect from the first day of the month following the date of appointment. Former ministers who transfer to other departments are paid at their current rate of pay up to the end of the month. Any increase in ministers’ salaries on transfer from the date of appointment is paid by their new department.

Secretary of State

	2021-22 Salary[Note 1] £	2021-22 Full year equivalent salary if different £	2021-22 Pension benefits[Note 2] to nearest £1,000	2021-22 Total to nearest £1,000	2020-21 Salary [Note 1] £	2020-21 Full year equivalent salary if different £	2020-21 Pension benefits[Note 2] to nearest £1,000	2020-21 Total to nearest £1,000
Rt Hon Kwasi Kwarteng MP[Note 8]	67,505	-	17,000	85,000	39,962	67,505	10,000	50,000

Ministers of State

	2021-22 Salary[Note 1] £	2021-22 Full year equivalent salary if different £	2021-22 Pension benefits[Note 2] to nearest £1,000	2021-22 Total to nearest £1,000	2020-21 Salary[Note 1] £	2020-21 Full year equivalent salary if different £	2020-21 Pension benefits[Note 2] to nearest £1,000	2020-21 Total to nearest £1,000
Lord Grimstone	–	–	–	–	–	–	–	–
Rt Hon Greg Hands MP (from 15 Sep 2021)[Note 3]	15,840	31,680	5,000	21,000	-	-	-	-
Anne-Marie Trevelyan MP (to 14 Sep 2021)	15,840	31,680	3,000	19,000	7,324	31,680	2,000	9,000

Parliamentary Under-Secretaries of State

	2021-22 Salary[Note 1] £	2021-22 Full year equivalent salary if different £	2021-22 Pension benefits[Note 2] to nearest £1,000	2021-22 Total to nearest £1,000	2020-21 Salary[Note 1] £	2020-21 Full year equivalent salary if different £	2020-21 Pension benefits[Note 2] to nearest £1,000	2020-21 Total to nearest £1,000
Lord Callanan[Note 4]	107,335	-	18,000	125,000	107,335	-	17,000	125,000
Paul Scully MP[Note 5]	22,375	-	6,000	28,000	22,375	-	5,000	28,000
Lee Rowley MP (from 16 Sep 2021)[Note 6]	–	–	–	–	–	–	–	–
George Freeman MP (from 17 Sep 2021)	12,058	22,375	3,000	15,000	-	-	-	-
Amanda Solloway MP (to 15 Sep 2021)	11,187	22,375	2,000	13,000	22,375	-	5,000	28,000
Nadhim Zahawi MP (to 14 Sep 2021)[Note 7]	–	–	–	–	–	–	–	–

Notes
1. Salary information excludes employers’ national insurance contributions. None of the ministers of the Department received benefits in kind during the year. Minsters in the House of Commons are remunerated on a different basis to those in the House of Lords as explained in Notes to the Remuneration report.
2. The value of pension benefits accrued during the year is calculated as (real increase in pension multiplied by 20) less (contributions made by the individual). Real increase excludes increases due to inflation or any increase or decrease due to transfer of pension rights.
3. Previously Minister of Trade for the Department for International Trade.
4. Full year equivalent salary includes £36,366 Lords Office Holders Allowance.
5. Jointly Parliamentary Under Secretary of State in BEIS and Minister for London.
6. Parliamentary Under-Secretary in BEIS and Government Whip, Lord Commissioner of HM Treasury; paid by HM Treasury.
7. Jointly Parliamentary Under-Secretary for the Department of Health and Social Care and BEIS; does not draw salary or pension benefits.
8. Secretary of State from 8 January 2021, therefore 2020-21 salary received was not reflective of a full year.

Ministers - pension benefits (audited information)

The table below shows the pension entitlements for each minister.

Secretary of State

	Pension benefits at age 65 as at 31 March 2022, £’000	Real increase in pension at age 65, £’000	CETV at 31 March 2022 [Note 1], £’000	CETV at 31 March 2021 [Note 1], £’000	Real increase in CETV, £’000
Rt Hon Kwasi Kwarteng MP	0-5	0-2.5	32	16	7

Ministers of State

	Pension benefits at age 65 as at 31 March 2022, £’000	Real increase in pension at age 65, £’000	CETV at 31 March 2022[Note 1], £’000	CETV at 31 March 2021[Note 1], £’000	Real increase in CETV, £’000
Lord Grimstone[Note 2]	–	–	–	–	–
Rt Hon Greg Hands MP (from 15 Sep 2021)	5-10	0-2.5	93	85	3
Anne-Marie Trevelyan MP (to 14 Sep 2021)	0-5	0-2.5	17	14	2

Parliamentary Under-Secretaries of State

	Pension benefits at age 65 as at 31 March 2022, £’000	Real increase in pension at age 65, £’000	CETV at 31 March 2022[Note 1], £’000	CETV at 31 March 2021[Note 1], £’000	Real increase in CETV, £’000
Lord Callanan	15-20	0-2.5	109	84	13
Paul Scully MP	5-10	0-2.5	12	6	3
Lee Rowley MP (from 16 Sep 2021)[Note 3]	-	-	-	-	-
George Freeman (from 17 Sep 2021)	0-5	0-2.5	23	20	1
Amanda Solloway MP (to 15 Sep 2021)	0-5	0-2.5	10	7	2
Nadhim Zahawi MP (to 14 Sep 2021)[Note 4]	-	-	-	-	-

Notes
1. Where ministers joined or left during the year, their CETV opening or closing amounts are as at their joining or leaving dates. See Notes to the Remuneration report for explanation of CETV.
2. Does not draw salary or pension benefits.
3. Does not draw salary or pension benefits.
4. Does not draw salary or pension benefits.

Senior officials - single total figure of remuneration (audited information)

The table below shows each component, and the single total figure of remuneration for each senior official in 2021-22. Senior officials comprise members of the executive committee.

Where officials have moved to or from a similar senior role in another department during the year, details of any remuneration relating to their subsequent or prior roles will be in that department’s remuneration report.

Permanent secretary

	Salary[Note 1] 2021-22, £’000	Full year equivalent salary if different 2021-22, £’000	Bonus 2021-22, £’000	Pension[Note 2] 2021-22, to nearest £1,000	Total 2021-22, £’000	Salary[Note 1] 2020-21, £’000	Full year equivalent salary if different 2020-21, £’000	Bonus 2020-21, £’000	Pension[Note 2] 2020-21, to nearest £1,000	Total 2020-21, £’000
Sarah Munby[Note 3]	160-165	-	-	62	220-225	150-155	160-165	-	53	205-210

Directors general

	Salary[Note 1] 2021-22, £’000	Full year equivalent salary if different 2021-22, £’000	Bonus 2021-22, £’000	Pension[Note 2] 2021-22, to nearest £1,000	Total 2021-22, £’000	Salary[Note 1] 2020-21, £’000	Full year equivalent salary if different 2020-21, £’000	Bonus 2020-21, £’000	Pension[Note 2] 2020-21, to nearest £1,000	Total 2020-21, £’000
David Bickerton (from 2 Aug 2021) [Note 4]	85-90	130-135	-	-	85-90	-	-	-	-	-
Caleb Deeks (from 13 Dec 2021) [Note 5,6]	25-30	80-85	-	18	40-45	0-5	100-105	5-10	9	20-25
Freya Guinness (from 19 Apr 2021) [Note 7]	140-145	145-150	-	58	195-200	-	-	-	-	-
Ashley Ibbett	120-125	-	-	54	170-175	130-135	120-125	5-10	133	270-275
Gavin Lambert (from 13 Dec 2021) [Note 5,6]	25-30	85-90	-	24	45-50	-	-	-	-	-
Lee McDonough (from 7 Jun 2021) [Note 8]	105-110	130-135	-	13	120-125	-	-	-	-	-
Madelaine McTernan [Note 9]	180-185	-	-	-	180-185	45-50	180-185	-	-	45-50
Paul Monks [Note 10]	105-110	-	-	41	145-150	50-55	105-110	-	21	70-75
Ben Rimmington (to 28 Jun 2021) [Note 11]	90-95	120-125	-	89	175-180	-	-	-	-	-
Jo Shanmugalingam [Note 12]	110-115	-	5-10	30	145-150	110-115	110-115	-	91	200-205
Joanna Whittington	160-165	-	5-10	44	210-215	160-165	-	5-10	67	235-240
Jaee Samant (to 31 Oct 2021)	80-85	130-135	5-10	14	100-105	130-135	-	5-10	69	205-210
Cath Bremner (to 6 Jun 2021) [Note 13]	20-25	135-140	-	9	30-35	10-15	125-130	-	5	15-20
Ben Golding (from 30 Jun 2021)	30-35	120-125	5-10	28	65-70	10-15	120-125	-	13	20-25

Directors

	Salary[Note 1] 2021-22, £’000	Full year equivalent salary if different 2021-22, £’000	Bonus 2021-22, £’000	Pension[Note 2] 2021-22, to nearest £1,000	Total 2021-22, £’000	Salary[Note 1] 2020-21, £’000	Full year equivalent salary if different 2020-21, £’000	Bonus 2020-21, £’000	Pension[Note 2] 2020-21, to nearest £1,000	Total 2020-21, £’000
Simon Hulme	180-185	-	-	69	245-250	80-85	180-185	-	31	110-115
Alice Hurrell	120-125	-	5-10	23	150-155	80-85	105-110	10-15	73	175-180
Dan Micklethwaite	100-105	-	0-5	33	135-140	40-45	100-105	-	16	55-60
Abigail Morris (from 1 Aug 2021) [Note 14]	70-75	110-115	0-5	-	75-80	-	-	-	-	-
Tom Taylor	130-135	-	5-10	27	165-170	130-135	-	5-10	48	185-190
Doug Watkins (to 31 Mar 2022) [Note 15]	140-145	-	-	-	140-145	135-140	-	0-5	-	140-145
Mike Keoghan (to 16 Jan 2022) [Note 16]	100-105	130-135	-	24	125-130	70-75	130-135	5-10	109	185-190
Craig Woodhouse (to 14 Jul 2021)	35-40	130-135	-	15	50-55	130-135	-	5-10	69	205-21

Notes
1. Salary information excludes employers’ national insurance contributions. Departure costs have been paid in accordance with the provisions of the Civil Service Compensation Scheme, a statutory scheme made under the Superannuation Act 1972. Exit costs are accounted for in full in the year of departure. Where officials have moved to or from a similar senior role in another department during the year, details of any remuneration relating to their subsequent or prior roles will be in that department’s remuneration report.
2. The value of pension benefits accrued during the year is calculated as (real increase in pension multiplied by 20) plus (real increase in any lump sum) less (contributions made by the individual). Real increase excludes increases due to inflation or any increase or decrease due to transfer of pension rights.
3. Sarah Munby was Director General until 19 July 2020 contracted and remunerated at 85% of full time equivalent. Her Full Year Equivalent salary was £125-130k. From 20 July 2020, Sarah became Permanent Secretary on full time basis and her FYE is £160-165k. The prior year disclosure has been restated to reflect the actual entitlement during the year, although some of this was received as backdated pay during 2021-22.
4. Appointed as Director General of Business Sectors from 2 August 2021.
5. Joined BEIS 13 December 2021 from a Jobshare role at the Cabinet Office, as Directors for Civil Service Modernisation and Reform. Now Interim DG Jobshare for Market Frameworks.
6. Remunerated at 70% of Full Time Equivalent, Full time Equivalent of full year equivalent salary is £120-125k.
7. Appointed as Director General, Chief Operating Officer from 19 April, 2021 - previously Director at the Office of Rail and Road (ORR).
8. Appointed as Director General of Net Zero Strategy and International from 7 June 2021 - previously Director General at the Department of Health and Social Care (DHSC).
9. On secondment from UK Government Investments (UKGI). BEIS pay Ms McTernan’s remuneration by Invoice so the figures are now disclosed for both 2020-21 and 2021-22.
10. Contracted and remunerated as 80% of full time equivalent; full time equivalent of full year equivalent salary is £130-135k.
11. Appointed as Director General of Net Zero Buildings and Industry from 28 June 2021 - previously Director at the Department for Transport (DfT)
12. Contracted and remunerated as 90% of full time equivalent; full time equivalent of full year equivalent salary is £120-125k.
13. Restated prior year salary benefits to 10-15 (125-130).
14. Appointed as Director of Communications from 9 August 2021 - previously Deputy Director at Department of Transport (DfT).
15. Left under Voluntary Exit terms on 31 March 2022. They received a compensation payment of £95k.
16. Temporarily appointed as Director General of Business Sectors.

Senior officials - pension benefits (audited information)

The table below shows the pension entitlements for each senior official for the year ending 2022. Senior officials comprise members of the executive committee.

Permanent secretary

	Accrued pension at pension age as at 31 March 2022 and related lump sum, £’000	Real increase in pension and related lump sum at pension age, £’000	CETV at 31 March 2022, £’000 [Note 1]	CETV at 31 March 2021, £’000 [Note 1]	Real increase in CETV, £’000	Employer contribution to partnership pension account, Nearest £100
Sarah Munby	5-10	2.5-5	84	48	21	-

Directors general

	Accrued pension at pension age as at 31 March 2022 and related lump sum, £’000	Real increase in pension and related lump sum at pension age, £’000	CETV at 31 March 2022, £’000 [Note 1]	CETV at 31 March 2021, £’000 [Note 1]	Real increase in CETV, £’000	Employer contribution to partnership pension account, Nearest £100
David Bickerton (from 2 Aug 2021) [Note 2]	-	-	-	-	-	-
Caleb Deeks (from 13 Dec 2021)	35-40	0-2.5	454	440	9	-
Freya Guinness (from 19 Apr 2021)	45-50	2.5-5	683	617	36	-
Ashley Ibbett	40-45 plus a lump sum of 80-85	2.5-5 plus a lump sum of 0-2.5	720	649	31	-
Gavin Lambert (from 13 Dec 2021)	30-35 plus a lump sum of 55-60	0-2.5 plus a lump sum of 0-2.5	491	471	15	-
Lee McDonough (from 7 Jun 2021)	50-55 plus a lump sum of 145-150	0-2.5 plus a lump sum of 0	1,251	1,186	(1)	-
Madelaine McTernan [Note 3]	-	-	-	-	-	9,000 (20-21: 2,300 (9,000 FYE)
Paul Monks	0-5	0-2.5	48	16	24	-
Ben Rimmington (from 28 Jun 2021)	45-50 plus a lump sum of 85-90	2.5-5 plus a lump sum of 5-7.5	761	661	64	-
Jo Shanmugalingam	30-35 plus a lump sum of 55-60	0-2.5 plus a lump sum of 0	443	408	7	-
Joanna Whittington	50-55 plus a lump sum of 75-80	2.5-5 plus a lump sum of 0	893	822	20	-
Jaee Samant (to 31 Oct 2021)	55-60 plus a lump sum of 115-120	0-2.5 plus a lump sum of 0	1,062	1,041	2	-
Cath Bremner (to 6 Jun 2021)	10-15	0-2.5	149	146	4	-
Ben Golding (to 30 Jun 2021)	35-40	0-2.5	437	418	16	-

Directors

	Accrued pension at pension age as at 31 March 2022 and related lump sum, £’000	Real increase in pension and related lump sum at pension age, £’000	CETV at 31 March 2022, £’000 [Note 1]	CETV at 31 March 2021, £’000 [Note 1]	Real increase in CETV, £’000	Employer contribution to partnership pension account, Nearest £100
Simon Hulme	5-10	2.5-5	78	24	39	-
Alice Hurrell	45-50	0-2.5	671	627	5	-
Dan Micklethwaite	25-30	0-2.5	312	292	11	-
Abigail Morris (from 1 Aug 2021) [Note 2]	-	-	-	-	-	-
Tom Taylor	55-60 plus a lump sum of 100-105	0-2.5 plus a lump sum of 0	915	858	7	-
Doug Watkins (to 31 March 2022) [Note 3]	-	-	-	-	-	19,600 (20-21: 22,000)
Mike Keoghan (to 16 January 2022)	45-50 plus a lump sum of 80-85	0-2.5 plus a lump sum of 0	739	695	7	-
Craig Woodhouse (to 14 Jul 2021)	5-10	0-2.5	62	53	5	-

Notes
1. Where senior officials joined or left during the year, their CETV opening or closing amounts are as at their joining or leaving dates. See Notes to the Remuneration report for explanation of CETV.
2. Not a member of Civil Service pension arrangements during the year.
3. Member of partnership pension schemes.

Fee entitlements for non-executive board members (audited information)

The table below shows fee entitlements for non-executive directors who were members of the Departmental Board during the year ending 31 March 2022.

	Fee entitlement, 2021-22 £’000	Full year equivalent if different, 2021-22 £’000	Fee entitlement, 2020-21 £’000	Full year equivalent if different, 2020-21 £’000
Ann Cairns	20-25	-	5-10	20-25
Nigel Boardman [Note 1]	5-10	20-25	20-25	-
Vikas Shah (from 4 May 2021)	10-15	15-20	-	-
Stephen Hill (from 6 May 2021)	10-15	15-20	-	-
Peter Mather (from 30 March 2022)	0-5	20-25	-	-

Notes
1. On secondment to Cabinet Office from April to September 2021.

Fair pay disclosure (audited information)

The table below shows the relationship during the year ending 31 March 2022 between the remuneration of the highest-paid director and the median remuneration of the workforce across the Core Department and 3 agencies, Companies House, Insolvency Service and UK Space Agency. Remuneration figures include salary, non-consolidated performance-related pay and benefits-in-kind. They do not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the remuneration of the organisation’s workforce.

The banded remuneration of the highest-paid director in BEIS in the financial year 2021-22 was £200k-£205k (2020-21: £180k-£185k). This was 4.98 times (2020-21: 4.52) the median remuneration of the workforce, which was £40,650 (2020-21: £40,350).

In 2021-22, 45 (2020-21: 3) employees received remuneration in excess of the highest-paid director. Remuneration ranged from £20,025 to £408,595 (2020-21 £18,542-£251,665).

The median pay ratio for the relevant financial year is consistent with the pay, reward and progression policies for the entity’s employees taken as a whole. The minor increase in median remuneration of the workforce is due to a pay increase in year for employees in the lowest pay scale.

	2021-22	2020-21
Remuneration band of highest paid director	£200,000-£205,000	£180,000-£185,000
Median remuneration of workforce	£40,650	£40,350
Ratio of highest paid director to median	4.98	4.52
Remuneration range of workforce including directors	£20,025-£408,595	£18,542-£251,665
Number of people remunerated in excess of highest paid director	45	3

The number of people remunerated in excess of the highest paid director has increased in 2021-22 as a result of an increase in agency staff in implementation work and IT projects.

The table below shows the percentage change from previous year in total salary & allowances and performance pay & bonuses for the highest paid director and for staff average.

	Highest paid director	Staff average
Salary & Allowances	0%	2%
Performance pay & bonuses	100% [Note 1]	-33%

Notes
1. Highest paid director did not receive a bonus in 2020-21.

The below table shows the ratio between the highest paid directors’ total remuneration and the lower quartile, median and upper quartile for staff total pay and benefits for 2021-22. The slight increase in ratio results from the remuneration band of the highest paid director increasing in year.

	Lower quartile, 2021-22	Median, 2021-22	Upper quartile, 2021-22	Lower quartile, 2020-21	Median, 2020-21	Upper quartile, 2020-21
Total pay & benefits	31,392	40,650	54,675	29,575	40,350	54,675
Ratio	6.45:1	4.98:1	3.70:1	6.17:1	4.52:1	3.34:1
Salary	31,000	40,050	53,600	29,240	40,050	53,600
Ratio	5.89:1	4.56:1	3.40:1	6.24:1	4.56:1	3.40:1

Notes to the remuneration report

The information in the Remuneration report relates solely to the Core Department except for the fair pay disclosure, which relates to the Core Department and 3 of its Agencies.

Similar information relating to chief executives and most senior managers of the Agencies and other bodies of the Departmental family is given in the individual annual reports and accounts of the relevant bodies.

Single total figure of remuneration

Salary

‘Salary’ includes gross salary; overtime; reserved rights to London weighting or London allowances; recruitment and retention allowances; private office allowances and any other allowance to the extent that it is subject to UK taxation. This report is based on accrued payments made by the Department and thus recorded in these accounts.

In respect of Ministers in the House of Commons, departments bear only the cost of the additional Ministerial remuneration; the salary for their services as an MP (£81,932 from 1 April 2021) and various allowances to which they are entitled are borne centrally.

However, the arrangement for Ministers in the House of Lords is different in that they do not receive a salary but rather an additional remuneration, which cannot be quantified separately from their Ministerial salaries. This total remuneration, as well as the allowances to which they are entitled, is paid by the Department and is therefore shown in full in the figures above.

Bonuses

Bonuses are based on performance levels attained and are made as part of the appraisal process. Bonuses relate to the performance in the year in which they become payable to the individual. The bonuses reported in 2021-22 relate to performance in 2020-21 and the comparative bonuses reported for 2020-21 relate to performance in 2019-20.

Pension Benefits

Ministerial pensions

Pension benefits for Ministers are provided by the Parliamentary Contributory Pension Fund (PCPF). The scheme is made under statute and the rules are set out in the Ministers’ etc. Pension Scheme 2015.

Those Ministers who are Members of Parliament may also accrue an MP’s pension under the PCPF (details of which are not included in this report). A new MP’s pension scheme was introduced from May 2015, although members who were MPs and aged 55 or older on 1 April 2013 have transitional protection to remain in the previous MPs’ final salary pension scheme.

Benefits for Ministers are payable from State Pension age under the 2015 scheme. Pensions are re-valued annually in line with Pensions Increase legislation both before and after retirement. The contribution rate from May 2015 is 11.1% and the accrual rate is 1.775% of pensionable earnings.

The figure shown for pension value includes the total pension payable to the member under both the pre- and post-2015 Ministerial pension schemes.

Ministerial pensions - the Cash Equivalent Transfer Value (CETV)

This is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the pension benefits they have accrued in their former scheme.

The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total Ministerial service, not just their current appointment as a Minister. CETVs are calculated in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Ministerial pensions - the real increase in the value of the CETV

This is the element of the increase in accrued pension funded by the Exchequer. It excludes increases due to inflation and contributions paid by the Minister. It is worked out using common market valuation factors for the start and end of the period.

Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has 4 sections: 3 providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 switch into alpha sometime between 1 June 2015 and 1 February 2022. Because the government plans to remove discrimination identified by the courts in the way that the 2015 pension reforms were introduced for some members, it is expected that, in due course, eligible members with relevant service between 1 April 2015 and 31 March 2022 may be entitled to different pension benefits in relation to that period (and this may affect the Cash Equivalent Transfer Values shown in this report – see below). All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the 2 schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a defined contribution (money purchase) pension with an employer contribution (partnership pension account).

Employee contributions are salary-related and range between 4.6% and 8.05% for members of classic, premium, classic plus, nuvos and alpha. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to 3 years initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on their pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate is 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is an occupational defined contribution pension arrangement which is part of the Legal & General Mastertrust. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member). The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the 2 schemes, but note that part of that pension may be payable from different ages.)

Further details about the Civil Service pension arrangements can be found on their website.

Civil service pensions - Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme.

A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Civil service pensions - Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Parliamentary accountability and audit report

Statement of Outturn against Parliamentary Supply (audited information)

Overview

In addition to the primary statements prepared under IFRS, the Government Financial Reporting Manual (FReM) requires the Department for Business, Energy and Industrial Strategy to prepare a Statement of Outturn against Parliamentary Supply (SOPS) and supporting notes.

The SOPS and related notes are subject to audit, as detailed in the Certificate and Report of the Comptroller and Auditor General to the House of Commons.

The SOPS is a key accountability statement that shows, in detail, how an entity has spent against their Supply Estimate. Supply is the monetary provision (for resource and capital purposes) and cash (drawn primarily from the Consolidated Fund), that Parliament gives statutory authority for entities to utilise. The Estimate details supply and is voted on by Parliament at the start of the financial year.

Should an entity exceed the limits set by their Supply Estimate, called control limits, their accounts will receive a qualified opinion.

The format of the SOPS mirrors the Supply Estimates, published on GOV.UK, to enable comparability between what Parliament approves and the final outturn.

The SOPS contain a summary table, detailing performance against the control limits that Parliament have voted on, cash spent (budgets are compiled on an accruals basis and so outturn will not exactly tie to cash spent) and administration.

Non-voted Budgets generally comprise CFERs (Consolidated Fund Extra Receipts) that represent operating income or expenditure financed directly from the Consolidated Fund as a standing service or from the National Insurance Fund. Non-voted expenditure does not require Parliamentary authority, but is included within budgets set by HMT for completeness.

Estimates and Outturn spend are disclosed gross (gross expenditure and income) for activities of the Core Department and net for the activities of the Departmental Group’s arm’s length bodies.

The supporting notes on pages 124 to 134 [Notes to the SOPS, 2021-22] detail the following: Outturn by Estimate line, providing a more detailed breakdown (note 1); a reconciliation of Outturn to Net operating expenditure in the SoCNE, to tie the SOPS to the financial statements (note 2); a reconciliation of Outturn to Net cash requirement (note 3); and, an analysis of income payable to the Consolidated Fund (note 4).

The SOPS and Estimates are compiled against the budgeting framework, which is similar to, but different from, IFRS. An understanding of the budgeting framework and an explanation of key terms is provided on page 43, in the financial review section of the performance report [Our budget framework]. Further information on the Public Spending Framework and the reasons why budgeting rules are different to IFRS can also be found in chapter 1 of the Consolidated Budgeting Guidance, available on GOV.UK.

The SOPS provides a detailed view of financial performance, in a form that is voted on and recognised by Parliament. The financial review, in the Performance Report, provides a summarised discussion of outturn against estimate and functions as an introduction to the SOPS disclosures.

Summary table 2021-22 (£’000s)

Figures in the columns headed ‘Voted’ cover the voted control limits voted by Parliament. Refer to the Supply Estimates guidance manual, available on GOV.UK, for detail on the control limits voted by Parliament. Significant variances between Outturn and the Estimate are explained in the financial review on pages 42 to 54 [Financial review].

SOPS note	Note	Outturn Voted	Outturn Non-voted	Outturn Total	Estimate Voted	Estimate Non-voted	Estimate Total	Outturn vs Estimate: saving/ (excess) Voted	Outturn vs Estimate: saving/ (excess) Total	2020-21 outturn Total
Departmental Expenditure Limit
Resource	1.1	9,407,915	695,862)	8,712,053	10,170,148	(601,510)	9,568,638	762,233	856,585	22,496,431
Capital	1.2	21,007,816	(15,424)	20,992,392	22,095,399	(15,424)	22,079,975	1,087,583	1,087,583	20,449,976
Total DEL	-	30,415,731	(711,286)	29,704,445	32,265,547	(616,934)	31,648,613	1,849,816	1,944,168	42,946,407
Annually Managed Expenditure
Resource	1.1	114,889,364	260,991	115,150,355	188,853,432	450,000	189,303,432	73,964,068	74,153,077	(8,152,114)
Capital	1.2	(3,647,242)	(142,400)	(3,789,642)	4,787,217	(142,400)	4,644,817	8,434,459	8,434,459	19,543,887
Total AME	-	111,242,122	118,591	111,360,713	193,640,649	307,600	193,948,249	82,398,527	82,587,536	11,391,773
Total Budget
Resource	1.1	124,297,279	(434,871)	123,862,408	199,023,580	(151,510)	198,872,070	74,726,301	75,009,662	14,344,317
Capital	1.2	17,360,574	(157,824)	17,202,750	26,882,616	(157,824)	26,724,792	9,522,042	9,522,042	39,993,863
Total Budget Expenditure	-	141,657,853	(592,695)	141,065,158	225,906,196	(309,334)	225,596,862	84,248,343	84,531,704	54,338,180
Non-budget expenditure	-	-	-	-	-	-	-	-	-	7,983
Total Budget and non-budget	-	141,657,853	(592,695)	141,065,158	225,906,196	(309,334)	225,596,862	84,248,343	84,531,704	54,346,163

These tables and the following SOPS notes have been restated as explained in note 28.

Net cash requirement 2021-22 (£’000s)

	SOPS note	Outturn 2021-22	Estimate 2021-22	Outturn vs Estimate: saving/(excess) 2021-22	Outturn total 2020-21 restated
Net cash requirements	3	29,470,720	43,510,287	14,039,567	46,657,216

Administration costs 2021-22

	SOPS note	Outturn 2021-22	Estimate 2021-22	Outturn vs Estimate: saving/(excess) 2021-22	Outturn total 2020-21 restated
Administration costs	1.1	534,916	593,741	58,825	542,843

Although not a separate voted limit, any breach of the administration budget, will also result in an excess vote.

Notes to the SOPS, 2021-22

Audited information.

SOPS 1. Outturn detail, by Estimate line

SOPS 1.1 Analysis of Resource Outturn by Estimate line (£’000s)

Significant variances between Outturn and Estimate are explained in the financial review on pages 42 to 54 [Financial review].

	Resource outturn, Administration, Gross, 2021-22	Resource outturn, Administration, Income, 2021-22	Resource outturn, Administration, Net, 2021-22	Resource outturn, Programme, Gross, 2021-22	Resource outturn, Programme, Income, 2021-22	Resource outturn, Programme, Net, 2021-22	Resource outturn, Total, 2021-22	Estimate, Total, 2021-22	Estimate, Virements, 2021-22	Estimate, Total inc. virements, 2021-22	Outturn vs Estimate: saving/ (excess), 2021-22	Resource, Outturn restated, Total, 2020-21
Spending in DEL Voted expenditure
A Deliver an ambitious industrial strategy	-	-	-	4,223,480	(83,024)	4,140,456	4,140,456	4,944,899	(214,277)	4,730,622	590,166	18,822,515
B Maximise investment opportunities and bolster UK interests	-	-	-	133,566	(1,914)	131,652	131,652	131,575	77	131,652	-	90,816
C Promote competitive markets and responsible business practices	4,123	(40)	4,083	345,980	(141,228)	204,752	208,835	227,106	-	227,106	18,271	123,553
D Delivering affordable energy for households and businesses	-	-	-	90,261	(144)	90,117	90,117	134,072	-	134,072	43,955	83,933
E Ensuring that our energy system is reliable and secure	-	-	-	911,093	(7,840)	903,253	903,253	688,976	214,277	903,253	-	5,789
F Taking action on climate change and decarbonisation	-	-	-	85,219	(2,043)	83,176	83,176	68,822	14,354	83,176	-	53,099
G Managing our energy legacy safely and responsibly	-	-	-	195,797	-	195,797	195,797	203,869	(1,795)	202,074	6,277	216,909
H Science and Research	-	-	-	43,792	(295)	43,497	43,497	40,989	2,508	43,497	-	29,390
I Capability	500,276	(41,106)	459,170	26,967	125	27,092	486,262	581,019	(90,941)	490,078	3,816	482,229
J Government as Shareholder	-	-	-	1,334,442	(20,289)	1,314,153	1,314,153	1,399,641	(932)	1,398,709	84,556	1,595,733
K Promote competitive markets and responsible business practices (ALB) net	8,989	-	8,989	50,319	-	50,319	59,308	61,455	-	61,455	2,147	61,407
L Ensuring that our energy system is reliable and secure (ALB) net	-	-	-	(3,039)	-	(3,039)	(3,039)	1	-	1	3,040	(2,297)
M Taking action on climate change and decarbonisation (ALB) net	4,098	-	4,098	11,635	-	11,635	15,733	14,658	1,075	15,733	-	11,217
N Managing our energy legacy safely and responsibly (ALB) net	4,485	-	4,485	35,183	-	35,183	39,668	37,873	1,795	39,668	-	32,055
O Science and Research (ALB) net	6,182	-	6,182	232,316	-	232,316	238,498	248,503	-	248,503	10,005	227,334
P Capability (ALB) net	12,379	-	12,379	-	-	-	12,379	1,585	10,794	12,379	-	11,103
Q Government as Shareholder (ALB) net	74	-	74	20,192	-	20,192	20,266	19,334	932	20,266	-	(7,246)
R NDA and SLC expenditure (ALB) net	35,456	-	35,456	1,392,448	-	1,392,448	1,427,904	1,365,771	62,133	1,427,904	-	1,245,231
Deliver an ambitious industrial strategy (ALB) net	-	-	-	-	-	-	-	-	-	-	-	13,127
Total voted DEL	576,062	(41,146)	534,916	9,129,651	(256,652)	8,872,999	9,407,915	10,170,148	-	10,170,148	762,233	23,095,897
Non-voted expenditure
S Deliver an ambitious industrial strategy (CFER)	-	-	-	(155)	(1,299)	(1,454)	(1,454)	(1,391)	-	(1,391)	63	-
T Science and Research (CFER)	-	-	-	-	(555)	(555)	(555)	(119)	-	(119)	436	-
U Nuclear Decommissioning Authority Income (CFER)	-	-	-	(781)	(693,072)	(693,853)	(693,853)	(600,000)	-	(600,000)	93,853	(599,466)
Total non-voted DEL	-	-	-	(936)	(694,926)	(695,862)	(695,862)	(601,510)	-	(601,510)	94,352	(599,466)
Total spending in DEL	576,062	(41,146)	534,916	9,128,715	(951,578)	8,177,137	8,712,053	9,568,638	-	9,568,638	856,585	22,496,431
Spending in AME Voted expenditure
V Deliver an ambitious industrial strategy	-	-	-	(47,251)	(15,274)	(62,525)	(62,525)	172,316	-	172,316	234,841	(10,747,128)
W Promote competitive markets and responsible business practices	-	-	-	73,653	(713)	72,940	72,940	74,150	-	74,150	1,210	89,422
X Delivering affordable energy for households and businesses	-	-	-	-	-	-	-	5,409,000	-	5,409,000	5,409,000	-
Y Ensuring that our energy system is reliable and secure	-	-	-	352,055	(13,206)	338,849	338,849	530,900	-	530,900	192,051	(4,108)
Z Taking action on climate change and decarbonisation	-	-	-	241	-	241	241	591	-	591	350	667
AA Managing our energy legacy safely and responsibly	-	-	-	(55,760)	(23,091)	(78,851)	(78,851)	(85,671)	6,820	(78,851)	-	(208,322)
AB Science and Research	-	-	-	109,627	-	109,627	109,627	17,496,601	-	17,496,601	17,386,974	86,053
AC Capability	-	-	-	5,305	-	5,305	5,305	22,845	(15,684)	7,161	1,856	(41,033)
AD Government as Shareholder	-	-	-	478,552	(299,612)	178,940	178,940	992,976	-	992,976	814,036	17,150
AE Renewable Heat Incentive	-	-	-	919,555	-	919,555	919,555	1,026,000	-	1,026,000	106,445	848,139
AF Deliver an ambitious industrial strategy (ALB) net	-	-	-	473	-	473	473	19,800	-	19,800	19,327	(71,456)
AG Promote competitive markets and responsible business practices (ALB) net	-	-	-	375	-	375	375	960	-	960	585	(221)
AH Taking action on climate change and decarbonisation (ALB) net	-	-	-	10,015,257	-	10,015,257	10,015,257	25,000,000	-	25,000,000	14,984,743	468,485
AI Managing our energy legacy safely and responsibly (ALB) net	-	-	-	3,112,786	-	3,112,786	3,112,786	3,103,928	8,858	3,112,786	-	231,227
AJ Science and Research (ALB) net	-	-	-	192,049	-	192,049	192,049	203,479	-	203,479	11,430	64,982
AK Capability (ALB) net	-	-	-	10	-	10	10	4	6	10	-	-
AL Government as Shareholder (ALB) net	-	-	-	(520,071)	-	(520,071)	(520,071)	9,553	-	9,553	529,624	(354,185)
AM Nuclear Decommissioning Authority (ALB) net	-	-	-	100,605,107	-	100,605,107	100,605,107	134,876,000	-	134,876,000	34,270,893	1,027,590
Maximise investment opportunities and bolster UK interests	-	-	-	(703)	-	(703)	(703)	-	-	-	703	(1,217)
Total voted AME	-	-	-	115,241,260	(351,896)	114,889,364	114,889,364	188,853,432	-	188,853,432	73,964,068	(8,593,955)
Non-voted expenditure
AO Promote competitive markets and responsible business practices	-	-	-	271,102	(10,111)	260,991	260,991	450,000	-	450,000	189,009	441,841
Total non-voted AME	-	-	-	271,102	(10,111)	260,991	260,991	450,000	-	450,000	189,009	441,841
Total spending in AME	-	-	-	115,512,362	(362,007)	115,150,355	115,150,355	189,303,432	-	189,303,432	74,153,077	(8,152,114)
Total resource	576,062	(41,146)	534,916	124,641,077	(1,313,585)	123,327,492	123,862,408	198,872,070	-	198,872,070	75,009,662	14,344,317
Non-budget: voted
Prior Period Adjustments	-	-	-	-	-	-	-	-	-	-	-	7,983
Total Resource and non-budget spending	576,062	(41,146)	534,916	124,641,077	(1,313,585)	123,327,492	123,862,408	198,872,070	-	198,872,070	75,009,662	14,352,300

SOPS 1.2. Analysis of capital Outturn by Estimate line (£’000s)

	Capital Outturn, Gross, 2021-22	Capital Outturn, Income, 2021-22	Capital Outturn, Net total, 2021-22	Estimate, Total, 2021-22	Estimate, Virements, 2021-22	Estimate, Total inc. virements, 2021-22	Outturn vs Estimate, savings/ (excess), 2021-22	Capital Outturn Restated, Total, 2020-21
Spending in DEL, Voted expenditure
A Deliver an ambitious industrial strategy	304,895	(64,317)	240,578	245,347	-	245,347	4,769	227,102
B Maximise investment opportunities and bolster UK interests	330,670	(30,988)	299,682	303,780	-	303,780	4,098	492,700
C Promote competitive markets and responsible business practices	22,230	(2,274)	19,956	51,599	-	51,599	31,643	23,159
D Delivering affordable energy for households and businesses	1,306,296	(50,093)	1,256,203	1,346,100	-	1,346,100	89,897	1,184,722
E Ensuring that our energy system is reliable and secure	1,005,678	-	1,005,678	1,363,950	(9,962)	1,353,988	348,310	277
F Taking action on climate change and decarbonisation	281,851	9	281,860	324,140	-	324,140	42,280	239,432
G Managing our energy legacy safely and responsibly	5,620,909	-	5,620,909	5,633,578	-	5,633,578	12,669	5,074,050
H Science and Research	785,379	(58,206)	727,173	917,081	(59,075)	858,006	130,833	787,076
I Capability	28,155	(143)	28,012	21,608	6,404	28,012	-	35,399
J Government as Shareholder	413,159	(90,818)	322,341	276,375	45,966	322,341	-	1,069,581
K Promote competitive markets and responsible business practices (ALB) net	2,010	-	2,010	7,753	-	7,753	5,743	1,682
M Taking action on climate change and decarbonisation (ALB) net	2,500	-	2,500	5,165	-	5,165	2,665	284
N Managing our energy legacy safely and responsibly (ALB) net	25,769	-	25,769	45,351	-	45,351	19,582	17,915
O Science and Research (ALB) net	8,691,692	-	8,691,692	8,632,617	59,075	8,691,692	-	9,125,825
P Capability (ALB) net	3,558	-	3,558	-	3,558	3,558	-	2,298
Q Government as Shareholder (ALB) net	456,799	-	456,799	890,296	(45,996)	844,330	387,531	368,759
R NDA and SLC expenditure (ALB) net	2,023,096	-	2,023,096	2,030,659	-	2,030,659	7,563	1,799,723
Deliver an ambitious industrial strategy (ALB) net	-	-	-	-	-	-	-	(8)
Total voted DEL	21,304,646	(296,830)	21,007,816	22,095,399	-	22,095,399	1,087,583	20,449,976
DEL: Non-voted expenditure
S Deliver an ambitious industrial strategy (CFER)	-	(13,333)	(13,333)	(13,333)	-	(13,333)	-	-
T Science and Research (CFER)	-	(2,091)	(2,091)	(2,091)	-	(2,091)	-	-
Total non-voted DEL	-	(15,424)	(15,424)	(15,424)	-	(15,424)	-	-
Total spending in DEL	21,304,646	(312,254)	20,992,392	22,079,975	-	22,079,975	1,087,583	20,449,976
Spending in AME, Voted expenditure
W Promote competitive markets and responsible business practices	151	-	151	-	151	151	-	-
AA Managing our energy legacy safely and responsibly	23,091	-	23,091	23,091	-	23,091	-	29,382
AB Science and Research	1,271	-	1,271	2,934,000	-	2,934,000	2,932,729	1,247
AC Capability	144	-	144	30,000	(205)	29,795	29,651	-
AD Government as Shareholder	(831,201)	(2,765,000)	(3,596,201)	1,788,460	-	1,788,460	5,384,661	19,718,443
AF Deliver an ambitious industrial strategy (ALB) net	(13,310)	-	(13,310)	10,000	-	10,000	23,310	(8,954)
AH Taking action on climate change and decarbonisation (ALB) net	54	-	54	-	54	54	-	-
AI Managing our energy legacy safely and responsibly (ALB) net	-	-	-	1,866	-	1,866	1,866	-
AJ Science and Research (ALB) net	(57,467)	-	(57,467)	-	-	-	57,467	(53,610)
AL Government as Shareholder (ALB) net	(4,975)	-	(4,975)	(200)	-	(200)	4,775	(221)
Total voted AME	(882,242)	(2,765,000)	(3,647,242)	4,787,217	-	4,787,217	8,434,459	19,686,287
Non-voted expenditure
AN Managing our energy legacy safely and responsibly (CFER)	-	(142,400)	(142,400)	(142,400)	-	(142,400)	-	(142,400)
Total non-voted AME	-	(142,400)	(142,400)	(142,400)	-	(142,400)	-	(142,400)
Total spending in AME	(882,242)	(2,907,400)	(3,789,642)	4,644,817	-	4,644,817	8,434,459	19,543,887
Total capital	20,442,404	(3,219,654)	17,202,750	26,724,792	-	26,724,792	9,522,042	39,993,863
Non-budget
Total capital and non-budget spending	20,442,404	(3,219,654)	17,202,750	26,724,792	-	26,724,792	9,522,042	39,993,863

The total Estimate columns include virements. Virements are the re-allocation of provision in the Estimates that do not require parliamentary authority (because Parliament does not vote to that level of detail and delegates to HM Treasury).

Further information on virements are provided in the Supply Estimates manual, available on GOV.UK.

The outturn vs estimate column is based on the total including virements. The estimate total before virements have been made is included so that users can tie the estimate back to the Estimates laid before Parliament.

Significant variances between Outturn and Estimate are explained in the financial review on pages 42 to 54 [Financial review].

SOPS note 2. Reconciliation of outturn to net operating expenditure (£’000s)

As noted in the overview to the SOPS, Outturn and the Estimates are compiled against the budgeting framework – which is similar to, but different from, IFRS. Therefore, this reconciliation bridges the resource Outturn to Net operating expenditure, linking the SOPS to the financial statements.

The prior year comparatives present the Net operating expenditure as reported at 31 March 2021.

	SOPS note	2021-22, Outturn total	2020-21 Restated, Outturn total
Total resource Outturn in Statement of Outturn against Parliamentary Supply	SOPS 1.1	123,862,408	14,352,300
Add:
NDA remedial decommissioning costs which are capital in budgets but taken through the SoCNE	-	2,010,568	1,769,474
Capital Grants	-	8,040,251	8,114,313
Share of profit/loss of joint ventures and associates	-	(158,633)	(129,641)
Other non-budget	-	71,583	60,505
Financial Guarantees	-	(3,480,509)	19,781,449
Research and Development costs	-	9,080,276	9,092,499
Total	-	15,563,536	38,688,599
Less:
Non-budget, non voted items in respect of BIS (Postal Services Act 2011) Company Limited and B Company Limited	-	-	11
Expected return on pension scheme assets	-	(37,878)	(35,699)
NDA income scored in SOPS only	-	43,387	32,132
Capital Income in SoCNE	-	(50,522)	(108,548)
Research and Development income	-	(495,781)	(473,771)
Prior period adjustments	-	-	(7,983)
Other:
Impact of intra group transactions	-	65,996	66,427
Total	-	(474,798)	(527,431)
Net Operating Expenditure for the period in Consolidated Statement of Comprehensive Net Expenditure	SoCNE	138,951,146	52,513,468

Some NDA decommissioning utilisations are capital in nature and therefore not included in resource outturn, this results in them being a reconciling item.

Capital Grants are budgeted for as CDEL but accounted for as expenditure and income in the SoCNE, and therefore function as a reconciling item between Resource and Net Operating Expenditure.

Share of profit/loss of joint ventures and associates is accounted for in the SoCNE as a non-budget item and therefore function as a reconciling item.

Other non-budget includes intra group transactions where the cash payment is eliminated and the budget impact is therefore recognised as a reconciling item.

Financial guarantees are budgeted for as CAME. They are recognised as expenditure in the SoCNE and relate to the Covid-19 and recovery business loan schemes.

Research and Development is budgeted for as CDEL but accounted for as income and expenditure in the SoCNE and therefore function as a reconciling item.

SOPS 3. Reconciliation of Net resource Outturn to Net cash requirement (£’000s)

As noted in the overview to the SOPS, Outturn and the Estimates are compiled against the budgeting framework - not on a cash basis. Therefore, this reconciliation bridges the resource and capital Outturn to the Net cash requirement.

	SOPS note	Outturn	Estimate	Outturn vs Estimate: saving/(excess)
Total Resource Outturn	SOPS 1.1	123,862,408	198,872,070	75,009,662
Total Capital Outturn	SOPS 1.2	17,202,750	26,724,792	9,522,042
Adjustments for ALBs
Remove voted resource and capital	-	(126,346,429)	(176,586,411)	(50,239,982)
Removal of intra-group transactions	-	82,485	-	(82,485)
Add cash in grant-in-aid	-	12,220,487	13,878,872	1,658,385
Add share purchase and loans	-	382,224	-	(382,224)
Less share capital repayment	-	(106,041)	-	106,041
Adjustments to remove non-cash items
Depreciation	-	(28,832)	(412,680)	(383,848)
New provisions and adjustments to previous provisions	-	(717,762)	(25,258,814)	(24,541,052)
Other non-cash items	-	(902,650)	23,166	925,816
Financial Guarantees and Loan Commitment Liabilities	-	3,680,211	-	3,680,211)
Adjustments to reflect movements in working balances
Increase/(decrease) in receivables	-	(971,212)	(556,125)	415,087
(Increase)/decrease in payables	-	299,765	6,293,100	5,993,335
Use of provisions	-	189,597	222,983	33,386
IFRS 16 adjustment	-	31,024	(31,024)
Total	-	(112,187,133)	(182,395,909)	(70,208,776)
Removal of non-voted budget items
Other non-voted budget items	-	592,695	309,334	(283,361)
Total	-	592,695	309,334	(283,361)
Net cash requirement	-	29,470,720	43,510,287	14,039,567

SOPS 4. Amounts of income to the Consolidated Fund

SOPS 4.1 Analysis of income payable to the Consolidated Fund (£’000s)

In addition to the income retained by the Department, the following income is payable to the consolidated fund (cash receipts being shown in italics).

The type of income allowed to be retained by the Department is set out in the ambit of the Supply Estimate. Income of a type not included in the Estimate, or in excess of amounts agreed with HM Treasury, is required to be surrendered to the Consolidated Fund. This includes the commercial income of the Nuclear Decommissioning Authority, receipts arising from Coal Pension surpluses and income generated by the BIS (Postal Services Act 2011) Company, which forms the bulk of the amounts shown above, together with other miscellaneous receipts.

	Outturn total, 2021-22, accruals	Outturn total, 2021-22, cash basis	Outturn total, accruals, 2020-21	Outturn total, cash basis, 2020-21
Operating income of the NDA within the Ambit	480,925	493,000	716,007	736,000
Income outside the ambit of the Estimate	205,129	205,129	100,333	127,753
[Excess] cash surrenderable to the Consolidated Fund	142,400	142,400	142,400	142,400
Total amount payable to the Consolidated Fund	828,454	840,529	958,740	1,006,153

SOPS 4.2: Consolidated Fund income

BEIS also collects income as an agent for the consolidated fund. This income is disclosed separately in the Trust Statement, pages 310 to 354, and is not included in SOPS 4.1 – income payable to the consolidated fund.

Details are also provided in the individual accounts of the Insolvency Service for items which are not included in note 4.1.

Other parliamentary accountability disclosures

Losses statement (audited information)

	Core Department and Agencies, 2021-22	Departmental Group, 2021-22	Core Department and Agencies, 2020-21	Departmental Group, 2020-21
Total number of losses	5,765	53,512	7,383	7,749
Value of losses
RPS receivable impairment - £m	262	262	447	447
COVID-19 business support grant schemes - £m	33	33	1,038	1,038
COVID-19 loan guarantee schemes - £m	67	67	98	98
Other losses - £m	10	35	304	307
Total value of losses - £m	372	396	1,887	1,890

Details of cases over £300,000: COVID-19 business support grants: Core Department

The Department has estimated based on information currently available, that loss in relation to fraud and error on the COVID-19 business support grants paid in the 2021-22 year, included in the ‘Grants’ note (note 4.4) is immaterial to the accounts and falls within the range of £67 million and £5.42 million, the midpoint of the estimate being £33 million which is the value included in the losses table above.

The estimate of irregular payments on the grants made in 2020-21 has been updated and is detailed in the Regularity Statement on page 145. The refined estimate is slightly lower than the estimate included in last year’s annual report and accounts.

The estimate is based on ongoing post assurance sampling work being undertaken by the Department, which include a number of uncertainties due to data limitations, further details are included in the Regularity of Expenditure disclosure in the annual report. The value of the losses has been estimated based on a random sample. However, the Department has no further information on the number of losses associated with the estimated value.

Details of cases over £300,000: COVID-19 loan guarantees: Core Department

During 2021-22, the Core Department paid £327 million to cover interest payments for the Bounce Back Loan Scheme (note 4.1), known as Business Interruption Payments (BIPs). The Department’s central estimate of fraud and error occurrence at year end within the scheme is 4.24% and as such an estimate of £18.8 million relates to suspected fraudulent BIPs. Further information regarding the fraud rate estimate is included within note 21 and the Regularity of Expenditure disclosure in the annual report. The table above does not include the number of losses in relation to the COVID-19 loan guarantees BIPs payments. The value of the losses has been estimated however the Department has no further information on the number of losses associated with the estimated value.

Lenders have notified the Core Department of suspected borrower fraud in relation to 2,997 guarantee claims totalling £128 million which were paid out by the Core Department under the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and Recovery Loan Scheme (note 21) during 2021-22 (31 March 2021: £4.8 million).

Details of cases over £300,000: fruitless payments: Core Department

The Core Department recognised £9 million in relation to 13 suspected fraudulent payments within the Future Fund Scheme.

Details of cases over £300,000: fruitless payments: Core Department

£0.3 million of employees’ income tax and national insurance contributions and late payment interest were paid to HM Revenue and Customs for members of staff reclassified for tax purposes from self-employed to employees of the Department.

Details of cases over £300,000: claims abandoned: Agencies

Redundancy Payment Service (RPS) receivable impairment: most of the redundancy payments made from the National Insurance Fund (NIF) are in respect of employees of insolvent companies. Repayment of debt is recovered from the sale of the assets of the insolvent company. A small proportion of the debt (12%) is preferential, and as such has a higher recovery rate. HMRC record the impairment of the RPS receivable in NIF accounts. The RPS receivable impairment for 31 March 2022 is £262 million (31 March 2021: £447 million).

Details of cases over £300,000: administrative write-off: Departmental Group

£0.6 million loss arose when UKRI impaired and retired equipment damaged beyond use in a fire at a facility that forms part of the ISIS Neutron and Muon Source at Rutherford Appleton Laboratory, part of UKRI’s owned scientific estate.

Details of cases over £300,000: store losses: Departmental Group

Store losses reported by NDA in 2022 includes the write off of inventory previously purchased for use by electricity generating sites, and no longer required following the conclusion of generation activity (value £17,324,973) of which one item was valued at £791,655 and another at £789,736.

Special payments (audited information)

Special payments include extra-contractual, ex gratia, compensation, special severance payments, extra-statutory and extra-regulatory.

	Core Department and Agencies, 2021-22	Departmental Group, 2021-22	Core Department and Agencies, 2020-21	Departmental Group, 2020-21
Total number of special payments	97	104	86	91
Total value of special payments - £m	21	21	-	1

Special severance payments

5 special severance payments were made in year. The amounts paid are not disclosed as doing so would conflict with BEIS’ legal obligation under the Data Protection Act 2018.

Details of cases over £300,000

Settlement of legal claim

The Core Department and Met Office entered into a settlement agreement with Atos IT Services UK Ltd for joint payment of £24.0 million to Atos, without admission of liability, in relation to a procurement exercise undertaken by the Met Office, an executive agency (trading fund) of the Department. In a separate agreement with the Met Office, the Department undertook to contribute £20.7 million to this settlement with the balance of £3.3 million being paid by the Met Office.

Gifts and hospitality

Managing Public Money requires annual reports to report on gifts made by departments if their total value exceeds £300,000. Gifts with a value of more than £300,000 should be noted individually. During 2021-22, the Core Department did not give any reportable gifts above £300,000.

Fees and charges (audited information)

The Core Department provides a limited number of services for which it charges fees. Any such fees are set to comply with the cost allocation and charging requirements set out in HM Treasury and Office of Public Sector Information guidance.

The Core Department has fees generated from the Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme, and the Recovery Loan Scheme, further details can be found in note 6.1.

The Insolvency Service sets its fees to recover costs; it has a range of fees covering 4 areas:

• case administration: the average costs of administering bankruptcy cases, compulsory company liquidation cases and completing debt relief orders
• insolvency practitioner regulations: the cost of authorising and monitoring insolvency practitioners and registering individual voluntary arrangements
• estate accounting: the cost of financial transactions on insolvency cases using the Insolvency Service account
• debt relief orders: the cost of considering an application for a debt relief order by the Official Receiver

Companies House sets its fees to recover costs, it has a range of fees covering 2 main areas:

• registration activities – includes incorporation, annual registration, change of name, mortgage registration, dissolution, liquidation and recharges of costs incurred in the administration of late filling penalties; and
• dissemination activities – includes searches delivered on paper, electronically and to bulk customers insolvency practitioner regulations

Details of charging polices relating to partner organisations may be found in their respective published accounts.

Remote contingent liabilities (audited information) (£m)

Remote contingent liabilities are not included within the contingent liabilities in the financial statements, as they do not meet the threshold given in IAS 37.

Remote contingent liabilities have a small, remote likelihood of resulting in a transfer of economic benefit by the department.

The department has entered the following remote contingent liabilities by offering guarantees, indemnities or letters of comfort.

Quantifiable remote contingent liabilities

Measurement of quantifiable contingent liabilities is carried out following the requirements of IAS 37, given the reporting requirements of Managing Public Money. Managing Public Money requires that the full potential costs of such contracts be reported to Parliament.

	1 April 2021	Increase / (Decrease) in year	Liabilities crystallised in year	Obligations expired in year	31 March 2022	Amount reported to Parliament by Departmental Minute
The Core Department has indemnified Cornwall Council for any liability relating to the European Regional Development Fund (ERDF) that might arise from the transfer of Wave Hub due to (a) any breach of the ERDF Funding Agreements which occurred on or before the transfer date of 31 March 2017 and (b) any action or omission by the Core Department or Wave Hub in relation to the ERDF Funding Agreements prior to the transfer which leads to finding of an Irregularity by any competent authority.	18	-	-	-	18	18
The Core Department has indemnified the Coal Authority against potential claims arising from remunerated advisory work undertaken for other public sector bodies where settlement exceeds the Authority’s professional indemnity insurance.	3	-	-	-	3	-
Departmental Group: As part of a Sale Agreement relating to a previous BBSRC site, BBSRC (now part of UKRI) agreed to indemnify the purchaser against contamination resulting from dangerous substances. The indemnity was over a 10-year period commencing in 2013-14 and was capped at £3 million.	3	-	-	-	3	-
Total	24	-	-	-	24	18

Unquantifiable remote contingent liabilities: Core Department

Statutory guarantees

• Under section 9 of the British Aerospace Act 1980, the government is liable to discharge any outstanding liability of BAE Systems plc which vested in the company on 1 January 1981 in the event of its being wound up other than for the purpose of reconstruction or amalgamation.

Statutory indemnities

• Indemnities have been given to UK Atomic Energy Authority to cover certain indemnities provided by the Authority to carriers and British Nuclear Fuels plc against certain claims for damage caused by nuclear matter in the course of carriage.
• Indemnities have been given to bankers of the Insolvency Service against certain liabilities arising in respect of non-transferable “account payee” cheques due to insolvent estates and paid into the Insolvency Service’s account.
• Indemnity has been given to National Grid’s liabilities with regards to the interconnector linking the UK and France.
• A statutory liability will arise under the Nuclear Installations Act 1965 (as amended by the Nuclear Installations (Liability for Damage) Order 2016) for third-party claims in excess of the operator’s liability in the event of a nuclear accident in the UK.
• Indemnities have been provided to certain nuclear site companies and the Nuclear Decommissioning Authority in respect of personal injury claims in the event of a nuclear incident.
• A contingent liability exists in relation to the possibility of claims for any exposure to ionising radiation arising from the fusion activities of the UK Atomic Energy Authority.

Intellectual property

• A liability to the European Patent Office could arise under Article 40 of the European Patent Convention of 1973 as the UK is one of the contracting states.
• A liability to the World Intellectual Property Organisation could arise under Article 57 of the Patent Cooperation Treaty as the UK is one of the contracting states.

Legal costs

• A contingent liability exists in relation to various ongoing legal cases. The cost is dependent on the outcome of cases which currently cannot be reliably estimated.
• Under an agreement with the Financial Reporting Council, if the amount held in the Council’s legal costs fund falls below £1 million in any year, an additional grant will be made to cover legal costs subsequently incurred in that year.

Indemnities against personal liability

• Indemnities have been given to the directors appointed by the Core Department to wholly owned subsidiaries. These indemnities are against personal liability following any legal action against the companies.
• Indemnities have been provided to directors appointed to the Low Carbon Contracts Company Limited and Electricity Settlements Company Limited against personal liability following any legal action against the companies, to be triggered only after all other means have been exhausted, that is company and directors’ insurance and recovery of costs through their levies.
• Indemnities have been provided to the Low Carbon Contracts Company Limited and Electricity Settlements Company Limited in respect of their officers, to be triggered only after all other means have been exhausted, that is company and directors’ insurance and recovery of costs through their levies.
• Indemnities have been provided to trustees of the Nuclear Liabilities Fund appointed by the Secretary of State against personal liability in the event of legal action against the Fund.
• Indemnities have been provided to trustees of the Nuclear Liabilities Fund appointed by British Energy (now EDF Energy) against personal liability in the event of legal action against the Fund, to be triggered only in the event of failed recourse to indemnities from EDF Energy.
• Indemnities have been provided to certain insolvency administrators, including the Official Receiver, relating to actions undertaken in respect of administration of specified companies.
• Indemnities have been provided to the Oil and Gas Authority (OGA) who operate as the North Sea Transition Authority (NSTA), in respect of certain liabilities that could arise from the actions or omissions of its directors and otherwise arising from a director holding or having held office in the company.
• Indemnities have been provided to the MCS Service Company Limited and trustees of the MCS Charitable Foundation for any liability that might arise as a result of actions taken and decisions made for which the Core Department was ultimately responsible prior to transfer to the Company and Charitable Foundation of responsibility for the Microgeneration Certification Scheme (MCS) in April 2018.
• An indemnity has been provided to the Chair of the Post Office Horizon IT Inquiry in respect of any liabilities he may incur as a result of holding, or having held, this position.
• An indemnity has been provided to Elexon Limited against third party claims relating to the design and/or implementation of the Contracts for Difference and Capacity Markets settlement systems which are not covered by insurance and/or guarantees by their sub‑contractors.

Losses or damages under agreements

• An indemnity has been provided for any losses or damages caused to other parties to the Energy Research Partnership consortium agreement.

Environmental clean-up

• A contingent liability exists in relation to the costs of retrieving and disposing of sealed radioactive sources under the Environmental Permitting (England and Wales) Regulations 2016 in the event that a company keeping such sources becomes insolvent.
• A contingent liability arises in relation to the remediation of land contaminated by a nuclear occurrence as the Secretary of State is deemed to be the appropriate person to bear responsibility under section 9 of The Radioactive Contaminated Land (Modification of Enactments) (England) (Amendment) Regulations 2007 SI 2007/3245.
• The Nuclear Liabilities Fund was established in 1996 to meet certain costs of decommissioning 8 nuclear power plants in the UK that have been owned and operated by EDF Energy Nuclear Generation Limited since 2009. A constructive obligation was created in 2002 when the government undertook to underwrite the Fund in respect of these liabilities to the extent that the assets of the Fund might fall short; any surplus generated by the Fund would be paid over to the government once the liabilities have been met. The total undiscounted estimated liability as at 31 March 2022 of £24.7 billion (31 March 2021: £23.5 billion) has a present value of £51.9 billion (31 March 2021: £23.8 billion) which includes an allowance for future inflation. The value of the Fund as at 31 March 2022 is £20.4 billion (31 March 2021: £14.7 billion). It is not possible to quantify the extent to which the government may be obliged to contribute to the Fund, nor of any surplus that may arise, given the high level of uncertainty relating to estimation of decommissioning costs and investment returns on Fund assets over a future period exceeding 100 years.
• Under the United Nations Convention on the Law of the Sea (UNCLOS) 1982, OSPAR decision 98/3, the Energy Act 2004 and the Petroleum Act 1998, the Department would become responsible for decommissioning most oil, gas and renewable energy installations in the event that operators are unable to fulfil their decommissioning commitments.

Others

• A contingent liability exists in respect of the risks associated with the Core Department assuming responsibility for uplifts in pension contributions for the UK Atomic Energy Authority’s non-active pension scheme members.
• The Secretary of State Investor Agreement (SOSIA) provides protections in certain scenarios where the Hinkley Point C nuclear plant is shut down for reasons that are political or due to certain changes in insurance arrangements or certain changes in law. Payments under the SOSIA would be expected in the first instance to be made using funds from the Supplier Obligation but in certain circumstances they could also come direct from the Secretary of State, relying on spending powers granted under the relevant Appropriation Act or, if payments were to be made over a period longer than 2 years, seeking a new spending power at the time. The payments could be up to around £22 billion excluding non-decommissioning operational costs that may be incurred after any shutdown. However, the liability to make payments under the SOSIA is almost entirely within the control of HM Government.

Unquantifiable remote contingent liabilities: Agencies and departmental ALBs in Departmental Group

• UKSA has an unquantifiable contingent liability arising from the international (UN) convention, which requires the UK government to be ultimately liable for third party costs from accidental damage arising from UK space activities. To manage the risk to the government, the Outer Space Act 1986 requires licensees to indemnify HMG against any proven third party costs. In March 2015 the Outer Space Act 1986 was amended to cap the previously unlimited liability for licensed activities. The cap is set at €60 million for the majority of missions. This amendment came into force from 1 October 2015 and was designed to adequately balance the risk to the UK government whilst ensuring UK space operators remain competitive internationally. There is a requirement on licensees to obtain third party liability insurance (set at €60 million for the majority of missions) for the duration of the licensed activity, with the UK government a named beneficiary. The UK government is therefore exposed to a potential liability for third party costs which are not recoverable from the licensee. The liability is unidentifiable at the time of reporting.
• UKRI collaborates with a number of other international partners in the funding, management and operation of technical facilities which are not owned by UKRI. In the event of a decision to withdraw from any of these arrangements, it is likely that UKRI would assist in the search for a replacement partner to ensure that technical commitments were met. The most significant international collaborations are in respect of CERN and European Southern Observatory (ESO). For both of these facilities there is the possibility that UKRI would be obliged to contribute to decommissioning costs arising from a decision taken to discontinue operations. The decisions to decommission are not wholly within UKRI’s control.
• The NDA has non-quantifiable contingent liabilities arising from indemnities given as part of the contracts for the management of the nuclear site license companies. These indemnities are in respect of the uninsurable residual risk that courts in a country which is not party to the Paris and Brussels Conventions on third party liability in the field of nuclear energy may accept jurisdiction to determine liability in the event of a nuclear incident. Indemnities are provided to the previous Parent Body Organisations (PBOs) of LLWR, Magnox, Sellafield and Dounreay covering the periods of their ownership.
• The former BBSRC sponsored Roslin Institute transferred to the University of Edinburgh on 13 May 2008. BBSRC agreed to provide indemnity for any potential costs that arise as a result of past actions of the institute and indemnity for any fall in grant income of the Neuropathogenesis Unit as a result of the transfer. The proportion of settlement UKRI will fund declines on an annual basis and is limited to claims up to 31 March 2023.

Other potential or expected liabilities

The Department has entered into the following arrangements, details of which are provided in the interests of transparency. They are not contingent liabilities which require disclosure under IAS 37 or Managing Public Money, as the obligating events did not exist at the reporting date.

Hinkley Point C Funded Decommissioning Programme (FDP) and Waste Transfer Contracts (WTCs)

The contract with NNB Generation Company Limited (NNB) to build Hinkley Point C (HPC) nuclear power plant includes a Contract for Difference between NNB and the Low Carbon Contracts Company Ltd, an FDP and associated FDP documents including WTCs between NNB and the Core Department.

The FDP and related documents including WTCs require NNB to make prudent provision for their waste and decommissioning liabilities. To meet their liabilities, the operator must set up a fund with an independent governance framework and will pay into it so that it is on track to fund the liabilities that arise from decommissioning and waste management. The fund will report annually to the Secretary of State and a full review will be conducted every 5 years to ensure that the fund is on track to meet all its liabilities. If it is off track, the operator will be required to take corrective action. These liabilities are strictly the operator’s responsibility and the probability of taxpayers picking up these liabilities is remote.

Alongside the FDP, the government has entered into 2 WTCs. These set out terms on which the government will take title to and liability for the spent fuel and intermediate level waste (ILW) from the site after decommissioning in order to dispose of the waste safely. The WTCs have generally been prepared in line with the government’s published waste transfer pricing methodology. Although the WTCs provide a default price based on today’s best estimate, they allow the waste transfer price to be set after a specified later date. The final price agreed is subject to a cap, but the likelihood of the future costs exceeding the agreed cap is considered remote.

Capacity agreements

These are statutory arrangements between National Grid, as system operator, and capacity providers. They require the capacity provider to be able to provide a given level of capacity in relevant delivery years when called upon to do so by National Grid.

At a capacity auction, applicants who offer the lowest bid can win a capacity agreement. A capacity auction relates to delivery of capacity approximately 4 years ahead (T-4). Most recently, the capacity agreements resulting from the 2019 T-3 and T-4 capacity auction held in February and March 2020, are for the Delivery Year commencing in 2022-23 and 2023-24. Also, the capacity agreements resulting from the 2019 T-1 capacity auction, held in January 2020, are for the delivery year commencing in 2020-21. In addition to T-1, T-3 and T-4, the interim periods are covered by Transitional arrangements. There are currently 8 live capacity auctions out of a total of 13, which have been awarded from the start of the scheme in 2014 for the delivery year commencing 2016-17.

The Department has responsibility for administering the settlement process. This role is undertaken by the Electricity Settlements Company (ESC). The obligation for ESC to make capacity payments only arises when the respective levy is received from licensed suppliers and the generator provides the agreed level of capacity. The potential income and payments arising from these arrangements are outlined in the following table*:

*Does not include the 2022 T4 and T1 auctions as awaiting data

As at 31 March 2022 (£m)

	Due within 1 year	Due within 2-5 years	Due over 5 years	Total
Capacity Market - ESC	745	4,093	5,327	10,165
Income from levy - ESC	(745)	(4,093)	(5,327)	(10,165)
Total Departmental Group	-	-	-	-

As at 31 March 2022 (£m)

	Due within 1 year	Due within 2-5 years	Due over 5 years	Total
Capacity Market - ESC	957	2,763	4,022	7,742
Income from levy - ESC	(957)	(2,763)	(4,022)	(7,742)
Total Departmental Group	-	-	-	-

Regularity of expenditure (audited information)

The Department ensures that the concept of regularity is understood and complied with in all its operational activities. It ensures compliance with HM Treasury’s Managing Public Money.

In 2020-21 annual report and accounts, the Department published estimates of fraud and error in relation to the COVID-19 loan guarantees and the COVID-19 business support grants, for expenditure that was recognised in the 2020-21 financial year. The Department has refined these estimates as more information has become available.

For grant expenditure recognised in 2021-22 the Department has calculated initial estimates of the level of fraud and error across the schemes.

The below provides an update on the estimated levels of fraud and error in the COVID-19 loan guarantees and the COVID-19 business support grants.

COVID-19 loan guarantees

As a result of the COVID-19 pandemic, the Department entered into loan guarantee agreements with accredited lenders, providing support to businesses under:

• the Bounce Back Loan Scheme (BBLS)
• the Coronavirus Business Interruption Loan Scheme (CBILS)
• the Coronavirus Large Business Interruption Loan Scheme (CLBILS)
• the Recovery Loan Scheme (RLS) - launched in 2021-22 to help support business recover from the pandemic

BBLS

Due to the imperative to deliver rapid support to businesses impacted by the pandemic, Ministers Directed officials to implement a scheme design which would facilitate faster lending. This mean that BBLS relied on self-certification of eligibility and included and changes to lender’s usual controls. It was expected that there would consequently be a heightened risk of fraudulent borrowing and loans being issued in error. A statistical sampling exercise was undertaken during the 2020-21 financial year, to provide an estimate of the level of fraud and error in the BBLS.

During the 2020-21 year, a sample of 1,067 loans were examined and placed into differing categories based on the likelihood of fraud. This resulted in a central estimate for the incidence of fraud in the portfolio of 11.15% of facilities, which was included in the expected credit loss (ECL) calculation at 31 March 2021. Additional work was completed following further engagement with lenders on post year end information which enabled a conclusion to be drawn on loans which had previously been classified as ‘possibly fraud’. This resulted in the central estimate of 7.5% being disclosed in 2020-21 as a non-adjusting post balance sheet event.

During 2021-22 further work to refine the fraud and error estimate was undertaken to consider other fraud risks not captured within the sample exercise (which was designed while the scheme was still live), and to make use of repayments data that was not previously available. Taken together, this new information indicates that the 7.5% is likely understating the fraud incidence in the scheme. However, there is currently insufficient evidence to support a quantified uplift to the estimate on the basis of these additional fraud risk indicators (this is detailed and discussed further in note 21). Therefore, the Department has maintained the fraud estimate in the scheme at 7.50%, adjusted for additional claims identified by lenders as fraudulent within the sampled population. This increases the rate to 8.00%, although it acknowledges that the actual rate is likely to be higher and future measurement work will attempt to reflect this.

As well as refining the fraud incidence estimate, the Department assessed the information that is available on repayments for the loans identified as probable fraud in the above sample, in order to estimate the losses resulting from estimated fraud incidence. The fraud estimate has been reduced by 52.94% to take into account the potential rate of loss that could occur as a result of those loans identified as probable fraud. The rate has been adjusted to account for the number suspected fraud that has already been observed within the portfolio as suspected fraud cases have been claimed and settled. This equates to 0.75% of portfolio lending, which when deducted from the lifetime fraud and error rate gives rise to a 3.49% fraud and error rate loss estimate for the outstanding exposure at the year-end, which has been used as an input in the expected credit loss modelling.

The table below shows the progress to date of the estimated levels of fraud and error loss in the BBLS:

	31 Mar 2022	Nov 2021	31 Mar 2021 ECL valuation
Central estimate	3.49% £1,120m	7.5%	11.15% £4,944m
Lower range	1.49% £481m	4.5%	8.15% £3,615m
Upper range	7.24% £2,320m	10.5%	14.15% £6,275m
Sample size	1,067 [Note 1]	1,067	1,067

Notes
1. While the results of the testing on the sample of 1,067 the fraud occurrence estimate for 2021-22, information on materialised fraud also forms part of the final estimate

Significant uncertainties remain around the estimate, and it is widely acknowledged that there are additional risk indicators (not included in the sampling exercise which underpins the current estimate) which will increase the estimate of the incidence of fraud and error in the scheme. The challenge is quantifying these risks in a way that is sufficiently robust and allows the estimate to be updated based on verifiable evidence. Further information in relation to the uncertainties associated with the fraud estimate are included in note 21. The estimate is based on 3 components:

• The work carried out on the sample of loans resulting in an 8.0% estimate of fraud within the sample, and identification of any other loans in the sample subsequently flagged as fraudulent by lenders.
• An estimated conversion to loss factor of 52.94%, reducing the overall fraud estimate.
• This estimate is based on the performance of the 85 loans identified as ‘probably fraudulent’ from the initial sample of 1,067. The performance of these 85 loans have been monitored as an indicator of how fraudulent loans will perform throughout their lifetime.
• Removal of the known fraud losses, which amount to 0.75% of the portfolio.

For further details on the fraud estimate and the related data limitations, see note 21.

Eventual losses of public funds due to fraud and error could, and are expected to, vary from the range noted above. Further details regarding the loan guarantees can be found in the notes for ‘Accounting Policies, note 1’, ‘Operating Expenditure, note 4’, and ‘Financial guarantee, loan commitment liabilities and re-insurance contracts, note 21’.

The Department will continue to refine its estimate of fraud and error and report on this in future annual reports.

CBILS, CLBILS, RLS

Unlike BBLS which relied on self-certification of eligibility and did not have credit checks, for CBILS, CLBILS and RLS, lenders followed standard lending practices. Although neither the volume nor cadence of lending through the schemes was normal, the Department’s judgement is that there is a normal level of fraud and error within CBILS, CLBILS and RLS as detailed further in note 21.

Repayments data which is available to date supports this assessment as there are currently low levels of claims and defaults across these 3 schemes, and low levels of payments in arrears. The table below shows the level of repayments data as at 31 March 2022 for CBILS and RLS, the only schemes of these 3 which have a liability that is material to the accounts.

Scheme	Outstanding facilities	Outstanding facilities paying on time	Outstanding facilities - Repayments in arrears	Outstanding facilities - Repayments in default	Facilities fully repaid
CBILS	£18.5 bn	78.7%	1.3%	<1%	18.1%
RLS	£2.6 bn	97.4%	<1%	<1%	<1%

The Department will continue to monitor fraud and error on these schemes, along with continued monitoring of repayments as further information becomes available. This will support any adjustments required to our assumptions on fraud and error.

Further information on these schemes can be found in note 21 to the financial statements and the actual losses for 2021-22 can be found in ‘Losses and special payments’ disclosure.

The Department is also undertaking a range of other Counter Fraud activities to pursue fraudsters and recover monies. Further information on this is outlined in the Governance Statement on page 86 [Fraud and error analysis in the COVID-19 business support schemes].

COVID-19 business support grants

The following COVID-19 business support grants schemes were provided in urgent response to the financial difficulties faced by businesses during the pandemic as a result of both regional and national lockdowns:

• Small Business Grant Fund (SBGF)
• Retail, Hospitality and Leisure Grant Fund (RHLGF)
• Local Authority Discretionary Grant Fund (LADGF)
• Various Local Restrictions Support Grants (LRSG)
• Christmas Support Package (CSP)
• Restart Grant
• Additional Restrictions Grants and various top-ups (ARG)
• Omicron Hospitality and Leisure Grant (OHLG)

The various LRSG schemes comprise:

• LRSG Addendum (November)
• LRSG (Open)
• LRSG (Closed) Pre-November 2020
• LRSG (Closed) Post 2 December
• Closed Business Lockdown Payment
• LRSG (Closed) Addendum
• LRSG Sectors
• LRSG (Closed) Addendum - Tier 4

Due to the rapid turnaround in making funding available for businesses, it was expected there would be a degree of fraudulent claims, opportunistic behaviour and payments made in error outside of the scheme criteria, especially in the earlier schemes.

For the 2020-21 accounts, the Department produced an initial estimate of irregular spend in the first 3 schemes (SBGF, RHLGF and LADGF). In 2021-22 work over these 3 schemes has continued, resulting in a final refined estimate. The Department has also produced initial estimates of irregular expenditure in the remaining grant schemes.

For all schemes, the checks performed involved assessing each sampled payment for eligibility against the grant scheme criteria. The estimates below represent irregularity overall and it is not possible to break them down into separate fraud and error figures. The level of irregularity is expected to vary by scheme. The checks performed are not fully comprehensive as they cannot identify instances of complex fraud. This is why the Department is undertaking a range of other Counter Fraud activities – described in the Governance Statement on page 86 [Fraud and error analysis in the COVID-19 business support schemes].

Further information on each scheme is detailed below.

Grant expenditure recognised in 2020-21

Small Business Grant Fund (SBGF); Retail Hospitality and Leisure Grant Fund (RHLGF); Local Authority Discretionary Grant Fund (LADGF)

The estimated level of fraud and error in the COVID-19 grant schemes, for the 2020-21 accounts, was based on work carried out over the initial 3 schemes: SBGF, RHLGF and LADGF. Payments were deemed either ‘not eligible’, ‘eligible’ or ‘possibly eligible’.

The estimated level of fraud and error was based on those payments categorised as ‘not eligible’. This resulted in a central estimate of irregular payments that was material to the 2020-21 accounts, at 8.9% (£1,038 million). There were uncertainties in the estimate as a result of data limitations and time constraints.

This year, the Department has refined the estimated level of fraud and error in the first 3 schemes (SBGF, RHLGF, LADGF). The central estimate of 8.4% (£985 million) shown in the table below is the Department’s final estimate. The table also shows the initial 2020-21 estimate for comparison.

SBGF, RHLGF and LADGF

	2021-22 final estimate	2020-21 initial estimate
Department expenditure	£11,659m (2020-21)	£11,659m (2020-21)
Sample size	4,476	476
Estimates
Central estimate	8.4% (£985m)	8.9% (£1,038m)
Lower bound (95% confidence interval)	7.6% (£890m)	4.4% (£514m)
Upper bound (95% confidence interval)	9.3% (£1,079m)	13.4% (£1,562m)

The level of fraud and error in relation to the initial 3 schemes is estimated to be 8.4%. The confidence intervals are shown in the table above. This is the central estimate of statistical analysis and a refinement of the earlier estimate published in the Department’s Annual Report and Accounts 2020-21.

The initial estimate was based on a sample of 476 payments, drawing only on publicly available information. The Department has now had more time to carry out testing. The refined estimate is based on a much larger, statistically representative sample of 4,476 payments, resulting in a narrower range. It also uses evidence from the local authorities making the payments, in addition to publicly available information.

This approach was discussed with the Office for National Statistics (ONS). They concluded that the number and stratification of checks was suitable for reporting an irregular payment value at a national level.

The testing in 2020-21 classified the 476 payments as, ‘not eligible’ ‘eligible’ or ‘possibly eligible’. The estimate was based on the ‘not eligible’ payments. The Department has now had more time to request further evidence from local authorities for these ‘possibly eligible’ payments. Therefore, where the Department has still been unable to firmly determine eligibility, ‘possibly eligible’ items have been included in the final estimate (8.4%) of irregular payments for SBGF, RHLG and LADGF.

If these ‘possibly eligible’ items were excluded from the estimate, the level of irregular payments would drop to 0.5% (£60 million). This represents the payments in the sample identified as ‘not eligible’. Had it been possible to conclude on these ‘possibly eligible’ items, some would likely have been classified as ‘eligible’. Therefore, it is not possible to determine exactly what the irregular spend percentage would have been – although this prudent approach may overestimate the level of fraud and error.

The above results conclude the Department’s work to determine its estimate of irregular payments in the SBGF, RHLG and LADGF schemes. They therefore provide the Department’s final estimate over the level of fraud and error in these schemes. Work has already begun to recover those payments which have been identified as ‘not eligible’. Further details of this can be found on page 86 of the annual report [Fraud and error analysis in the COVID-19 business support schemes].

Various Local Restrictions Support Grants (LRSG); Christmas Support Package (CSP)

The initial estimate included in the 2020-21 annual report and accounts for the level of fraud and error in the SBGF, RHLGF and LADGF schemes was extrapolated across the LRSG, CSP, CBLP, ARG, and the first ARG top-up schemes. This is because there was insufficient time to develop a separate estimate for these schemes in time for the 2020-21 accounts.

As reported in BEIS’ 2020-21 accounts, the Department expected to find lower levels of irregular payments in the later schemes compared to the first 3 – lower than the initial sample’s central estimate of 8.9%. This was because the Department provided increased guidance and support to local authorities administering these schemes. Local authorities also had the opportunity to learn from experience administering the initial schemes.

During 2021-22, the Department started work to estimate the level of fraud and error in the later schemes. As with the earlier schemes, the work involved reviewing a random sample of payments from each scheme for eligibility under the scheme criteria. The Department used evidence from local authorities, publicly available information and lessons learned from the work on the earlier schemes. These estimates will continue to be refined.

Various LRSG

The table below sets out the initial estimates of fraud and error in the LRSG schemes. The results presented here provide a guide to the levels of irregularity in these schemes. The checks concluded to date are not expected to change further and the analysis that has been conducted assumes no changes will take place. These results are an indication of what BEIS expects to hold true if the checks processed to date are confirmed to be representative of the larger, final sample.

	2021-22
Department expenditure	£5,349m (2020-21) [Note 1]
Sample size	587
Estimates
Central estimate	0.5% (£27m)
Lower bound (95% confidence interval)	0.0% (£0m) [Note 2]
Upper bound (95% confidence interval)	1.2% (£63m)

Notes

1. Total estimated expenditure recognised in 2020-21 was £5,571 million. Final expenditure figure is £5,349 million, as detailed in note 1.26.
2. The number of checks found to be irregular, and small sample size processed to date, mean that it has been necessary to adjust the lower bound presented here to reflect the already observed irregularity. The value of the lower bound is expected to rise as more checks are performed, even if the percentage remains the same.

Each payment has been categorised as ‘eligible’, ‘not eligible’ or ‘ongoing’. Payments categorised as ‘not eligible’ have been included in the estimate.

There are uncertainties in the above estimates, due to data limitations and time constraints. Significant data limitations are detailed below.

Due to time and data constraints, checks on some payments are not yet concluded and further investigation is required to determine their eligibility. For LRSG, the Department has processed one or more checks from data received from 56 local authorities (18% of all authorities). 42% of the checks have been processed from the statistically valid sub-sample group meaning there is a possibility of bias in the results.

The not-yet-concluded items are termed ‘ongoing’ because further time and investigation is required to determine whether the payments were made within the scheme criteria. There is no information to suggest that these payments are any more likely than average to be irregular, although the estimated value of irregular spend could increase once these samples are concluded.

The Department will continue to investigate the ongoing samples. Work carried out this year over the first 3 schemes found that payments categorised last year as ‘possibly eligible’ have, on further investigation, mainly been categorised as ‘eligible’. This supports the Department’s decision to exclude the ‘ongoing’ items from the estimate in the table above, until further work is completed.

In 2020-21, expenditure recognised for the CSP scheme was £22.9 million. This was immaterial to the accounts and expenditure on the other schemes was significantly higher. Therefore, the Department has focussed its efforts on the estimates for the more material schemes, where irregular payments are likely to have a higher total value. For CSP, data from 42 authorities (13% of all authorities) has been processed to date. The small sample size means a statistically valid estimate is not yet available.

A total of c. 2.2 million grant payments were made for the LRSG and CSP grant schemes; the sample of 629 payments analysed represents 0.03% of all payments. The Department has agreed with the ONS that a larger sample size will need to be concluded to form a fully representative estimate. The Department will continue this work over the next financial year.

Grant schemes with expenditure recognised in 2021-22

Restart, ARG and OHLG

Expenditure is recognised in 2021-22 for the following grant schemes:

• Restart
• ARG including various top-up schemes
• OHLG

Below are the Department’s initial estimates of the level of fraud and error in these grant schemes. The results presented here provide a guide to the levels of irregularity in these schemes. The checks concluded to date are not expected to change further and the analysis that has been conducted assumes no changes will take place. These results are an indication of what BEIS expects to hold true if the checks processed to date are confirmed to be representative of the larger, final sample.

	Restart	ARG	OHLG	2021-22 Total
Department expenditure	£3,045m	2021-22: £499m 2020-21: £1,631m	£479m	£4,023m
Sample size	555	626	392	-
Estimates
Central estimate	0.5% (£16m)	1.6% (2021-22: £8m) (2020-21: £26m)	1.3% (£6m)	£30m
Lower bound (95% confidence interval)	0.0% (£0m) [Note 1]	0.6% (2021-22: £3m) (2020-21: £9m)	0.1% (£0m)	£3m
Upper bound (95% confidence interval)	1.2% (£38m)	2.6% (2021-22: £13m) (2020-21: £43m)	2.5% (£12m)	£63m

Notes

1. The number of checks found to be irregular, and small sample size processed to date, mean that it has been necessary to adjust the lower bound presented here to reflect the already observed irregularity. The value of the lower bound is expected to rise as more checks are performed, even if the percentage remains the same.

For each scheme, BEIS reviewed a random sample of payments, and each was categorised as ‘eligible’, ‘not eligible’ or ‘ongoing’. Due to time constraints, checks on some payments are not yet concluded and further investigation is required to determine their eligibility. Other significant data limitations and assumptions are detailed below.

As with the LRSG and CSP schemes, payments for which a conclusion has not yet been reached are termed ‘ongoing’. These have not been included in the estimate for Restart, ARG or OHLG, for the same reasons detailed above.

Local authorities continued to distribute funds for OHLG, ARG and Restart until the end of March 2022. The Department worked with local authorities to collect data for the reconciliations faster than for the earlier schemes. However, the late scheme closure reduced the time available to review the payments and form the fraud and error estimate.

Where the local authority reconciliation was not yet complete, monitoring and evaluation data was instead used to select the sample. This data was collected through the year and represented around 80% of payments. There is a possibility that this biases the results, although the Department has no evidence to believe this is the case.

ARG expenditure was recognised in 2020-21 and in 2021-22 because several top-ups of the scheme were issued. The scheme guidance for each top-up was very similar and local authorities retained high levels of discretion for the businesses that would receive the funding. As the estimate of fraud and error is for the scheme in totality, the scheme is included in full in the table above. The funding was provided across 2 years. This period is sufficiently short that the Department has assumed that the rate of fraud and error across the 2 years would not vary significantly. Therefore, the same percentage has been applied to the spend in 2 years.

The ARG scheme gave local authorities high levels of discretion to set their own eligibility criteria to fit local circumstances. This estimate is based only on eligibility against criteria mandated by BEIS. Local authorities will have also set their own additional criteria for eligibility, which the Department has not reviewed.

A total of around 1.3 million grant payments were made for the OHLG, ARG and Restart grant schemes. The sample of 1,573 payments analysed represents 0.1% of all payments. The Department has agreed with the ONS that a larger sample size will need to be concluded for a fully representative estimate to be formed. The total final sample for these schemes is expected to exceed 3,000 payments. The Department will continue this work over the next financial year.

The results show a significant decrease in the estimated levels of fraud and error in the later grant schemes, compared to the initial 3 grant schemes (SBGF, LADGF, RHLGF). This may be a result of clearer scheme guidance, articulating more clearly who is eligible to receive the payments; stronger requirements for local authorities to perform pre-payment checks; and better clarity on the information the Department would require from local authorities to evidence that a payment was eligible.

Forward Look

The Department is continuing its assurance exercises to refine the fraud and error estimates for the LRSG, CSP, Restart, ARG and OHLG schemes. These exercises will test larger samples of payments based on the sampling methodology agreed with the ONS. It will also give local authorities the opportunity to respond to enable a conclusion to be drawn on those payments currently classified as ‘ongoing’. The work will provide statistically valid results using similar methodology to the Cohort 1 refinement above.

The Department is also undertaking a range of other Counter Fraud activities to prevent and detect fraud, pursue fraudsters, and recover monies. This activity helps to continue to build up the Department’s understanding of irregular payments across the different schemes.

Renewable heat incentive grant scheme

The value of payments made in error during 2021-22 under the Core Department GB Renewable Heat Incentive Scheme is estimated at £10.4 million (1.1% of total payments) within a 95% confidence interval of £6.2 million to £14.6 million. Applied to the expenditure total of £919.6 million (which represents the value of payments made in 2021-22, adjusted for net movements on accrued amounts payable) this would give an estimate of potential error of £10.1 million within a 95% confidence interval of £6.0 million to £14.2 million. This assumes the same error rate would be incurred on the accrued expenditure when it is paid.

Sarah Munby
Permanent Secretary and Principal Accounting Officer

18 October 2022

The Certificate of the Comptroller and Auditor General to the House of Commons

Opinion on financial statements

I certify that I have audited the financial statements of the Department for Business, Energy and Industrial Strategy (“the Department”) and of its Departmental Group for the year ended 31 March 2022 under the Government Resources and Accounts Act 2000. The Departmental Group consists of the Department and the bodies designated for inclusion under the Government Resources and Accounts Act 2000 (Estimates and Accounts) Order 2021. The financial statements comprise: the Department’s and the Departmental Group’s

• Statement of Financial Position as at 31 March 2022;
• Statement of Comprehensive Net Expenditure, Statement of Cash Flows and Statement of Changes in Taxpayers’ Equity for the year then ended; and
• the related notes including the significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards.

In my opinion the financial statements:

• give a true and fair view of the state of the Department and the Departmental Group’s affairs as at 31 March 2022 and its net expenditure for the year then ended; and
• have been properly prepared in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions issued thereunder.

Emphasis of matters

Provision for nuclear decommissioning

Without qualifying my opinion, I draw attention to the disclosures made in notes 1.27 and 20.1 to the financial statements concerning the uncertainties inherent in the nuclear decommissioning provisions. As set out in these notes, given the very long timescales involved and the complexity of the plants and materials being handled, a considerable degree of uncertainty remains over the value of the liability for decommissioning nuclear sites designated by the Secretary of State. Significant changes to the liability could occur as a result of subsequent information and events which are different from the current assumptions adopted by the Nuclear Decommissioning Authority.

Contracts for Difference (CfD) derivatives

I also draw attention to the disclosures made in notes 1.20 and 10 to the financial statements concerning the measurement of liabilities relating to CfDs. As set out in these notes, there is a high degree of estimation uncertainty inherent in forecasting electricity generation volumes and wholesale electricity prices into the late 2030s (and 2060s for the purposes of the Hinkley Point C CfD) and there is a great deal of subjectivity involved in selecting a wholesale electricity price forecast input that conforms to the principles of fair value. The fair valuation estimate is particularly sensitive to other assumptions, including the rate applied to discount projected future difference payments. Significant changes to the liability could occur as a result of subsequent information and events which are different from the current assumptions adopted.

Financial guarantee liabilities

Furthermore, I draw attention to the disclosures made in notes 1.27 and 21 to the financial statements concerning the measurement of the Department’s liability under the Bounce Back Loan guarantee scheme. As described in note 21, the guarantee liability recognised in these financial statements is the present value of the amount that the Department expects to pay to lenders to settle claims made in accordance with scheme rules, which has been measured in accordance with the lifetime expected credit loss requirements of IFRS 9 as instructed per the HM Treasury adaptation per the Government Financial Reporting Manual (FReM). As note 21 describes, the measurement of the guarantee liability is highly sensitive to assumptions regarding probability of default and loss given default, with particular sensitivity to assumptions regarding the rate of fraud and error occurrence and associated loss. The Department has taken into account all reasonable and supportable information at the reporting date in estimating the guarantee liability recognised in the financial statements, however, as disclosed in note 21, there are a number of additional risk indicators for which the Department is unable to quantify the impact on the liability due to current data limitations.

The sensitivity also applies to the associated credit losses recognised in the Statement of Comprehensive Net Expenditure.

My opinion is not modified in respect of these matters.

Opinion on regularity

In my opinion, in all material respects:

• the Statement of Outturn Against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2022 and shows that those totals have not been exceeded; and
• the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (UK) (ISAs UK), applicable law and Practice Note 10 Audit of Financial Statements and Regularity of Public Sector Entities in the United Kingdom. My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I have also elected to apply the ethical standards relevant to listed entities. I am independent of the Department and its Group in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Department and its Group’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Department or its Group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Accounting Officer with respect to going concern are described in the relevant sections of this certificate.

The going concern basis of accounting for the Department and its Group is adopted in consideration of the requirements set out in HM Treasury’s Government Financial Reporting Manual, which requires entities to adopt the going concern basis of accounting in the preparation of the financial statements where it anticipated that the services which they provide will continue into the future.

Other information

The other information comprises information included in the Annual Report, but does not include the financial statements nor my auditor’s certificate and report. The Accounting Officer is responsible for the other information.

My opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

Opinion on other matters

In my opinion the part of the Remuneration and Staff Report to be audited has been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000.

In my opinion, based on the work undertaken in the course of the audit:

• the parts of the Accountability Report subject to audit have been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000;
• the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements and is in accordance with the applicable legal requirements.

Matters on which I report by exception

In the light of the knowledge and understanding of the Department and the Departmental Group and its environment obtained in the course of the audit, I have not identified material misstatements in the Performance and Accountability Report.

I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• I have not received all of the information and explanations required for my audit; or
• adequate accounting records have not been kept by the Department or returns adequate for my audit have not been received from branches not visited by my staff; or
• the financial statements and the parts of the Accountability Report subject to audit are not in agreement with the accounting records and returns; or
• certain disclosures of remuneration specified by HM Treasury’s Government Financial Reporting Manual have not been made or parts of the Remuneration and Staff Report to be audited is not in agreement with the accounting records and returns; or
• the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Responsibilities of the Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Accounting Officer is responsible for:

• maintaining proper accounting records;
• the preparation of the financial statements and Annual Report in accordance with the applicable financial reporting framework and for being satisfied that they give a true and fair view;
• ensuring that the Annual Report and accounts as a whole is fair, balanced and understandable;
• internal controls as the Accounting Officer determines are necessary to enable the preparation of financial statements to be free from material misstatement, whether due to fraud or error; and
• assessing the Department and its Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Accounting Officer anticipates that the services provided by the Department and its Group will not continue to be provided in the future.

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Government Resources and Accounts Act 2000.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was considered capable of detecting non-compliance with laws and regulations including fraud

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulations, including fraud. The extent to which my procedures are capable of detecting non-compliance with laws and regulations, including fraud is detailed below.

Identifying and assessing potential risks related to non-compliance with laws and regulations, including fraud

In identifying and assessing risks of material misstatement in respect of non-compliance with laws and regulations, including fraud, we considered the following:

• the nature of the sector, control environment and operational performance including the design of the Department and its Group’s accounting policies, key performance indicators and performance incentives.
• Inquiring of management, the Department’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Department and its Group’s policies and procedures relating to:
  • identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
  • detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
  • the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Department and its Group’s controls relating to the Department’s compliance with the Government Resources and Accounts Act 2000, Managing Public Money and the Supply and Appropriation (Main Estimates) Act 2021.
• discussing among the engagement team, including significant component audit teams, and involving relevant internal and external specialists, including modelling and economics specialists regarding complex expected credit loss models and statistics experts regarding the adequacy of the Department’s fraud assessment in COVID-19 support schemes and regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, I considered the opportunities and incentives that may exist within the Department and its Group for fraud and identified the greatest potential for fraud in the following areas: revenue recognition, posting of unusual journals, complex transactions and bias in management estimates, including in the valuation of the Department’s liability for loan guarantee schemes. In common with all audits under ISAs (UK), I am also required to perform specific procedures to respond to the risk of management override.

I also obtained an understanding of the Department and Group’s framework of authority as well as other legal and regulatory frameworks in which the Department and Group operates, focusing on those laws and regulations that had a direct effect on material amounts and disclosures in the financial statements or that had a fundamental effect on the operations of the Department and its Group. The key laws and regulations I considered in this context included Government Resources and Accounts Act 2000, Managing Public Money, the Supply and Appropriation (Main Estimates) Act 2021, employment law, tax and pension legislation, the Industrial Development Act 1982, Local Government Act 2003 and the Coronavirus Act 2020. In addition, I considered the Department’s assessment of the level of fraud and error in COVID-19 support schemes and the regularity of grant expenditure.

Audit response to identified risk

As a result of performing the above, the procedures I implemented to respond to identified risks included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described above as having direct effect on the financial statements;
• enquiring of management, the Audit and Risk Committee and in-house legal counsel concerning actual and potential litigation and claims;
• reading and reviewing minutes of meetings of those charged with governance and the Board and internal audit reports;
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business; and
• reviewing the Department’s methodology and assumptions in estimating the level of fraud and error in COVID-19 support schemes.

I also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and significant component audit teams and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website. This description forms part of my certificate.

Other auditor’s responsibilities

I am required to obtain appropriate evidence sufficient to give reasonable assurance that the Statement of Outturn against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals and that those totals have not been exceeded. The voted Parliamentary control totals are Departmental Expenditure Limits (Resource and Capital), Annually Managed Expenditure (Resource and Capital), Non-Budget (Resource) and Net Cash Requirement.

I am also required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Gareth Davies
Comptroller and Auditor General

19 October 2022

National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

The Report of the Comptroller and Auditor General to the House of Commons

Introduction

The Department for Business, Energy & Industrial Strategy (the Department) is responsible for supporting business; implementing the UK’s Industrial Strategy; promoting science, research and innovation; securing affordable and clean energy supplies; and coordinating delivery of the government’s climate change commitments.

Last year I qualified my regularity opinion of the Department’s and Departmental Group’s 2020-21 financial statements. This qualification was due to:

• the estimated material level of fraud in the COVID-19 business loan schemes for which the Department provided financial guarantees; and
• the estimated material level of fraud and error in the COVID-19 business support grants funded by the Department.

I also committed to review the Department’s updated estimates and activities in recovering irregular payments as part of my audit of the Department’s and Departmental Group’s 2021-22 financial statements. This report sets out:

• The Department’s progress on refining the fraud and error estimates in the COVID-19 business loan schemes and COVID-19 business support grants at 31 March 2022;
• The limitations in the Department’s estimate of the level of fraud and error present in the Bounce Back Loans Scheme and the associated implications for the financial statements; and
• The progress the Department has made in recovering irregular payments in the COVID-19 business loan scheme guarantees and COVID-19 business support grants.

Key findings

• The Department has refined its fraud and error estimate for the Bounce Back Loans Scheme (BBLS) in 2021-22. The Department has refined its central estimate of fraud and error in BBLS, with 3.49% (£1.12 billion) estimated to be the Department’s outstanding exposure to fraud loss that will arise from claims against the BBLS guarantee. The Department has identified limitations in its estimate which continue to limit its precision, however I am satisfied that the Department has made reasonable use of supportable information available at the reporting date.
• The Department has refined its assessment of the level of fraud and error present in the other loan guarantee schemes in 2021-22. As repayment and loan performance data became available for the other loan guarantee schemes, the Department concluded there are immaterial levels of fraud and error in the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
• The Department has refined the fraud and error estimates for early business support grants in 2021-22. The full assurance exercise that it planned to complete by spring 2022 is ongoing and the Department now expects to conclude this in 2022-23. BEIS’ central estimate is that the first 3 schemes include irregular payments of £985 million. Its estimates for the later schemes show significantly lower rates of fraud and error, with a combined central estimate of £57 million.
• Delays in the Department’s planned assurance exercises contributed to slower progress in activity to recover irregular payments. At 31 March 2022, local authorities have recovered £4.2 million in irregular payments on business support grant schemes (which is 0.4% of estimated irregular payments^{[footnote 1]}), with a further £1.2 million identified and referred to the Department for recovery. The Department did not complete its planned assurance exercises to its original spring 2022 timetable and revised its completion date to 2022-23. This delay has slowed the progress it has been able to make in supporting local authorities in identifying and recovering irregular grant payments.

2021-22 refinement of fraud and error estimates for business loan schemes

In its 2020-21 financial statements, the Department committed to refine its estimates of the levels of fraud present in the business loan scheme guarantees (BBLS, CBILS and CLBILS) as more reliable information, for example through loan repayment data, became available. This information allowed the Department to expand its analysis to also consider error in loan payments, both on the part of the lender and the borrower. The different characteristics of fraud and error in the business loan schemes will have varying implications for the losses faced by the Department as guarantees are called. For example, where a loan has been issued as a result of lender fraud or error, the BBLS guarantee will be invalidated, reducing the loss exposure to the Department.

Robust and timely measurement of fraud is key to developing a cost-effective control environment. Consideration of this additional information will help the Department to develop more reliable fraud and error estimates. Refined estimates provide vital transparency for taxpayers and Parliament, and will help the Department make better decisions about where to deploy its counter fraud resources to achieve the best return on investment.

Bounce Back Loans Scheme fraud and error estimate refinement

During 2020-21, the Department commissioned experts to produce a statistical estimate of the rate of occurrence of fraud in BBLS which was based on a sample of 1,067 loans. It used this work to estimate the level of fraud present within the scheme at 11.15% to a 95% confidence interval^{[footnote 2]}. The Department acknowledged in its 2020-21 financial statements limitations associated with their estimate:

• the estimate included all items flagged as ‘possible’ and ‘probable’ fraud occurrence, resulting in a likely overestimate of the rate of fraud present in the scheme;
• the Department had been unable to estimate the level of fraud occurrence that was likely to result in a loss through a claim on the loan guarantee, instead assuming that all fraud occurrences would result in loss, resulting in an overestimate of the fraud loss; and
• the estimate did not include a number of known fraud risk factors (for example businesses not adversely impacted by the pandemic taking out BBLS thus reducing the amount of money available for other public service delivery) because risk indicators could not be built into the estimation approach.

As part of my audit of the Department’s 2020-21 financial statements, I examined its rationale for these limitations and was satisfied that its justification was reasonable.

The Department continued to refine its estimate of the level of fraud and error during 2021-22, with 3 significant revisions to its central estimate:

• Refinement of the Department’s central estimate of fraud and error from 11.15% to 8.0%. The Department has disclosed in Note 21 of the financial statements that it refined its central estimate of fraud and error from 11.15% to 8.0%, This was possible as the sampling exercise undertaken by its experts was completed, combined with continued analysis of the status of sampled loans up to the reporting date of 31 March 2022. The reduction in estimated fraud and error arose as the Department’s experts obtained additional information in order to classify all identified ‘possible fraud’ cases as either ‘probable fraud’ or ‘no fraud suspected’, reducing the suspected overstatement that was disclosed in the 2020-21 financial statements.
• Estimation of the level of suspected fraud cases that are likely to result in a loss to the Department. The Department, through engagement with lenders, analysis of repayment data and monitoring of performance of the sampled loan facilities, has been able to estimate the level of suspected fraud cases that are expected to result in a claim against the BBLS guarantee (and therefore a loss to the Department). As disclosed in note 21 to the financial statements, the Department currently estimates a loss conversion rate of 52.9% with remaining loans expected to be repaid. This reduces the uncertainty over this element of the Department’s estimate compared to the position in 2020-21, where the Department had to assume 100% loss in the absence of information to conclude otherwise.
• An adjustment to remove the fraud that has already been observed in the Scheme. The Department has adjusted its fraud and error estimate to remove the fraud that has already been observed, through claimed and settled loan status of 0.75% (11,511 suspected fraud cases claimed or settled out of the 1.54 million BBLS loans provided).

The impact of these refinements is to reduce the Department’s central estimate of fraud and error which is expected to result in a loss within BBLS to 3.49%. The Department’s estimated outstanding exposure of this fraud and error at 31 March 2022 is £1.12 billion and is included within the financial guarantee liabilities in the Department’s and Departmental Group’s Consolidated Statement of Financial Position with more detail provided in note 21.

Despite these refinements of the fraud and error estimate, significant limitations remain which the Department anticipates will result in an understatement of the level of fraud and error present within the scheme. The Department estimates that an uplift of 4% to its fraud occurrence estimate would be a reasonable representation of these limitations, but acknowledges that it does not have sufficiently supportable information to make an adjustment to the guarantee liability and meet the requirements of International Financial Reporting Standards. These limitations arise from fraud risk indicators which the Department has identified but which have not been considered in the sampling work performed. Details of these indicators are included in note 21 to the financial statements, along with the Department’s assessment as to why it has been unable to obtain reliable information to support an adjustment to its fraud and error estimate at this stage.

I have considered the rationale set out by the Department, including its explanations as to why it has not been able to obtain reliable information to produce a supportable estimate for inclusion in its financial statements. Given the significance of the Department’s fraud and error estimate to its expected credit loss calculations (and therefore the guarantee liability disclosed within the financial statements) I am of the opinion that it would not be appropriate for the Department to apply an uplift to its fraud and error estimate at 31 March 2022 due to the lack of reliable and supportable information available to quantify the impact of the omitted risk indicators. These limitations are sufficiently disclosed by the Department.

As the Department notes, the data limitations in the estimate could result in both increases and decreases to the fraud and error estimate. Furthermore, there is no evidence available to determine the extent to which any fraud associated with the additional risk indicators outlined by the Department would result in a default on the BBLS loan and a loss to the Department.

The significance of the fraud and error estimate to the expected credit loss calculation underpinning the Department’s guarantee liability estimate is likely to decrease in future years as fraud losses crystalise and scheme lenders make claims against the BBLS guarantee. Fraudulent cases are unlikely to start repayments, and therefore will become apparent at an early stage due to default. The Department therefore expects to see the majority of fraud losses crystalising during 2022-23, following the end of the BBLS repayment holiday period.

Other business support guarantee scheme fraud and error estimate refinement

During 2021-22, the Department obtained repayment and loan performance data from lenders to support its fraud and error assessment for CBILS, CLBILS and RLS. This data showed that there were low levels of claims and defaults across the schemes and low levels of payments in arrears. Out of these 3 schemes, CBILS and RLS^{[footnote 3]} had material amounts outstanding at 31 March 2022 which are disclosed as liabilities within the Department’s financial statements^{[footnote 4]}. The Department’s engagement with lenders has shown that the levels of default arising from fraudulent or erroneous loans on these schemes is not material. I am satisfied with the Department’s assessment of the levels of fraud and error expected to be present in these schemes.

2021-22 refinement of fraud and error estimates for business support grants

Initial 3 2020-21 grant schemes

The Department calculated an initial estimate of the fraud and error for the first 3 business support grant schemes in 2020-21^{[footnote 5]} of 8.9% (£1.04 billion). In those financial statements, the Department explained how this estimate contained uncertainties because of data limitations and time constraints. During 2021-22, the Department set out to obtain more data from local authorities to finalise the testing that was inconclusive in 2020-21. This would allow it to increase reliability and narrow the range of the estimate to give more precision as to where the actual level may be. The Department has managed to do so, calculating a revised central estimate of 8.4% (£985 million); however significant uncertainties remained in its finalised estimate due to the inconclusion of items where the Department has been unable to firmly determine eligibility. The Regularity of Expenditure disclosures on page 145 of the Annual Report and Accounts set out how the range of the estimate has narrowed since 2020-21.

Remaining 2020-21 grant schemes

In 2020-21, the Department recognised the estimated expenditure for ‘other’ 2020-21 business support grant schemes however, the Department was unable to carry out a fraud and error assessment for these schemes due to time and data constraints^{[footnote 6]}. The Department has since undertaken assurance work for these grant schemes and produced an estimate of the fraud and error for inclusion in its 2021-22 financial statements. The Department’s central estimate of fraud and error in these schemes is £27.3 million (0.5% of associated grant payments) as disclosed on page 150 of the Annual Report and Accounts [Various LRSG]](#various-lrsg)].

2021-22 COVID-19 business support grants schemes

In 2021-22, the Department provided a further £4 billion of COVID-19 business support grant through 3 new schemes^{[footnote 7]}. As with the 2020-21 grant schemes, the Department has carried out a programme of assurance work to estimate the level of fraud and error on these schemes. The Department’s central estimate of fraud and error in these schemes is £30 million (0.75% of associated grant payments), with further details (including individual scheme estimates) disclosed on page 151 of the Annual Report and Accounts [Grant schemes with expenditure recognised in 2021-22].

The Department originally planned to complete the assurance work for business support grants (excluding the Omicron Hospitality and Leisure Grant and Additional Restrictions Grant schemes) by spring 2022. This was to determine a more reliable fraud and error estimate to allow it to help local authorities to identify irregular payments in the non-sampled population to support the recovery of irregular payments. The Department has been unable to complete this exercise for the ‘other’ 2020-21 grant schemes or the new 2021-22 schemes and now expects to do so in 2022-23.

My audit sought to obtain assurance over the precision of the estimated range of fraud and error in the COVID 19 business support grant schemes which have been estimated or refined by the Department in 2021-22. I am satisfied the estimated level of fraud and error in the expenditure associated with 2021-22 grant schemes is not material.

Progress recovering irregular payments for COVID-19 business support loans and grants

The Department is working with the National Investigation Service (NATIS), the Insolvency Service and other law enforcement agencies to pursue investigations into fraud in the Bounce Back Loans Scheme^{[footnote 8]}.

By 31 March 2022, NATIS had recovered £3.8 million on BBLS (0.34% of estimated irregular payments expected to result in a loss at 31 March 2022 ^{[footnote 9]}), of which £2.6 million has been returned to the commercial lenders and partners and £1.2 million has been returned to HM Treasury. In relation to BBLS, NATIS had made 49 arrests and had 43 ongoing investigations as at 31 March 2022. The Department’s recovery efforts for BBLS remain ongoing and it has committed to the Public Accounts Committee to set out further details on how it is working to maximise recovery efforts and reduce exposure to taxpayers by December 2022.

The Department is also working with local authorities to recover irregular grant payments made as a result of fraud or error in the various business support grant schemes^{[footnote 10]}. At 31 March 2022, a total of £4.2 million irregular payments have been recovered (which is 0.4% of estimated irregular payments^{[footnote 11]}) with 32 arrests and 19 ongoing investigations with NATIS.

The Department has not made the progress it planned in recovering irregular grant payments due to delays in the assurance exercise. The Department’s recovery activity, in conjunction with local authorities, has so far focussed on recovering irregular payments that have been identified as part of its assurance work or notified to the Department by local authorities. The Department is yet to apply its findings to the rest of the population of payments to help local authorities identify those non-sample tested payments with a higher risk of being irregular. The Department has therefore deferred the wider recovery of irregular payments until this exercise has concluded. For the initial 3 grant schemes (which have the estimated material levels of fraud and error), this means wider recovery action is not starting until 2-3 years after the businesses received the irregular payments. The longer the Department takes to start the recovery process, the lower the likelihood of successful recovery and potentially the greater the losses to the public purse.

Gareth Davies
Comptroller and Auditor General

19 October 2022

National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

1. This is calculated based on the 2021-22 combined central estimates of irregular payments for all business support grant schemes of £1.04 billion per pages 147 to 151 of the Department’s Annual Report and Accounts [CBILS, CLBILS, RLS]. ↩

2. Meaning the Department could be 95% confident from the results of their estimate that the level of fraud present in BBLS is within the range of 8.15% to 14.15%, with 11.15% representing the central point of this range in 2020-21. ↩

3. Recovery Loan Scheme (RLS) is a new business support guarantee scheme in 2021-22, see note 21 of the financial statements for scheme details. The fraud and error estimate was calculated for the first time using CBILS data due to similarities in the schemes, see page 146 of the Annual Report and Accounts [CBILS, CLBILS, RLS] for estimate calculation details. ↩

4. Page 147 of the Annual Report and Accounts [CBILS, CLBILS, RLS] shows that outstanding facilities at 31 March 2022 are £18.5 billion and £2.6 billion for CBILS and RLS respectively. This page also provides further repayment data for these schemes. ↩

5. The initial 3 grant schemes were: Small Business Grant Fund (SBGF); Retail, Hospitality and Leisure Grant Fund (RHLGF); and Local Authority Discretionary Grand Fund (LADGF). ↩

6. The ‘other’ 2020-21 grant schemes were: Closed Business Lockdown Payment; Christmas Support Package; and Local Restrictions Support Grants (various iterations). ↩

7. The 3 new grant schemes were: Restart Grant; Omicron Hospitality and Leisure Grant (OHLG); and Additional Restrictions Grant (ARG). ↩

8. House of Commons Committee of Public Accounts, Thirty-Third Report of Session 2019–21 Department for Business, Energy and Industrial Strategy Covid-19: Bounce Back Loan Scheme, HC 687, March 2021 ↩

9. This is calculated based on the Department’s 2021-22 central estimate of the outstanding exposure to irregular payments expected to result in a loss for BBLS of £1.12 billion per page 146 of the Department’s Annual Report and Accounts [BBLS]. ↩

10. House of Commons Committee of Public Accounts, First Report of Session 2022–23 Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020–21 inquiry, HC 59, September 2022 ↩

11. This is calculated based on the 2021-22 combined central estimates of irregular payments for all business support grant schemes of £1.04 billion per pages 148 to 152 of the Department’s Annual Report and Accounts Grant expenditure recognised in 2020-22]. ↩