Financial statements

Question 1

Consolidated Statement of Comprehensive Net Expenditure

Accepted Answer

For the period ended 31 March 2023.

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Revenue from contracts with customers	6.1	(487)	(2,693)	(650)	(3,040)
Total operating income		(487)	(2,693)	(650)	(3,040)
Staff costs	3	598	1,755	560	1,632
Purchase of goods and services	4.1	1,166	4,070	4,249	6,894
Depreciation and impairment charges	4.2	74	593	122	534
Provision, financial guarantee and other liabilities expenses	4.3	4,625	(104,095)	(2,832)	103,540
Grants	4.4	56,600	51,275	25,133	20,237
Other operating expenditure		3	(13)	-	(9)
Total operating expenditure/(income)		63,066	(46,415)	27,232	132,828
Net operating expenditure/(income)		62,579	(49,108)	26,582	129,788
Finance income	6.2	(181)	(372)	(178)	(320)
Finance expense	5	98	(2,563)	(43)	(646)
Contracts for difference derivatives	10	-	(13,491)	-	10,286
Share of post-tax loss/ (profits) of associates and joint ventures	14	52	(306)	(29)	(159)
(Gain)/loss on net assets transferred	11	-	(3)	-	-
Net expenditure/(income) for the year from operations		62,548	(65,843)	26,332	138,949
Net expenditure/(income) for the year		62,548	(65,843)	26,332	138,949
Other comprehensive income and expenditure
Net (gain)/loss on:
Items that will not be reclassified to net operating expenditure:
– Revaluation of property, plant and equipment		-	(307)	(78)	(285)
– Revaluation of intangible assets		-	(22)	-	14
Items that may be reclassified subsequently to net operating costs:
– Revaluation of investments		(8)	(7)	124	91
– Other revaluation movements		(8)	(28)	(7)	(7)
– Actuarial (gains)/losses		-	(333)	-	(194)
Total other comprehensive net income and expenditure		(16)	(697)	39	(381)
Comprehensive net expenditure/(income) for the year		62,532	(66,540)	26,371	138,568

Core department and agencies comprise: the core department, Companies House, Insolvency Service, and UK Space Agency.

All operations are continuing.

Further analysis of staff costs can be found in the staff note in the accountability report on page 67.

The notes on pages 198 to 338 form part of these accounts.

Question 2

Consolidated Statement of Financial Position

Accepted Answer

As at 31 March 2023.

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Revenue from contracts with customers	6.1	(487)	(2,693)	(650)	(3,040)
Total operating income		(487)	(2,693)	(650)	(3,040)
Staff costs	3	598	1,755	560	1,632
Purchase of goods and services	4.1	1,166	4,070	4,249	6,894
Depreciation and impairment charges	4.2	74	593	122	534
Provision, financial guarantee and other liabilities expenses	4.3	4,625	(104,095)	(2,832)	103,540
Grants	4.4	56,600	51,275	25,133	20,237
Other operating expenditure		3	(13)	-	(9)
Total operating expenditure/(income)		63,066	(46,415)	27,232	132,828
Net operating expenditure/(income)		62,579	(49,108)	26,582	129,788
Finance income	6.2	(181)	(372)	(178)	(320)
Finance expense	5	98	(2,563)	(43)	(646)
Contracts for difference derivatives	10	-	(13,491)	-	10,286
Share of post-tax loss/ (profits) of associates and joint ventures	14	52	(306)	(29)	(159)
(Gain)/loss on net assets transferred	11	-	(3)	-	-
Net expenditure/(income) for the year from operations		62,548	(65,843)	26,332	138,949
Net expenditure/(income) for the year		62,548	(65,843)	26,332	138,949
Other comprehensive income and expenditure
Net (gain)/loss on:
Items that will not be reclassified to net operating expenditure:
– Revaluation of property, plant and equipment		-	(307)	(78)	(285)
– Revaluation of intangible assets		-	(22)	-	14
Items that may be reclassified subsequently to net operating costs:
– Revaluation of investments		(8)	(7)	124	91
– Other revaluation movements		(8)	(28)	(7)	(7)
– Actuarial (gains)/losses		-	(333)	-	(194)
Total other comprehensive net income and expenditure		(16)	(697)	39	(381)
Comprehensive net expenditure/(income) for the year		62,532	(66,540)	26,371	138,568

Core department and agencies comprise: the core department, Companies House, Insolvency Service, and UK Space Agency.

The notes on pages 198 to 338 form part of these accounts.

Sarah Munby
Permanent Secretary and Principal Accounting Officer

10 October 2023

Question 3

Consolidated Statement of Cash Flows

Accepted Answer

For the period ended 31 March 2023.

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Revenue from contracts with customers	6.1	(487)	(2,693)	(650)	(3,040)
Total operating income		(487)	(2,693)	(650)	(3,040)
Staff costs	3	598	1,755	560	1,632
Purchase of goods and services	4.1	1,166	4,070	4,249	6,894
Depreciation and impairment charges	4.2	74	593	122	534
Provision, financial guarantee and other liabilities expenses	4.3	4,625	(104,095)	(2,832)	103,540
Grants	4.4	56,600	51,275	25,133	20,237
Other operating expenditure		3	(13)	-	(9)
Total operating expenditure/(income)		63,066	(46,415)	27,232	132,828
Net operating expenditure/(income)		62,579	(49,108)	26,582	129,788
Finance income	6.2	(181)	(372)	(178)	(320)
Finance expense	5	98	(2,563)	(43)	(646)
Contracts for difference derivatives	10	-	(13,491)	-	10,286
Share of post-tax loss/ (profits) of associates and joint ventures	14	52	(306)	(29)	(159)
(Gain)/loss on net assets transferred	11	-	(3)	-	-
Net expenditure/(income) for the year from operations		62,548	(65,843)	26,332	138,949
Net expenditure/(income) for the year		62,548	(65,843)	26,332	138,949
Other comprehensive income and expenditure
Net (gain)/loss on:
Items that will not be reclassified to net operating expenditure:
– Revaluation of property, plant and equipment		-	(307)	(78)	(285)
– Revaluation of intangible assets		-	(22)	-	14
Items that may be reclassified subsequently to net operating costs:
– Revaluation of investments		(8)	(7)	124	91
– Other revaluation movements		(8)	(28)	(7)	(7)
– Actuarial (gains)/losses		-	(333)	-	(194)
Total other comprehensive net income and expenditure		(16)	(697)	39	(381)
Comprehensive net expenditure/(income) for the year		62,532	(66,540)	26,371	138,568

The notes on pages 198 to 338 form part of these accounts.

Question 4

Statement of Changes in Taxpayers’ Equity (core department and agencies)

Accepted Answer

For the period ended 31 March 2023.

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Revenue from contracts with customers	6.1	(487)	(2,693)	(650)	(3,040)
Total operating income		(487)	(2,693)	(650)	(3,040)
Staff costs	3	598	1,755	560	1,632
Purchase of goods and services	4.1	1,166	4,070	4,249	6,894
Depreciation and impairment charges	4.2	74	593	122	534
Provision, financial guarantee and other liabilities expenses	4.3	4,625	(104,095)	(2,832)	103,540
Grants	4.4	56,600	51,275	25,133	20,237
Other operating expenditure		3	(13)	-	(9)
Total operating expenditure/(income)		63,066	(46,415)	27,232	132,828
Net operating expenditure/(income)		62,579	(49,108)	26,582	129,788
Finance income	6.2	(181)	(372)	(178)	(320)
Finance expense	5	98	(2,563)	(43)	(646)
Contracts for difference derivatives	10	-	(13,491)	-	10,286
Share of post-tax loss/ (profits) of associates and joint ventures	14	52	(306)	(29)	(159)
(Gain)/loss on net assets transferred	11	-	(3)	-	-
Net expenditure/(income) for the year from operations		62,548	(65,843)	26,332	138,949
Net expenditure/(income) for the year		62,548	(65,843)	26,332	138,949
Other comprehensive income and expenditure
Net (gain)/loss on:
Items that will not be reclassified to net operating expenditure:
– Revaluation of property, plant and equipment		-	(307)	(78)	(285)
– Revaluation of intangible assets		-	(22)	-	14
Items that may be reclassified subsequently to net operating costs:
– Revaluation of investments		(8)	(7)	124	91
– Other revaluation movements		(8)	(28)	(7)	(7)
– Actuarial (gains)/losses		-	(333)	-	(194)
Total other comprehensive net income and expenditure		(16)	(697)	39	(381)
Comprehensive net expenditure/(income) for the year		62,532	(66,540)	26,371	138,568

Question 5

Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Accepted Answer

For the period ended 31 March 2023.

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Revenue from contracts with customers	6.1	(487)	(2,693)	(650)	(3,040)
Total operating income		(487)	(2,693)	(650)	(3,040)
Staff costs	3	598	1,755	560	1,632
Purchase of goods and services	4.1	1,166	4,070	4,249	6,894
Depreciation and impairment charges	4.2	74	593	122	534
Provision, financial guarantee and other liabilities expenses	4.3	4,625	(104,095)	(2,832)	103,540
Grants	4.4	56,600	51,275	25,133	20,237
Other operating expenditure		3	(13)	-	(9)
Total operating expenditure/(income)		63,066	(46,415)	27,232	132,828
Net operating expenditure/(income)		62,579	(49,108)	26,582	129,788
Finance income	6.2	(181)	(372)	(178)	(320)
Finance expense	5	98	(2,563)	(43)	(646)
Contracts for difference derivatives	10	-	(13,491)	-	10,286
Share of post-tax loss/ (profits) of associates and joint ventures	14	52	(306)	(29)	(159)
(Gain)/loss on net assets transferred	11	-	(3)	-	-
Net expenditure/(income) for the year from operations		62,548	(65,843)	26,332	138,949
Net expenditure/(income) for the year		62,548	(65,843)	26,332	138,949
Other comprehensive income and expenditure
Net (gain)/loss on:
Items that will not be reclassified to net operating expenditure:
– Revaluation of property, plant and equipment		-	(307)	(78)	(285)
– Revaluation of intangible assets		-	(22)	-	14
Items that may be reclassified subsequently to net operating costs:
– Revaluation of investments		(8)	(7)	124	91
– Other revaluation movements		(8)	(28)	(7)	(7)
– Actuarial (gains)/losses		-	(333)	-	(194)
Total other comprehensive net income and expenditure		(16)	(697)	39	(381)
Comprehensive net expenditure/(income) for the year		62,532	(66,540)	26,371	138,568

The notes on pages 198 to 338 form part of these accounts.

Question 6

Notes to the accounts

Accepted Answer

1. Accounting policies, judgments, and estimates

1.1 Basis of accounting

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adapted and interpreted by the HM Treasury 2022-23 Government Financial Reporting Manual (FREM) and as set out in the Accounts Direction to the department pursuant to section 5(2) of the Government Resources and Accounts Act 2000 (GRAA) except as described at 1.2 below. Where the FREM permits a choice of accounting policy, the policy selected is that judged to be most appropriate to the particular circumstances of the core department and its consolidated entities (the departmental group) for the purpose of giving a true and fair view. The policies adopted by the departmental group are described below; they have been applied consistently to items considered material to the accounts.

On 7 February 2023, the prime minister announced a major machinery of government change which redistributed the activities of several existing government departments, including BEIS, and created three new departments, the Department for Business and Trade, the Department for Science, Innovation and Technology, and the Department for Energy Security and Net Zero. The Government Resources and Accounts Act (2000) requires departments to produce Annual Report and Accounts which follow the structures set out to Parliament at the relevant Supplementary Estimate. The 2022-23 Supplementary Estimates for BEIS were presented before the Machinery of Government change took place. As a result, this annual report and accounts presents those activities paid out of the BEIS Vote for 2022-23.

The Consolidated Statement of Financial Position (SOFP) shows significant net liabilities, primarily relating to energy support schemes, COVID-19 business support financial guarantees schemes, Contracts for Difference derivatives and provisions for nuclear decommissioning which will be settled over many years. Liabilities in excess of those to be funded by the departmental group are expected to be met by future funding voted by Parliament annually in Supply and Appropriation Acts. There is no reason to believe the resources required to settle these liabilities will not be forthcoming. It has accordingly been considered appropriate to adopt a going concern basis for the preparation of these financial statements.

1.2 Accounting convention

These accounts have been prepared under the historical cost convention modified to measure property, plant and equipment (except specific waste management assets), intangibles, investment properties and financial instruments at fair value to the extent required or permitted under IFRS as set out in these accounting policies.

The department has agreed with HM Treasury that specific nuclear waste management assets should be measured at historical cost less any impairment losses where there is no reliable and cost effective valuation methodology; this is a departure from the FREM requirement to report property, plant and equipment at fair value. Public dividend capital and shares in consolidated bodies held by the core department are carried at historical cost less any impairment in accordance with the FREM.

1.3 Presentational currency

The financial statements are presented in pounds sterling, the functional currency of the departmental group. Transactions denominated in a foreign currency are translated into sterling at the rate of exchange on the date of each transaction. In preparing the financial statements, monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing at the reporting date. All translation differences of monetary assets and liabilities are included in net expenditure for the year. Values are rounded to the nearest million pounds (£m) unless the FREM requires a lower threshold.

1.4 Basis of consolidation

The departmental group accounts consolidate the balances of the core department and designated bodies listed in note 28, which fall within the departmental boundary as defined in the FREM and make up the departmental group, excluding transactions and balances between them. Where the Office for National Statistics (ONS) designates a body retrospectively such that the body should have been designated for consolidation in a prior period, the accounts are voluntarily restated to reflect the position from the effective date of classification. The consolidated bodies prepare accounts in accordance with either the FREM, the Charities’ Statement of Recommended Practice (for charities), or the Companies Act 2006 (for limited companies). For those bodies that do not prepare accounts in accordance with the FREM, adjustments are made upon consolidation if necessary where differences would have a significant effect on the accounts. The core department and its designated bodies are all domiciled in the UK.

1.5 Changes in accounting policies

Accounting policies are unchanged compared to those in the 2021-22 departmental group financial statements.

1.6 New accounting standards adopted in the year and FREM changes

No new accounting standards have been adopted in these financial statements.

1.7 Applicable accounting standards issued but not yet adopted

IFRS 17 ‘Insurance Contracts’

IFRS 17 ‘Insurance Contracts’ replaces IFRS 4 ‘Insurance Contracts’, which requires reporters to identify insurance contracts, and for those contracts recognise an insurance contract liability. The insurance contract liability is calculated as the present value of future insurance cashflows (the fulfilment cash flows) plus a subsequent risk adjustment. The IASB (International Accounting Standards Board) announced the deferral of IFRS 17 until 1 January 2023 and therefore, the implementation timetable in the public sector is being extended to the earliest of 1 April 2023. The Financial Reporting Advisory Board (FRAB) has since agreed a further two-year deferral to require adoption on 1 April 2025.

The departmental group is currently assessing the impact of the adoption of IFRS 17.

The core department recognises a reinsurance liability in relation to the Trade Credit Reinsurance Scheme. Please see note 1.23 and note 21 for further details of the accounting policy and current valuation.

1.8 Operating income

Operating income relates directly to the operating activities of the departmental group and includes income from contracts with customers, levies, grants and income from coal pension schemes.

The departmental group is required to identify receipts which it collects on behalf of the Consolidated Fund; these are not recognised as income but instead are disclosed in a separate Trust Statement published alongside these accounts and in note 4 in the Statement of Outturn against Parliamentary Supply (SOPS) in the accountability report.

Operating income from contracts with customers

Income from contracts with customers are allocated to individual promises, or performance obligations, on a stand-alone selling price basis, and is recognised when the related performance obligation is satisfied, either over time or at a point in time.

The performance obligations are typically satisfied upon delivery of goods and services in accordance with the contractually defined timescales. The payment terms for the invoices are typically 30 days. Where the departmental group receives consideration prior to the transfer of goods and services, the amount is recorded as contract liabilities. Where the departmental group has transferred goods and services to a customer and the right to consideration is conditioned on something other than the passage of time, the amount is recorded as contract assets.

The measurement of income takes account of significant financing components, variable consideration, and any discounts or rebates.

Levies

Levy income is recognised in the departmental group accounts when an event has occurred that creates an obligation on a counterparty to pay the levy, the amount can be reliably measured, and it is probable that the assisted economic benefits from the taxable event will flow to the departmental group. Levies are typically set on an annual basis, invoiced monthly, quarterly or bi-annually, and accounted for in the period to which the invoices are related to and performance obligations are satisfied.

The Low Carbon Contracts Company Ltd (LCCC) and Electricity Supply Company Ltd (ESC) are permitted to retain levies collected under statute and classified as taxes in the national accounts. This income is recognised by LCCC and ESC in the same period as the related expenditure. LCCC and ESC do not prepare their individual accounts under FREM and have judged that IFRS 15 ‘Revenue from Contracts with Customers’ does not apply to income from electricity suppliers. IFRS 15 is applicable to the departmental group’s remaining levy income under FREM guidance.

The departmental group is not permitted by the FREM to recognise tax income relating to future years, whereas LCCC, which does not apply the FREM, is able to. Adjustments are made on consolidation to ensure compliance with the departmental group accounting policy.

Grant income

Grant income including European funding is recognised when there is reasonable assurance that there are no conditions attached, or that any such conditions have been complied with and it is certain the grant will be received. Research grants and fellowships are recognised in line with a schedule of pre-agreed payment profiles, which include matching considerations over the period of the grant duration and to the period which they relate. Where the terms and conditions do not specify a pre-agreed payment profile or other matching considerations, obligations are recognised in full. Where the profile indicates an unclaimed and/or unpaid amount exists at the reporting date, such sums are accrued.

Under the FREM, grants and grants-in-aid should be accounted for in accordance with IAS 20 ‘Accounting for Government Grants and Disclosure of Government Assistance’ as interpreted by the FREM. The grant income is and continues to be out of the scope of IFRS 15.

Income from the Mineworkers’ Pension Scheme

Income arising from the government guarantee of certain benefits payable to members and beneficiaries of the Mineworkers’ Pension Scheme is recognised when the core department becomes entitled to the income and the value can be reliably measured.

The government is entitled to a portion of any periodic valuation surpluses as determined by the Government Actuary’s Department. The cash amounts are to be received annually up to 2027. The Coal Pension receivables have been classified as held at amortised cost under IFRS 9 ‘Financial Instruments’. The associated income, therefore, is out of scope of IFRS 15.

1.9 Staff costs

Staff costs are recognised as expenses when the departmental group becomes obligated to pay them, including the cost of any untaken leave entitlement.

1.10 Grants payable

Grants payable are recognised when the grant recipient has performed the activity that creates an entitlement to the grant under the terms of the scheme and include estimates for claims not yet received. Where an intermediary acts as agent in distributing grant on behalf of the department, grants payable are recognised when the grant recipient becomes entitled to the grant. Grant contributions to international organisations in the form of promissory notes are recognised as expenses when they become payable on demand with the department exercising no further control over disbursement.

1.11 Taxation

The core department and its agencies are exempt from corporation tax by way of Crown exemption. Some consolidated bodies are subject to corporation tax on taxable profits. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to HM Revenue and Customs, based on tax rates and laws that are enacted or substantively enacted by the reporting date.

Value-added tax (VAT) is accounted for in the accounts, in that the amounts are shown net of VAT except for irrecoverable VAT, which is aggregated with the cost of purchased items.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised for all tax-deductible temporary differences, carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available in future years against which they can be utilised.

1.12 Property, plant, and equipment (PPE)

Assets are capitalised as PPE if they are intended for use on a continuing basis and their original carrying value, on an individual or asset pool basis, exceeds the relevant capitalisation threshold which ranges from £1,000 to £10,000 across the departmental group. Exceptions are:

a. assets held by the NDA on designated nuclear sites are only recognised where the economic element of their value at the reporting date exceeds £100,000 and the proportion of asset value relating to commercial activity exceeds 10%

b. operational mine water schemes and subsidence pumping stations are held by the Coal Authority at £nil value because they are used to address pollution caused by past mining activities where the economic benefits have already been received.

To the extent that it has been recognised as a provision under IAS 37, the estimated cost of decommissioning facilities is recognised as part of the carrying value of the asset at initial recognition and depreciated over its useful life.

Valuation of PPE

PPE is carried at fair value except for nuclear waste management assets held at historical cost (see note 1.19) and assets under construction which are held at cost. In accordance with the FREM, assets that have short useful lives or are of low value are carried at depreciated historical cost less impairment as a proxy for fair value.

Non-specialist land and buildings are measured at current value in existing use using professional valuations. Specialist land and buildings are measured at depreciated replacement cost which represents the present value of the asset’s remaining service potential.

Revaluation of PPE

Any accumulated depreciation at the date of revaluation is eliminated and the resulting net book value restated to equal the revalued amount. Any revaluation increase arising is credited to the revaluation reserve except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in which case the increase is credited to net expenditure for the year to the extent of the decrease previously charged. A decrease in carrying amount arising on revaluation is charged as an expense to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. On de-recognition, any revaluation surplus remaining in the revaluation reserve attributable to the asset is transferred directly to the general fund.

Depreciation of PPE

PPE assets are depreciated to estimated residual values. This is done on a straight-line basis over their estimated useful lives, given in the table below. Residual values and useful lives are reviewed and adjusted if appropriate at each reporting date. Freehold and long leasehold land are not depreciated.

PPE	Estimated useful life in years
Freehold buildings	10 – 60
Agricultural buildings	Up to 60
Dwellings	Up to 60
Leasehold improvements	Shorter of remaining useful life or outstanding term of lease
Computer equipment	2 – 10
Plant and machinery	3 – 50
Office machinery (included in plant and machinery), furniture, fixtures and fittings	2 – 11
Transport equipment	2 – 14
Ships (included in transport equipment)	Minimum of 20
Aircraft (included in transport equipment)	Minimum of 15
Assets under construction	Not depreciated until available for use as intended by management

1.13 Investment property

The departmental group holds properties which have been classified as investment properties and are measured using the fair value model specified in IAS 40. Gains and losses arising from changes in fair value are recognised in net expenditure for the year.

1.14 Intangible non-current assets

Intangible non-current assets are capitalised if they are intended for use on a continuing basis and their original carrying value, on an individual or asset pool basis, exceeds the relevant capitalisation threshold which ranges from £1,000 to £10,000 across the departmental group. There are no active markets for the majority of the departmental group’s intangible non-current assets which are valued at the lower of depreciated replacement cost and value in use using a valuation technique (for example for income-generating assets); where there is no value in use, depreciated replacement cost is used. Where there is an active market, the valuation is derived from the active market. Assets of low value or with short useful lives are carried at cost less accumulated amortisation and impairment losses as a proxy for fair value. They are amortised on a straight-line basis over the following periods:

Intangible non-current asset	Period
Software licences	3 – 10 years
Internally developed software	Up to 10 years
Website development costs	2 – 5 years
Patents, licences and royalties	7 – 15 years

1.15 Impairment of PPE and intangible non-current assets

The departmental group reviews carrying amounts at each reporting date. If an indicator for impairment occurs then the recoverable amount of the asset (the higher of fair value less costs to sell and value in use) is estimated and an impairment loss recognised to the extent that it is lower than the carrying amount. Losses arising from a clear consumption of economic benefit are charged to net expenditure for the year. Losses that do not result from a loss of economic value or service potential are taken to the revaluation reserve to the extent that a revaluation reserve exists for the impaired asset; otherwise to net expenditure for the year.

1.16 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and other short term highly liquid investments which are readily convertible to known amounts of cash are subject to insignificant risk of changes in value and have an original maturity of 3 months or less. Any bank overdraft amounts are included within trade payables and other liabilities.

1.17 Leases

The departmental group adopted IFRS 16 ‘Leases’ from 1 April 2021, in agreement with HM Treasury.

Assumptions

The definition of a contract is expanded to include intra-UK government agreements where nonperformance may not be enforceable by law. This includes, for example, Memorandum of Understanding (MOU) agreements.

The group has expanded the definition of a lease to include arrangements with £nil consideration. Peppercorn leases are examples of these, they are defined by HM Treasury as lease payments significantly below market value. These assets are fair valued on initial recognition. On transition any differences between the discounted lease liability and the right of use asset are included through equity. Any differences between the lease liability and right of use asset for new leases after implementation of IFRS 16 are recorded in income.

As mandated in the FREM, the group has elected not to recognise right of use assets and lease liabilities for the following leases:

low value assets (these are determined to be in line with the departmental group’s capitalisation threshold, £10,000 de minimus)
leases with a lease term of 12 months or less

Measurement of right-of-use assets

Initial measurement:

At the commencement date, the departmental group measures the right-of-use asset at cost, which comprises:

the amount of the initial measurement of the lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs incurred
an estimate of costs to be incurred in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the lease terms and conditions.

Subsequent measurement:

Right-of-use assets are subsequently measured in line with the class of PPE asset to which the lease relates. The cost model for IFRS 16 is used as a proxy for valuation except where:

a longer-term contract that has no provisions to assess lease payments for market conditions
there is a significant period of time between these assessments
the valuation of the underlying asset is likely to fluctuate significantly due to changes in market prices

Depreciation of right-of-use assets:

Right-of-use assets are depreciated on a straight-line basis from commencement date to the earlier of the end of:

useful life of the right-of-use asset, assessed as the same as the class of PPE asset to which the lease relates
lease term

Impairment of right-of-use assets:

The departmental group applies IAS 36 ‘Impairment of Assets’ to determine whether a right- of-use asset is impaired and to account for any impairment loss identified.

Measurement of lease liabilities

Initial measurement:

At the commencement date, the departmental group measures the lease liability at the present value of the lease payments that are not paid at that date. Lease payments are discounted using either:

the interest rate implicit in the lease
HM Treasury discount rate where interest rates implicit in the lease cannot be readily determined
another discount rate where the departmental group determines it more accurately represents the interest rate

The weighted average discount rate applied to the lease liabilities is 1.66%. The majority of the departmental group has applied the HM Treasury discount rate prevailing at the time of adoption (1.99% from 1 April 2019 to 31 December 2019, 1.27% from 1 January 2020 to 31 December 2020, 0.91% from 1 January 2021 to 31 December 2021, 0.95% for leases that commence or are remeasured between 1 January 2022 to 31 December 2022, and 3.51% for leases that commence or are remeasured between 1 January 2023 to 31 March 2023).

At the commencement date, lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the term not paid at the commencement date:

fixed payments, including any in-substance fixed payments less any lease incentives receivable
variable lease payments that depend on an index or a rate, initially measured using the index or rate at the commencement date, for example, payments linked to a consumer price index or a benchmark interest rate
amounts expected to be payable by the departmental group under residual value guarantees
the exercise price of a purchase option if the departmental group is reasonably certain to exercise that option
payments of penalties for terminating the lease if the lease term reflects the departmental group exercising the option to terminate the lease and the departmental group is reasonably certain to exercise this option.

Subsequent measurement:

The lease liability is remeasured to reflect changes to the lease payments. The departmental group remeasures the lease liability by discounting the revised lease payments using a revised discount rate if there is a change in:

lease term
the departmental group’s assessment of an option to purchase the underlying asset, assessed considering events and circumstances in the context of a purchase option. The departmental group determines the revised lease payments to reflect the change in amounts payable under the purchase option
amounts expected to be payable under a residual value guarantee
future lease payments resulting from a change in the index or rate used to determine these future lease payments, including a change to reflect changes in market rental rates following a market rent review. The departmental group remeasures the lease liability to reflect those revised lease payments only when there is a change in the cash flows (this will be when the adjustment to the lease payments takes effect)

The amount of remeasurement of the lease liability is recognised as an adjustment to the right-of-use asset, where there is a balance on the right-of-use asset. However, if the carrying amount of the right-of-use asset is £nil and there is a further reduction in the measurement of the lease liability, the departmental group recognises the remaining amount of the remeasurement of the lease liability in the Statement of Comprehensive Net Expenditure.

Classification

The departmental group classifies leases where it is lessor as either an operating lease or a finance lease. The departmental group classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. If it does not, then the lease is classified as an operating lease.

Finance leases: recognition and measurement

At the commencement date, the departmental group recognises assets held under a finance lease within the Statement of Financial Position and presents them as a receivable at an amount equal to the net investment in the lease using the interest rate implicit in the lease to measure the net investment in the lease. Initial direct costs are included in the net investment in the lease. Finance lease income is allocated over the lease term so as to reflect a constant periodic rate of return on the departmental group’s net investment outstanding in respect of the leases.

Operating leases: recognition and measurement

The departmental group recognises lease payments from operating leases as income on a straight-line basis. The departmental group recognises costs, including depreciation incurred in earning the lease income as an expense. Initial direct costs incurred in obtaining the operating lease are added to the carrying amount of the underlying asset and these are expensed over the lease term on the same straight-line basis as the lease income.

1.18 Subsidiaries, associates, and joint ventures

Subsidiaries and public sector joint ventures are consolidated where designated within the departmental group boundary (note 28); those subsidiaries, joint ventures and associates that are outside of the departmental group boundary are measured in accordance with IFRS 9 ‘Financial Instruments’ or IAS 28 ‘Investments in Associates and Joint Ventures’ as relevant. The financial asset is recognised when the departmental group becomes party to the contractual provisions of the instrument. Equity investments in associates or joint ventures outside the public sector are initially recorded at cost and subsequently adjusted to reflect the departmental group’s share of net profit or loss of the associate or joint venture.

1.19 Financial instruments

Financial assets and liabilities are measured initially at fair value plus transaction costs unless measured at fair value through profit or loss in which case transaction costs are charged to Net expenditure for the year. Fair value is determined by reference to quoted prices where an active market exists for the instrument; otherwise, it is determined using generally accepted valuation techniques including discounted estimated cash flows. A regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using settlement date accounting. Further information is given in note 1.20 and note 1.26.

Financial assets

Classification and measurement of financial asset:

The classification of financial assets under IFRS 9 is based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.

Under IFRS 9, the requirement for classifying and measuring financial assets is that:

loans and other debt instruments are classified as either amortised cost, FVTOCI (fair value through other comprehensive income) or FVTPL (fair value through profit or loss), dependent on the business model and cash flow characteristics of the financial assets
investments in equity instruments are classified as FVTPL, unless an irrevocable election is made on initial recognition to recognise subsequent changes in fair value in Other Comprehensive Income (OCI) – the election is only available to equity instruments that are not held for trading
derivatives are classified as FVTPL

Categories of financial asset

Financial assets are categorised as one of the following:

amortised cost are financial assets whose contractual cash flows are solely payments of principal and interest and the objective of the business model is to hold financial assets to collect contractual cash flows only. They are initially recognised at fair value and thereafter at amortised cost using the effective interest method less any impairment – the effective interest rate method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period
Fair Value Through Other Comprehensive Income (FVTOCI) are either:
Debt instruments whose cash flows are solely payments of principal and interest and the business model of which is to hold for both collecting contractual cash flows and selling
Equity instruments that are neither held for trading nor contingent consideration recognised in a business combination, as the departmental group has made an irrevocable election at initial recognition.

After initial recognition, these assets are subsequently measured at fair value. Gains and losses in fair value are recognised directly in equity. On de-recognition, the cumulative gain or loss previously recognised in equity is recognised in net expenditure for the year for debt instruments and transferred to general fund for equity instruments
All financial assets which do not meet the criteria for classification to be recognised and measured at amortised cost and FVTOCI are recognised and measured at Fair Value Through Profit or Loss (FVTPL). Transaction costs and any subsequent movements in the valuation of the asset are recognised in net expenditure for the year

Impairment of financial assets

Financial assets other than equity instruments and those at FVTPL are assessed for impairment at each reporting date using the expected credit loss (ECL) model. The 3-stage model based on the level of credit risk is applied to any financial assets other than long term trade receivables, contract assets which do contain a significant financing component and lease receivables within the scope of IFRS 16 ‘Leases’ as follows:

For financial assets with low credit risk or assets that have not had a significant increase in credit risk since initial recognition, 12-month ECL are recognised and interest revenue is calculated on the gross carrying amount of the asset without the reduction of credit allowance.
For financial assets that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment, lifetime ECL are recognised and interest revenue is calculated on the gross carrying amount of the asset.
For financial assets that have objective evidence of impairment at the reporting date, lifetime ECL are recognised and interest revenue is calculated on the net carrying amount net of credit allowance.

Impairment gains or losses, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised in accordance with the standard, are recognised in profit or loss.

For long term trade receivables, contract assets which do not contain a significant financing component and lease receivables within the scope of IFRS 16 ‘Leases’, the simplified approach is applied and lifetime ECL are recognised as dictated by the FREM.

The impairment methodology is detailed in the financial instruments note 24.

Derecognition of financial assets

Financial assets are derecognised when the rights to receive future cash flows have expired or are transferred and the risks and rewards of ownership have been substantially transferred.

Financial liabilities

Classification and measurement of financial liabilities

The departmental group’s financial liabilities excluding derivatives and some financial guarantees are initially recognised at fair value including directly attributable transaction costs; they are subsequently measured at amortised cost using the effective interest rate method, except for:

Financial liabilities at fair value through profit or loss, which is applied to derivatives and other financial liabilities designated as such at initial recognition.
Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial liability is recognised for the consideration received for the transfer.
Financial guarantee contracts and loan commitments.

Derecognition of financial liabilities

Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.

Derivative financial instruments

Derivatives are initially recognised at fair value and subsequently at fair value. Gains/losses in fair value are recognised in net expenditure for the year unless hedge accounting is applied.

The departmental group has two classes of derivative financial instrument, foreign exchange contracts to which hedge accounting is applied and Contracts for Difference (CfDs) contracts to which hedge accounting is not applied.

Forward foreign exchange contracts:

Forward contracts are held as cash flow hedges to reduce exposure to foreign currency risk. The effective portions of changes in their fair values are recognised in equity. Gains and losses relating to ineffective portions are recognised immediately in net expenditure for the year. Amounts accumulated in equity are recycled to net expenditure for the year in the same period as the hedged item.

Contracts for Difference (CfDs):

CfDs are held to incentivise investment in low carbon electricity generation by agreeing strike prices with electricity generators which are counterparties to the contracts. The counterparty pays, or is paid, the difference between the strike price and the reference price (a measure of the average market price of electricity) at the time of electricity supply. CfDs are measured at FVTPL , initially at their transaction price (£nil) with subsequent changes in fair value (as measured by a valuation model) recognised in net expenditure for the year. Where the valuation model estimate of fair value at initial recognition is different from the transaction price, the difference is deferred and amortised to net expenditure for the year over the contract settlement period (note 10).

1.20 Financial guarantee and loan commitment liabilities

Financial guarantee contract liabilities

A guarantee liability is recognised when a lender makes an offer of a loan facility to a borrower which meets the eligibility criteria of the relevant scheme. Guarantee liabilities are derecognised when the department is no longer exposed to potential lender claim on the guarantee, that is either a) when a lender claim has been approved by the department for payment, b) on expiry of the guarantee without lender claim including where a loan facility has not been drawn down by the borrower within the offer period or c) if a guarantee is no longer considered to meet the eligibility criteria of the relevant scheme such that the guarantee is no longer effective. Amounts due to the department as recovered by lenders from defaulted borrowers following derecognition of the guarantee liability are recognised on a cash basis and offset against provision expense in the SOCNE.

Other than as described below, guarantee liabilities are measured as required by the FREM, at fair value at initial recognition and subsequently remeasured at the higher of a) the amount of loss allowance determined in accordance with IFRS 9 and b) the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 ‘Revenue from Contracts with Customers’.

In accordance with the 2022-23 FREM IFRS 9 adaptation, where the department issues a financial guarantee below fair value and where no active market or observable equivalent exists such that an estimate of fair value can be made that would require recognition under IFRS 9, the guarantee is measured, at initial recognition and at reporting period end, at an amount equal to lifetime expected credit loss (ECL) in accordance with the requirements of IFRS 9. As the rate intrinsic to the financial guarantee cannot be reliably determined, the HM Treasury financial instrument rate has been used to calculate the present value of expected credit losses.

Loan commitments at below market rate

The departmental group accepts a lower than market rate of return from Enterprise Capital Fund investments to encourage private sector investors to invest alongside. Although the departmental group expects to make a positive return from these investments, this return is less than that required by the private sector. The departmental group has, at initial recognition, elected to irrevocably designate the liability related to these loan commitments as measured at fair value through profit or loss because the group of financial assets and financial liabilities is managed, and its performance is evaluated on a fair value basis, in accordance with a documented investment strategy, and information is provided internally on that basis to key management personnel.

1.21 Pensions

The accounting for each of the departmental group’s pension plans is dependent on its nature.

Funded defined-benefit pension schemes

The departmental group has 9 funded defined-benefit pension schemes, the Medical Research Council pension scheme, 2 schemes through the Nuclear Decommissioning Authority (NDA) and 6 schemes through the nuclear site licence companies.

The net assets/liabilities recognised in the SOFP for funded defined benefit schemes are calculated by independent actuaries by deducting the fair value of scheme assets (at bid prices) from the present value of defined benefit obligations (estimated using the projected unit credit method, less any amounts receivable from third parties). Where the scheme is in surplus, the asset recognised in these statements is limited to the present value of benefits available from future refunds from the plan, reductions in future contributions to the plan or on settlement of the plan and takes into account the adverse effect of any minimum funding requirements. Actuarial gains and losses are recognised as other comprehensive net income and expenditure except for site licence companies where they are included in provision expense relating to the nuclear decommissioning provision.

Unfunded defined benefit pension schemes

The departmental group contributes towards a number of unfunded defined benefit pension schemes of which employees are members: these include the Principal Civil Service Pension Scheme (PCSPS), the Civil Servant and Other Pension Scheme (CSOPS) and the United Kingdom Atomic Energy Authority (UKAEA) combined pension scheme. The participating employers in these schemes are unable to identify their share of the underlying net liability; as such these schemes are accounted for as defined contribution pension schemes, with employers contributions charged to the SoCNE in the period to which they relate. Further information regarding PCSPS and CSOPS is presented in the staff report.

Defined contribution pension schemes

Contributions are charged to the SOCNE when they become payable. The departmental group has no further liabilities in respect of benefits to be paid to members.

More information about the departmental group’s pension schemes can be found in the accounts of the consolidated entities, including in note 3 for the core department, and of the pension schemes themselves.

1.22 Provisions

A provision is recognised when it is probable that an outflow of economic benefits will be required to settle a present obligation (legal or constructive) that can be reliably measured, and which results from a past event. Where the time value of money is material, the provision is measured at present value using discount rates prescribed by HM Treasury. HM Treasury issues nominal rates that do not take account of inflation, unlike real rates. Using these nominal rates, the cash flows are inflated using the following inflation rates provided by HM Treasury except where a more appropriate forecast has been identified for specific provisions.

	31 March 2023 Nominal discount rate	31 March 2023 Inflation rate	31 March 2023 Equivalent real discount rate	31 March 2022 Nominal discount rate	31 March 2022 Inflation rate	31 March 2022 Equivalent real discount rate
Cash outflows expected within 2 years	3.27%	7.40%	(3.85%)	0.47%	4.00%	(3.39%)
Cash outflows expected between 2 – 5 years	3.27%	1.65%	1.59%	0.47%	2.15%	(1.64%)
Cash outflows expected between 5 - 10 years	3.20%	2.0%	1.18%	0.70%	2.00%	(1.27%)
Cash outflows expected after 10 years	3.08%	2.0%	1.06%	0.71%	2.00%	(1.27%)

Nuclear decommissioning provisions

Where expenditure in settlement of a provision is expected to be recovered from a third party, the recoverable amount is treated as a separate asset (note 13). Provision charges in the SoCNE are shown net of changes in these recoverable amounts.

1.23 Insurance and reinsurance contracts

Insurance contracts are contracts under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified future event (the insured event) adversely affects the policyholder and are accounted for under IFRS 4 ‘Insurance Contracts’. Where IFRS 4 was found not to be prescriptive in some areas, guidance was taken from the standard issued to replace it in the future, IFRS 17 ‘Insurance Contracts’. The core department has recognised a reinsurance liability in relation to the Trade Credit Reinsurance Scheme (note 21).

Insurance contracts and reinsurance contracts are accounted for on the date the contract is approved by the core department.

Insurance and reinsurance liabilities are measured at fair value and cover both reported and unreported claims cover by the insurance and reinsurance contract at the reporting date, the value recognised is based on the experience of the insurance companies being reinsured by the department. Possible future claims relating to catastrophe are not included in the calculation of the insurance or reinsurance liabilities. The fair value for the Trade Credit Reinsurance Scheme is calculated using the income approach under IFRS 13, which reflects the present value of future cash outflows that are expected to occur. The discount rate used is the financial instrument nominal rate of 1.9% as set by HM Treasury. The cash outflows include the claims losses and the related claims handling expenses incurred by the insurance companies.

Insurance and reinsurance premiums are recognised in the SOCNE, when they are earned and not when they are written. Written reinsurance premiums include an estimate of premiums written by the insurance companies reinsured by the department, but not reported to the department at the reporting date. This relates to insurance contracts where the period of cover has commenced before the balance sheet date.

Where written insurance and reinsurance premiums are subject to retrospective adjustment due to risk not being able to be assessed with accuracy at the commencement of the insurance contract, recognition of any increases is deferred until recognition can be ascertained with reasonable certainty.

Where written insurance and reinsurance premiums are subject to a reduction, a remeasurement taking account of the reduction is assessed as soon as the department has an obligation to the policyholder.

Claims and expenses costs are recognised when they are incurred.

1.24 Contingent assets and liabilities

Contingent liabilities

Where an outflow of economic benefits from a past event is possible but not probable, the departmental group discloses a contingent liability. In addition to contingent liabilities disclosed in these financial statements in accordance with IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote are disclosed in the accountability report for Parliamentary reporting and accountability purposes. Remote contingent liabilities reported in the accountability report are stated at the amounts reported to Parliament.

Contingent assets

Where an inflow of economic benefits from a past event is probable, the departmental group discloses a contingent asset.

Estimates of the financial effects are disclosed where practicable; where the time value of money is material, contingent liabilities and assets are stated at discounted amounts and the amount reported to Parliament separately noted.

1.25 Third party assets

The departmental group holds certain cash balances belonging to third parties as custodian or trustee. These balances are not recognised in the financial statements since neither the departmental group nor government more generally has a direct beneficial interest in them.

1.26 Judgements, estimates and assumptions

Preparation of financial statements requires management to make judgements, estimates and assumptions based on experience and expected events that affect the reported amounts of assets and liabilities, income and expenditure. In accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’, revisions to accounting estimates are recognised prospectively. Revisions of the estimates and assumptions below could cause material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Key accounting judgements and estimates applied in these statements are described below.

Funding to Bulb Energy Ltd (in special administration) (notes 4.1 and 11.3)

The core department has provided funding to Bulb Energy Ltd which has been recognised as a financial asset measured at FVTPL under IFRS 9. The loan was measured at the date of recognition and has been assessed again for any changes to risk at the reporting date, significant judgements in relation to the fair value measurement of the loan are set out in note 11.3. The amount of the funding which has a low likelihood of repayment has been recognised consistently with the Conceptual Framework for Financial Reporting and IFRS. Expenditure relating to this funding has been recognised as a subsidy expense, as described in note 4.1. Future Fund (note 12.2)

The valuation of the Future Fund’s Convertible Loan Notes (CLNs) and post-conversion equity is complex due to the significant number and diversity of borrowers and investors in the Future Fund scheme, the options available to borrowers under the terms of the Convertible Loan Note Agreements (CLAs), and data limitations. This means that there is judgement and estimation uncertainty in the valuation and there are key unobservable inputs in the model. Significant judgements in relation to the fair value measurement of the Future Fund scheme are set out in note 12.2. Post Office Limited (note 20.2)

The core department has undertaken to provide an amount of funding to the Post Office to support payments made to individuals (postmasters and former postmasters) under three compensation schemes. The valuation of these provisions is the Post Office management’s best estimate of the most likely outcome of potential future payments. The provisions require a number of significant estimates and assumptions to be made including number of eventual claimants, distribution of heads of loss and assessments of loss of earnings. Further information can be found in the Post Office Limited’s published accounts.

The department has also recognised a provision in relation to the ‘GLO’ (Group Litigation Order) scheme to provide additional compensation for members of the group litigation: Alan Bates and others v Post Office Limited. This scheme is in its infancy and to date, only a small number of claims have been settled. This increases the level of estimation uncertainty but represents the core department’s best estimate of the future liability at the reporting date.

Energy Price Guarantee (various notes)

Suppliers apply judgements only in limited, specific areas of calculating the Energy Price Guarantee discount. For example, some suppliers use booked consumption volumes to determine their fixed tariff floor adjustments, other suppliers use the industry deemed position for consumption volumes and use this to determine consumption of fixed tariff customers and associated adjustments. For the latter, the value is reconciled as volume reconciliations are provided.

Fair value measurement of Hinkley Point C CfD

Significant judgements in relation to the fair value measurement of Hinkley Point C CfD are set out in note 10.

Deferral of differences between fair value and transaction price for CfDs

Judgements for deferral of differences between fair value and transaction prices for CfDs are set out in note 10.

Income recognition (note 6.1)

A number of significant accounting judgements have been performed to apply IFRS 15 to the recognition of revenue and costs from contracts with customers held by the NDA, including the determination of transaction price of each contract, the allocation of transaction price to each performance obligation, the timing of satisfaction of performance obligations, and the accounting treatment of contract costs. Detail is included in NDA’s financial statements.

COVID-19 business support grant expenditure (note 4.4)

Whilst the majority of reconciliations that support the value of the grants paid out by local authorities to businesses have been completed, a small amount are outstanding. As a result, an estimate of the expenditure has been made in relation to those schemes that have not been fully reconciled.

The estimated expenditure has been calculated using the returns from local authorities (LAs) which were received and reconciled to the funding allocation, at the point in time at which the calculation was performed. The department has carried out statistical analysis to show that there is no correlation between late responders and over/underspend, the analysis was carried out over the first three grant schemes (Local Authority Discretionary Grant Fund, Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund). The results of the analysis show that the correlation coefficient is zero and as such there is no correlation or trend between the time it takes LAs to provide information, and whether they spend more or less funding than the department provided them. We have assumed that the LRSG, Omicron Hospitality and Leisure Grant, Restart Grant and Additional Restrictions Grant will behave in the same way, with a zero correlation, given we have no information to believe otherwise.

The reconciliations determine how much of the allocated funding the LA has spent using the funding allocated as the starting point. The percentage of underspend resulting from the completed reconciliations is then applied to the total unreconciled allocated spend for each grant scheme. This estimate is based on the best information that the department has available.

Restart Grant, Omicron Hospitality and Leisure Grant and Additional Restrictions Grant

Grant scheme	Reconciled percentage (value)	Central estimate (£ m*)	Confidence interval
Restart	97%	3,038.4	99%
OHLG	97%	483.0	99%
Additional Restrictions	90%	2,117.9	99%

Notes:

*As the confidence interval is at 99%, there is little expected variation in the final expenditure for this scheme, noting the assumptions discussed above.

The difference between the cash amounts paid out to local authorities, and the expenditure determined to have been made to businesses is recognised as a receivable back to the department in note 15.

Energy Price Guarantee (various notes)

Under the Energy Price Guarantee, the amount customers could be charged per unit of gas or electricity was reduced to an annual equivalent of around £2,500 for a typical household in Great Britain and Northern Ireland. However, energy suppliers estimate the energy supplied to customers between the date of the last meter reading and the claim date. This is estimated through settlement systems, estimates of consumption not yet processed through selling systems, price estimates, billing systems, using historical consumption patterns, on a customer-by-customer basis, taking into account weather patterns, load forecasts and the difference between actual meter readings being returned and system estimates. Actual meter readings have continued to be compared to estimates between the end of the financial year and the date that the accounts were certified for issue. There is an ongoing industry standard volume reconciliation to address any over or under payment relating to the Energy Price Guarantee which will reconcile these estimates.

Energy Bill Relief Scheme (various notes)

Under the Energy Bill Relief Scheme, payments are made to energy suppliers based on the amounts that are billed to customers for each claim period. As with the Energy Price Guarantee detailed above, some energy suppliers estimate the energy supplied to customers between the date of the last meter reading and the latest billing date upon which claims are based. There is an ongoing industry standard volume reconciliation to address any overpayment or underpayment relating to the Energy Bill Relief Scheme.

COVID-19 Local Restriction Support Grants (Various)

Included in the 2020-21 accounts was an estimate of spend for the following grant schemes, due to not all reconciliations supporting the value of grants paid by L A s being completed as at 31 March 2021: Local Restrictions Support Grant (closed) and Addendum Schemes (closed), Local Restrictions Support Grant (open) and Closed Business Lockdown Payment schemes.

Since then, the reconciliation process has continued and almost all reconciliations are now complete. The department has revised the estimate of the spend in these schemes based on the completed reconciliations, and the difference between the expenditure recognised in the 2021-22 accounts, and the current estimate of expenditure is a small increase of £1.3 million as reflected in note 5.4. We have reconciled ~95% (in value) of the scheme’s funding and so a 99% confidence interval shows little expected variation in the final expenditure for this scheme.

The table below shows the value of the expenditure estimate and also includes the estimate of spend included in the 2021-22 accounts for comparison.

	Central Estimate	Confidence interval
Current estimate	£5,350.0 million	99%
2021-22 estimate	£5,345.5 million	99%

Useful lives of non-current assets (note 4.2, 7, 9, 8):
There is uncertainty in relation to estimated useful lives of non-current assets; these are reviewed as at the reporting date and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence or legal or other limits on their use.

Impairment of assets (note 4.2, 7, 9, 11, 12, 14, 15, 16, and 24):
Impairment of non-financial assets is measured by comparing the carrying value of the asset or cash generating unit with management’s estimate of its recoverable amount. Impairment of financial assets is measured using the expected credit loss model (note 1.20).

Fair value of Repayable Launch Investments (note 12.1):
The econometric model used to estimate future cash flows from Repayable Launch Investments includes a number of assumptions including on future economic growth.

Fair value of private equity investments (note 12.2):
A range of valuation techniques are used for private equity investments, including discounted cash flows and net asset values.

Redundancy Payments Service receivable (note 15):
There is uncertainty in the estimate of the amount to be realised by the Insolvency Service from sale of assets of insolvent employers.

CfD contracts (note 10):
The significant uncertainties affecting measurement of Financial Investment Decision Enabling for Renewables (FIDeR) and CfD contracts, which facilitate investment in low-carbon electricity generation, are described in the note.

Financial guarantees (note 21):
The liability for each individual guarantee is measured using modelling techniques with overlay adjustments, based on management judgement, applied to the total model liability estimates for each scheme if considered necessary to ensure reported liability values reflect all relevant reasonable and supportable information.

The liabilities for the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) are subject to significant estimation uncertainty relating primarily to estimates of probability of default of the underlying loans and recoveries from borrowers’ post claim, uncertainty over forward macroeconomic conditions; and, for BBLS, uncertainty in relation to levels of fraudulent borrowing.

Provisions (note 20):
Provision discount rates set by HM Treasury are updated annually and have a material effect on liabilities. There are other significant uncertainties in relation to measurement of the liabilities reported in note 20, in particular in relation to future decommissioning costs to be incurred by the NDA, UKAEA and Coal Authority, which are described in the note.

2. Reporting by operating segment

In accordance with the relevant reporting requirements, including IFRS 8 ‘Operating Segments’, the Statement of Outturn against Parliamentary Supply (SOPS) and supporting notes reflect net resource and capital outturn in line with the control totals voted by Parliament. The figures within SOPS 1.1 provide the income and expenditure totals associated with key business activities within the departmental group and therefore reflect the management information reporting to the board during the period.

3. Staff costs

	Permanently employed staff (£m)	Others (£m)	2022‑23 Total (£m)	2021‑22 Total (£m)
Wages and salaries	1,187	152	1,339	1,221
Social security costs	131	-	131	158
Other pension costs	294	-	294	280
Sub total	1,612	152	1,764	1,659
Less recoveries in respect of outward secondments	(7)	(2)	(9)	(27)
Total net costs	1,605	150	1,755	1,632
Of which
– Core department and agencies	555	43	598	560
– NDPBs and other designated bodies	1,050	107	1,157	1,072
Total net costs	1,605	150	1,755	1,632

See the staff report and remuneration report for further information on staff costs and numbers. The staff report also includes staff costs for nuclear site licence companies (SLCs). SLCs staff costs are not included here as they are included in the amount shown for utilisation in the NDA’s nuclear decommissioning provision in note 20.

4. Operating expenditure

4.1 Purchase of goods and services

	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Rentals under operating leases	2	6	-	5
Accommodation and office equipment costs	46	307	48	268
Legal, professional and consultancy costs	251	398	181	406
Finance, HR, IT and support costs	116	189	143	189
Training and other staff costs	11	36	9	33
Travel and subsistence costs	8	40	2	18
Advertising and publicity	20	35	6	22
Programme management and administration of grants and awards	76	799	113	587
Capacity Market payments	-	680	-	856
Professional and international subscriptions	589	963	414	743
Enforcement costs of employment related policies	39	39	29	29
Donations	-	25	-	38
Funding Paternity, Adoption and Shared Parental Leave policy	100	100	73	73
Purchase of geographical and scientific equipment	-	77	23	91
Purchase of weather information and weather related services	125	125	120	120
Redundancy payments service	264	264	261	261
Payment of taxes and levies	-	65	-	182
Subsidy to Post Office Limited	53	53	50	50
Coronavirus Business Interruption Loan Scheme (CBILS)	(51)	(51)	917	917
Bounce Back Loan Scheme (BBLS)	(29)	(29)	327	327
Energy intensive industries and other subsidies	(539)	(539)	1,445	1,445
Other purchase of goods and services cost	85	488	88	234
Total	1,166	4,070	4,249	6,894

Core department

CBILS and BBLS:
The core department has provided assistance to borrowers under the CBILS and BBLS loan guarantee schemes (note 36) by bearing the cost of lender fees for CBILS loans and of interest payments due for the first 12 months of loans for both CBILS and BBLS.

Energy intensive industries and other subsidies:
The core department has provided support to energy intensive industries and for other energy-related purposes including funding to Bulb Energy Ltd which entered energy supply company administration during 2021-22.Bulb’s special administrators worked closely with the department and Ofgem to ensure that exit from administration achieves the best outcome practicable for energy customers, taxpayers, and the industry. During 2022-23 the administrators completed the sale of Bulb assets and will continue to operate the company until the special administration regime comes to end. The funding to Bulb is repayable (note 11.3), but the repayment of the amounts provided during 2021-22 was not considered probable when the assessment was made as at 31 March 2022 and the funding was reported as subsidy in the table above. During 2022-23 following the sale of Bulb assets and reassessment of the likelihood of the loan repayment to the department, a reversal totalling £727 million of the previously reported expenditure was recognised.

Departmental group

Redundancy Payments Service:
Redundancy payments are made to employees whose employers have failed to make payments or who were insolvent. Redundancy Payment Service (RPS) claims are financed from the National Insurance Fund. They are processed and approved by the Insolvency Service (INSS), an agency of the department.

Associated income arises from 2 sources:

solvent recovery – money is recovered from solvent employers to meet the R P S redundancy payments
insolvent recovery – INSS becomes a creditor and receives a dividend if there are sufficient funds in the insolvency of the employer

RPS expenditure in 2022–23 totalled £294 million (2021–22: £285 million) against income of £28 million (2021–22: £24 million). The net amount totalled £266 million (2021–22: £261 million).

Capacity market payments:
Capacity Market payments of £680 million were recognised in 2022-23 (2021-22: £856 million).

Audit fees:
Audit fees are included under the heading ‘legal, professional and consultancy costs’.

	31 March 2023 Core department (£m)	31 March 2023 Agencies (£m)	31 March 2023 Other POs in departmental group (£m)	31 March 2022 Core department (restated) (£m)	31 March 2022 Agencies (£m)	31 March 2022 Other POs in departmental group (£m)
Core department	1,350,000	-	-	1,345,000	-	-
UKAEA Pension Scheme accounts	50,685	-	-	77,000	-	-
Trust statement	20,000	-	-	20,000	-	-
Nuclear Decommissioning Funding accounts	5,000	-	-	5,000	-	-
Total NAO audit services	1,425,685	335,475	2,675,826	1,447,000	288,000	2,433,523
NAO non‑audit services	-	-	-	-	-	-
Non‑NAO audit services	-	-	979,710	-	-	655,350
Non‑NAO non-audit services	-	-	43,313	-	-	78,585
Total audit services	1,425,685	335,475	3,698,849	1,447,000	288,000	3,088,873

4.2 Depreciation and impairment charges

	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Amortisation of recoverable contract costs	-	139	-	111
Depreciation	60	321	57	295
Amortisation	8	34	6	42
Impairment of property, plant and equipment	-	51	9	43
Impairment of investments and remeasurement of expected credit losses	6	48	50	43
Total	74	593	122	534

4.3 Provision, financial guarantee and other liabilities expenses

	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Increase/(decrease) in nuclear provisions due to changes in discount rate	(116)	(115,956)	43	90,512
Increase/(decrease) in other provisions due to changes in discount rate	(119)	(4,652)	35	2,818
Other provision movements relating to nuclear provisions	-	-	83	12,770
Other provision movements excluding bad debt provisions and financial guarantee liabilities	3,600	15,236	559	944
Total increase/(decrease) in provisions excluding bad debt provisions and financial guarantee liabilities	3,365	(105,372)	720	107,044
Loss on inception of financial guarantees	-	17	(16)	(16)
Total increase/(decrease) in loan commitment liabilities	-	-	-	48
Trade Credit Reinsurance	(7)	(7)	(11)	(11)
Total increase/(decrease) in CLBILS	(64)	(64)	(235)	(235)
Total increase/(decrease) in BBLS	1,175	1,175	(2,893)	(2,893)
Total increase/(decrease) in CBILS	(18)	(18)	(697)	(697)
Total increase/(decrease) in Recovery Loan Scheme	174	174	300	300
Total	4,625	(104,095)	(2,832)	103,540

The significant change in the provision expenses was primarily driven by the change in provision discount rates. The real discount rate for cash outflows expected after 10 years, prescribed by HM Treasury increased from (1.27%) in 2021-22 to 1.06% in 2022-23. The change in discount rate has the impact of increasing the expected future costs of settling the department’s liabilities, the actual costs of settling the department’s liabilities could be different.

Further detail of the movements in the nuclear decommissioning provision can be found in note 20.1 for Nuclear Provisions.

The Increase/(decrease) in other provisions due to changes in discount rate is also primarily driven by changes in the discount rate for Coal Authority’s provisions.

Further detail of movements in other provisions can be found in note 20.2 for Other Provisions.

Further information on the movements in the financial guarantee liabilities can be found in note 21.

4.4 Grants expenditure

	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Grant in aid	13,292	-	12,220	-
Market frameworks	75	75	73	73
Science and Research	740	8,078	578	7,416
International Climate Fund	220	227	312	311
Renewable Heat Incentive	1,001	1,001	920	920
Heat Infrastructure team	100	100	64	64
Innovation programmes	224	831	174	643
Social Housing and Public Sector Decarbonisation Grant schemes	409	409	599	599
Green Homes Grant scheme	(176)	(176)	465	465
Home Upgrade Grant scheme	46	46	152	152
Local Restriction Support Grant schemes	1	1	(223)	(223)
New burdens funding	15	15	53	53
Grants to central government bodies	24	24	5,632	5,632
Restart Grant	(6)	(6)	3,045	3,045
Omicron Hospitality and Leisure Grant scheme	4	4	479	479
Additional Restrictions Support Grant	(12)	(12)	499	499
Other grants	126	141	91	109
Post Office Network Reform	75	75	-	-
Energy Price Guarantee	20,424	20,424	-	-
Energy Bills Support Scheme	11,821	11,821	-	-
Offshore wind manufacturing investment support scheme	58	58	-	-
Energy Bill Relief Scheme	7,480	7,480	-	-
Alternative Fuel Payment	549	549	-	-
Other Energy Schemes	110	110	-	-
Total	56,600	51,275	25,133	20,237

Core department

In 2021-22 the department paid £5,610 million to the Nuclear Liabilities Fund, under an existing agreement between the department, the fund and HM Treasury, to take account of reduced future net investment returns for the fund following increases in UK corporation tax rates announced in March 2021. There we no such payment made in 2022-23.

The reduction of expenditure of £176 million under the Green Homes Grant scheme relates to clawbacks that were recognised on earlier phases of the Green Homes Grant Local Authority Delivery (LAD) scheme (2021-22: £466 million).

Energy bill support:
During 2022-23 the core department initiated a number of energy affordability schemes to support energy users in light of significant increases in the cost of energy.

Energy Bills Support Scheme:
Under the Energy Bills Support Scheme (EBSS) payments of £11,821 million were made to support domestic energy customers with the costs of rising energy bills by providing £400 to each eligible household through discounts applied to customers’ bills or as vouchers (Great Britain: £11,489 million and Northern Ireland: £332 million). This scheme closed on 31 March 2023. A year-end accrual for the final month’s payment is recognised in Note 15.

Energy Bill Relief Scheme:
Under the Energy Bill Relief Scheme (EBRS), payments of £7,480 million were made to limit the price non-domestic customers pay for electricity and gas by providing grant funding to energy suppliers for discounts provided to their customers. This scheme closed on 31 March 2023. Year-end accruals for the final payments are recognised in Note 15.

Energy Price Guarantee:
Under the Energy Price Guarantee (EPG) payments of £20,424 million were made to limit the price domestic customers pay for electricity and gas by providing grant funding to energy suppliers for discounts provided to their customers (Great Britain: £20,172 million and Northern Ireland: £252 million). This scheme was extended in November 2022 and will close on 31 March 2024. A year-end accrual for the final month’s payment is recognised in Note 15 and a provision recognised for the expenditure expected to be incurred between 1 April 2023 and 30 June 2023. A current receivable has been recognised in relation to volumetric and reduced tariff floor adjustments.

Alternative Fuel Payment:
Under the Alternative Fuel Payment payments of £549 million were made to cover domestic energy users that would not receive the full benefit of the Energy Price Guarantee as they are not connected to the mains gas grid and use alternative fuels as the main source of heating (Great Britain:£383 million and Northern Ireland: £166 million). Most of the domestic users eligible under this scheme received the £200 automatically as a credit to their electricity bills.

Customers that are also not connected to the main electricity grid (and therefore do not receive the automatic to their electricity bill) apply for the £200 support via the Alternative Fuel Payment – Alternative Fund (AFPAF). This scheme was open for applications until 31 May 2023.

Other energy schemes:
The £110 million total for Other Energy Schemes consists of EBSS Alternative Funding (EBSS AF) of £44 million and Non-Domestic Alternative Fuel Payment of £66 million.

EBSS AF covers those customers without a direct relationship to a domestic energy supplier. Eligible customers are required to apply for a £400 non-repayable discount to their fuel bills. The scheme closed to new applicants on 31 May 2023.

The Non-Domestic Alternative Fuel Payments provides a £150 fixed payment to non-domestic customers if their property is not connected to the gas grid, the electricity grid and a customer purchased alternative fuels for use at the property between September 2022 and January 2023. This scheme closed to new applicants on 28 April 2023.

COVID-19 business support grants:
In 2020-21 and 2021-22 the department provided COVID-19 support to businesses through several grant schemes. No new funding was provided under these schemes in the current year. An estimate of expenditure was made for those schemes where reconciliations were not complete at 31 March 2023. These estimates have been updated to reflect further completed reconciliations, further details can be found in note 1.26.

5. Finance expense

	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Change in fair value - financial assets	121	374	(34)	(640)
Net loss/(gain) on foreign exchange	-	(2)	-	1
Unrealised foreign exchange rate losses/(gains)	1	(22)	1	(6)
Bank charges and interest payable	-	54	-	57
Interest charges under finance leases	1	3	1	3
Expected return on funded pension scheme assets	-	(56)	-	(38)
Interest on pension liabilities	-	44	-	33
Borrowing costs on provisions	(25)	(2,958)	(11)	(56)
Total	98	(2,563)	(43)	(646)

‘Changes in fair value – financial assets’ for the core department and agencies of £121 million (2021-22: (£34) million) includes fair value movement on the Future Fund scheme £166 million (2021-22: (£6) million) relating to scheme implemented by the core department in response to the COVID-19 pandemic. Further detail of the Future Fund scheme can be found in note 12.2 other loans and investments.

The impact of HM Treasury-prescribed negative discount rates for provisions in 2021–22 was to increase undiscounted liabilities for the departmental group, the unwinding of which gives rise to a negative expense for borrowing costs on provisions. In 2022–23, HM Treasury’s prescribed equivalent real discount rates remained negative and increased for cashflows expected within 2 years, whereas cashflows expected in over 2 years were positive. The large increase in borrowing costs on provisions, from a £56 million gain for the departmental group in 2021–22 to £3.0 billion in 2022–23, is due to the change in discount rates (which are set by HMT) and subsequent unwinding of discount related to the provision. Further detail of the movements in provisions can be found in note 20.1 for nuclear provisions and note 20.2 for other provisions.

6. Income

6.1 Operating income

	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Fees, charges and recharges to/ from external customers and central government organisations	388	555	549	812
Levy income	16	783	13	1,204
Sales of goods and services	9	1,048	8	727
Miscellaneous income	12	95	7	59
European Union funding	-	20	-	9
Current grants and capital grants	56	185	73	229
Other operating income	6	7	-	-
Total	487	2,693	650	3,040

Core department and agencies

‘Fees, charges and recharges to/from external customers and central government organisations’ for the Core department and agencies of £388 million (2021–22: £549 million) includes premium fee income of £214 million (2021–22: £373 million) relating to schemes implemented by the core department in response to the COVID-19 pandemic. The premium fee income of £214 million includes £167 million (2021–22: £250 million) from the Coronavirus Business Interruption Loan Scheme, £21 million (2021–22: £31 million) from the Coronavirus Large Business Interruption Loan Scheme and £19 million from the Recovery Loan Scheme (2021–22: £15 million).

Departmental group

Within levy income, ESC’s income from capacity market suppliers was £680 million (2021–22: £856 million).

Within ‘sales of goods and services’, NDA’s revenue was £1,021 million (2021–22: £640 million).

Further details can be found in the NDA’s annual report and accounts.

6.2 Finance income

	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Effective Interest from FVTPL assets	9	8	16	17
Effective Interest from amortised cost assets	22	22	39	39
Interest income from FVTPL assets	19	75	16	65
Interest income from amortised cost assets	15	114	9	111
Dividend income from FVTPL assets held at the period end	-	39	-	72
Dividend income from investments in joint ventures, associates and public dividend capital	116	116	98	14
Dividend income for joint venture and associates	-	(2)	-	2
Total	181	372	178	320

Departmental group

Total dividend income was £153 million (2021–22: £88 million). Of this, dividends receivable from Urenco was £88 million (2021–22: £67 million).

7. Property, plant and equipment

Departmental group 2022–23

	Land (£m)	Buildings (£m)	Leasehold improvements (£m)	Information technology (£m)	Plant and machinery (£m)	Furniture, fixtures and fittings (£m)	Transport equipment (£m)	Assets under construction (£m)	Total (£m)
Cost or valuation
Balance at 1 April 2022	250	2,926	98	281	6,439	26	428	812	11,260
Additions	2	5	(1)	11	65	2	10	1,099	1,193
Disposals	-	(7)	(2)	(32)	(48)	(2)	(2)	-	(93)
Impairments	-	(8)	-	-	-	-	(2)	(18)	(28)
Transfers	3	-	-	(1)	1	-	-	-	3
Reclassifications	(7)	170	22	20	94	2	2	(303)	-
Revaluations	58	208	-	4	123	-	26	-	419
At 31 March 2023	306	3,294	117	283	6,674	28	462	1,590	12,754
Depreciation
Balance at 1 April 2022	-	(1,204)	(47)	(171)	(5,537)	(15)	(130)	-	(7,104)
Charged in year	-	(70)	(11)	(40)	(131)	(4)	(22)	-	(278)
Disposals	-	7	2	31	47	2	2	-	91
Impairments	-	(3)	-	-	(20)	-	-	-	(23)
Reclassifications	-	1	-	-	(1)	-	-	-	-
Revaluations	-	(42)	-	(2)	(69)	-	(7)	-	(120)
At 31 March 2023	-	(1,311)	(56)	(182)	(5,711)	(17)	(157)	-	(7,434)
Carrying amount at 31 March 2023	306	1,983	61	101	963	11	305	1,590	5,320
Carrying amount at 1 April 2022	250	1,722	51	110	902	*11	298	812	4,156
Asset financing
Owned	306	1,983	61	101	963	11	305	1,590	5,320
Carrying amount at 31 March 2023	306	1,983	61	101	963	11	305	1,590	5,320
Of the total
– Core department and agencies	32	173	51	11	68	4	-	52	391
– NDPBs and other designated bodies	274	1,810	10	90	895	7	305	1,538	4,929
Carrying amount at 31 March 2023	306	1,983	61	101	963	11	305	1,590	5,320

Departmental group 2021–22

	Land (£m)	Buildings (£m)	Leasehold improvements (£m)	Information technology (£m)	Plant and machinery (£m)	Furniture, fixtures and fittings (£m)	Transport equipment (£m)	Assets under construction (£m)	Total (£m)
Cost or valuation
At 1 April 2021	300	2,657	83	213	6,278	26	296	824	10,677
IFRS 16 adoption adjustment	(79)	(51)	-	-	-	-	-	-	(130)
Balance at 1 April 2021 221	2,606	83	213	6,278	26	296	824	10,547
Additions	1	6	-	32	28	1	9	338	415
Disposals	-	(3)	(1)	(14)	(27)	(2)	(80)	-	(127)
Impairments	-	(15)	-	-	(1)	-	-	(8)	(24)
Transfers	(6)	(1)	-	2	-	-	-	-	(5)
Reclassifications	-	13	16	50	62	-	201	(342)	-
Revaluations	34	320	-	(2)	99	1	2	-	454
At 31 March 2022	250	2,926	98	281	6,439	26	428	812	11,260
Depreciation
At 1 April 2021	(28)	(1,055)	(41)	(154)	(5,362)	(14)	(190)	-	(6,844)
IFRS 16 adoption adjustment	28	19	-	-	-	-	-	-	47
Balance at 1 April 2021 -	(1,036)	(41)	(154)	(5,362)	(14)	(190)	-	(6,797)
Charged in year	-	(60)	(7)	(32)	(133)	(3)	(16)	-	(251)
Disposals	-	3	1	14	25	2	76	-	121
Impairments	-	-	-	-	(8)	-	-	-	(8)
Revaluations	-	(111)	-	1	(59)	-	-	-	(169)
At 31 March 2022	-	(1,204)	(47)	(171)	(5,537)	(15)	(130)	-	(7,104)
Carrying amount at 31 March 2022	250	1,722	51	110	902	11	298	812	4,156
Carrying amount at 1 April 2021	221	1,570	42	59	916	12	106	824	3,750
Asset financing
Owned	250	1,722	51	110	902	11	298	812	4,156
Carrying amount at 3 March 2022	250	1,722	51	110	902	11	298	812	4,156
Of the total
– Core department and agencies	32	181	40	9	74	4	-	65	405
– NDPBs and other designated bodies	218	1,541	11	101	828	7	298	747	3,751
Carrying amount at 31 March 2022	250	1,722	51	110	902	11	298	812	4,156

Departmental group

The professional valuations of land and buildings undertaken within the departmental group were prepared in accordance with the Royal Institute of Chartered Surveyors (RICS) Valuation Standards (6th Edition), the ‘Red Book’. Unless otherwise stated, land and buildings are professionally revalued every 5 years and where appropriate in the intervening period, relevant indices are used. The most significant land and buildings at 31 March 2023 were held by Nuclear Decommissioning Authority (NDA) and UK Research and Innovation (UKRI). UKRI’s STFC land and buildings at the Rutherford Appleton Laboratory were professionally valued during 2022-23 as at 31 March 2023 by Avison Young Limited, Chartered Surveyors, an independent valuer.

Assets under construction additions as at 31st March 2023 include £839 million (31 March 2022: £nil) relating to nuclear new build activities at Sizewell C. This includes costs incremental and necessary to the development of low carbon power generators, such as planning, site preparation, associated development, safety compliance and cost of developing supply chain contracts. Construction at Sizewell C is subject to the government’s final investment decision.

In accordance with the FReM the majority of leasehold improvements, information technology, furniture, fixtures and fittings and plant and machinery are held at depreciated historic cost as a proxy for fair value as the assets have short useful lives or low values. Land, freehold buildings, dwellings, transport equipment and the remainder of plant and machinery are held at fair value based on professional valuations.

Within the departmental group, a variety of valuation techniques are used depending upon whether the PPE asset is a specialised asset or a non-specialised asset. Where the PPE asset is a specialised asset, then a depreciated replacement cost valuation is used, for example by scientific institutes. Where the PPE asset is a non-specialised asset, then an existing-use valuation is used, for example for land and office buildings. Depreciated replacement cost (DRC) valuations are based on a number of unobservable inputs; these would be classified as level 3 in accordance with IFRS 13. Existing-use value (EUV) valuations are based on a number of market corroborated but unobservable inputs e.g. land valuations are based on similar prices per hectare adjusted for the specific location of the land, whilst other EUV valuations use specific unobservable inputs, e.g. rental yields. The EUV valuations inputs are classified as level 2 and level 3 in accordance with IFRS 13.

Further information can be found in the financial statements of the individual bodies’ accounts.

8. Right of use assets

Departmental group 2022–23

	Land (£m)	Buildings (£m)	Plant and machinery (£m)	Transport equipment (£m)	Total (£m)
Cost or valuation
Balance at 1 April 2022	99	310	8	13	430
Additions	-	20	-	13	33
Disposals	(1)	(24)	-	(1)	(26)
Remeasurements	-	(22)	-	-	(22)
Transfers	(5)	1	-	-	(4)
Revaluations	9	(2)	-	-	7
At 31 March 2023	102	283	8	25	418
Depreciation
Balance at 1 April 2022	(31)	(70)	(6)	(7)	(114)
Charged in year	(1)	(43)	(1)	(6)	(51)
Disposals	-	17	-	1	18
Transfers	-	(1)	-	-	(1)
Revaluations	(2)	(1)	-	-	(3)
At 31 March 2023	(34)	(98)	(7)	(12)	(151)
Carrying amount at 31 March 2023	68	185	1	13	267
Carrying amount at 31 March 2022	68	240	2	6	316
Of the total
– Core department and agencies	1	50	-	9	60
– and other designated bodies	67	135	1	4	207
Carrying amount at 31 March 2023	68	185	1	13	267

Departmental group 2021–22

	Land (£m)	Buildings (£m)	Plant and machinery (£m)	Transport equipment (£m)	Total (£m)
Cost or valuation
At 31 March 2021					-
IFRS 16 - adjustment on adoption	94	281	2	10	387
Balance at 1 April 2021	94	281	2	10	387
Additions	5	27	2	2	36
Disposals	(1)	(1)	-	(1)	(3)
Impairments	-	(11)	-	-	(11)
Remeasurements	-	(2)	-	-	(2)
Revaluations	1	16	4	2	23
At 31 March 2022	99	310	8	13	430
Depreciation
At 31 March 2021	-	-	-	-	-
IFRS 16 - adjustment on adoption	(28)	(19)	-	-	(47)
Balance at 1 April 2021	(28)	(19)	-	-	(47)
Charged in year	(2)	(40)	(2)	(6)	(50)
Disposals	-	2	-	1	3
Revaluations	(1)	(13)	(4)	(2)	(20)
At 31 March 2022	(31)	(70)	(6)	(7)	(114)
Carrying amount at 31 March 2022	68	240	2	6	316
Of the total
Core department and agencies	1	102	-	3	106
NDPBs and other designated bodies	67	138	2	3	210
Carrying amount at 31 March 2022	68	240	2	6	316

The departmental group adopted IFRS 16 ‘Leases’ from 1 April 2021, in agreement with HM Treasury. Please see note 1 for further information on the adoption of IFRS 16 ‘Leases’.

9. Intangible assets

Departmental group 2022-23

	Information technology (£m)	Software licences (£m)	Websites (£m)	Patents (£m)	Assets under construction (£m)	Total (£m)
Cost or valuation
Balance at 1 April 2022	260	97	1	371	42	771
Additions	2	1	-	-	30	33
Disposals	(10)	(1)	-	-	-	(11)
Reclassifications	34	2	-	-	(36)	-
Transfers	6	-	-	(1)	(5)	-
Revaluations	-	-	-	22	-	22
At 31 March 2023	292	99	1	392	31	815
Amortisation
Balance at 1 April 2022	(220)	(88)	(1)	(299)	-	(608)
Charged in year	(17)	(4)	-	(13)	-	(34)
Disposals	10	1	-	-	-	11
At 31 March 2023	(227)	(91)	(1)	(312)	-	(631)
Carrying amount at 31 March 2023	65	8	-	80	31	184
Carrying amount at 1 April 2022	40	9	-	72	42	163
Asset financing
Owned	65	8	-	80	31	184
Carrying amount at 31 March 2023	65	8	-	80	31	184
Of the total
Core department and agencies	43	1	-	-	28	72
NDPBs and other designated bodies	22	7	-	80	3	112
Carrying amount at 31 March 2023	65	8	-	80	31	184

Departmental group 2021-22

	Information technology (£m)	Software licences (£m)	Websites (£m)	Patents (£m)	Assets under construction (£m)	Total (£m)
Cost or valuation
At 1 April 2021	190	168	1	385	24	768
Additions	4	1	-	-	28	33
Disposals	(2)	(12)	-	-	-	(14)
Reclassifications	70	(60)	-	-	(10)	-
Transfers in/(out)	(2)	-	-	-	-	(2)
Revaluations	-	-	-	(14)	-	(14)
At 31 March 2022	260	97	1	371	42	771
Amortisation
At 1 April 2021	(143)	(156)	(1)	(278)	-	(578)
Charged in year	(17)	(4)	-	(21)	-	(42)
Disposals	1	11	-	-	-	12
Reclassifications	(61)	61	-	-	-	-
At 31 March 2022	(220)	(88)	(1)	(299)	-	(608)
Carrying amount at 31 March 2022	40	9	-	72	42	163
Carrying amount at 1 April 2021	47	12	-	107	24	190
Asset financing
Owned	40	9	-	72	42	163
Carrying amount at 31 March 2022	40	9	-	72	42	163
Of the total
Core department and agencies	22	2	-	-	34	58
NDPBs and other designated bodies	18	7	-	72	8	105
Carrying amount at 31 March 2022	40	9	-	72	42	163

All software licenses are acquired separately.

All information technology (IT) assets are internally generated. IT assets are initially classified as assets under construction and are not amortised until they are commissioned, at which time they are reclassified as IT .

10. Derivative financial instruments

The most significant items included within Derivatives on the Consolidated Statement of Financial Position (SoFP) are the Contracts for Difference.

10.1 Contracts for Difference – accounting policies

Contracts for difference (CfDs) are a mechanism introduced to support new investment in low carbon generation projects. CfDs have been established as a private law contract between the ‘Generator’ and the Low Carbon Contracts Company Ltd (LCCC), a company wholly owned by the government and consolidated within the departmental group accounts.

CfDs have been classified as derivatives in accordance with IFRS 9 ‘Financial Instruments’, designated as FVTPL and are stated at their ‘fair value’ by deferring the difference between fair value and transaction price at initial recognition. Any resultant gain or loss in fair value is recognised in the Consolidated Statement of Comprehensive Net Expenditure.

The fair value of any derivative is assessed by reference to IFRS 13 ‘Fair Value Measurement’, which provides three options for assessment. Fundamentally the value should always reference an open marketplace but where no marketplace exists, an option is available for internally generated fair value. The different options are hierarchical and classed as level 1, 2, or 3 inputs, where level 1 is based on market prices, level 2 is based on observable data other than market prices and level 3 is used where level 1 or 2 data is unavailable.

The fair value of the CfDs has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term of the CfD. To calculate future cash flows, L C C C makes its best estimate of the payments which it will be committed to make, if and when the generators supply low carbon electricity in accordance with the contractual terms of the CfD. LCCC does this by selecting the discounted cash flow model, and also applying inputs and assumptions, to obtain a reliable estimate of future electricity prices which LCCC concludes results in the fair value measurement. The fair value measurement reflects what a market participant would take into account when establishing the price, and assumes an orderly transaction between market participants, at the measurement date.

The difference between the fair value of the liability at initial recognition (day one) and the transaction price, is deferred unless the calculation can be based on observable inputs which at this point in time is not the case for CfDs.

The deferred difference between the fair value of the liability on day one and the transaction price is amortised over the relevant payment period of the CfDs, which commences from the earlier of i) the actual start date of generation or ii) the end of the Target Commissioning Window (TCW) identified in the CfD, as this is the point at which the contractual liability will start to unwind (i.e. it is the point at which the potential payment period under the CfD commences).

The significance of these two dates is that they are the part of the contractual provisions which determine when the right to potential CfD payments starts. The contract payment period is typically for 15 years, although contracts relating to biomass conversion have an expiration date in 2027 and the bespoke Hinkley Point C (HPC) contract has a contract payment period of 35 years. CfDs may be signed many years in advance of actual generation. The main benefit to generators is the fact that they can derive economic value from these contracts over the payment period life of the contract.

Typically, if generators start generating within their TCW (which is specified in the contract) then the generation period starts from the date of generation and, subject to all conditions being met, the generator can extract benefit for the full term of the contract. If generators miss the end of their TCW (and it is not extended under the terms of the contract) then the payment life period commences at the end of their T C W even if the generator is not in a position to generate. If the generator does not achieve the required minimum generation capacity by the contractual Longstop Date, LCCC has a right to terminate the CfD.

After initial recognition, LCCC recognises the deferred difference as a gain or loss only to the extent that it arises from a change in a factor (including time) that market participants would take into account when pricing the asset or liability.

Changes in fair value arising after day one are recognised in the reporting period that they occur and are accounted for in the Consolidated Statement of Comprehensive Net Expenditure and in the Consolidated Statement of Financial Position as they arise.

10.2 Estimates - valuation of CfD liabilities and assets

The fair value of the unquoted CfD contracts is calculated using the income approach (discounted cash flow model) and represents LCCC’s best estimate of the payments which LCCC will be committed to make, if and when the generators supply low carbon electricity in accordance with their contractual terms. Annual cash flow is estimated as strike price minus forecast reference price, multiplied by estimated eligible generation volume. The series of periodic net operating expense is then discounted using a real discount rate based on the HM Treasury nominal rate of 1.9% adjusted by the latest OBR CPI inflation forecasts for each modelled year.

The valuation requires LCCC’s management to make certain assumptions about the model inputs, including cash flows, the discount rate, credit risk and volatility. Significant inputs are disclosed below.

One of the key inputs into the cash flow model is the estimate of future electricity prices which is derived by applying certain inputs and assumptions such as overall electricity demand, commodity prices, carbon prices, government policy, technology, and deployment of new generating capacity. Most commercial and public sector modelling of the electricity system for long term forecasting takes a very similar approach, but the detailed assumptions and methodology may differ. Given the complexity, range of possible inputs, and long-term nature of the modelling, and also to some extent the iterative relationship between the expectations of overall system cost and long-term demand (especially industrial demand), long-term system forecasts are not generally seen as a single “most likely” outcome with degrees of uncertainty either side. In fact, there are multiple sets of inputs that are internally consistent, and credible. Often a set of these inputs will be used as a “scenario,” and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long-term forecasting. The range of uncertainty can be significant when forecasting (as illustrated below) but does not necessarily mean that an individual scenario is not reasonable. Previously, LCCC has used the DDM model for the CfD valuation, however, following review against current independent industry recognised price series which are updated more frequently (the DDM was last updated in summer 2022), LCCC’s management determined that the available DDM series did not provide a fair representation of prices at 31 March 2023 to use in the CfD valuation. Accordingly, LCCC has used an independent industry recognised price series for the CfD valuation at 31 March 2023. The independent industry recognised price series applied was not an outlier of other industry recognised price series.

10.3 Significant areas of judgement

Fair value measurement of HPC CfD

LCCC entered into the HPC CfD on 29 September 2016. This project has a maximum lifetime generation cap of 910,000,000 MWh. The contract will expire at the earlier of 35 years after the start date of the second reactor or when the total CfD payments made have reached the generation cap.

The HPC CfD duration is more than double (35 years) the length of other CfDs (15 years) entered into by the departmental group. At the date the departmental group entered into the HPC CfD, commercial and public sector modelling of the electricity system did not extend out beyond 2040, and the departmental group concluded that the CfD did not meet the IFRS recognition criteria on the grounds that it was not possible to provide a single reliable fair value estimate for Hinkley Point C CfD. By 2019-20, the availability of long term price forecasts had improved to the extent that it was then able to recognise the HPC CfD in a similar manner to other CfDs.

Deferral of differences between fair value and transaction price for CfD

The fair value of the CfDs, disclosed below, is derived at initial recognition based on the valuation technique that uses data other than from observable sources. In accordance with IFRS 9, the measurement of CfDs in the Consolidated Statement of Financial Position therefore includes an adjustment to defer the difference between the fair value at initial recognition and the transaction price of £nil.

LCCC’s management believes it is reasonable to amortise the difference between the fair value at initial recognition and the transaction price over the same period as the actual contract life reflects the obligation under the contract to make payments and the right to receive monies from suppliers to make those payments. Financial instrument standards require the “deferred difference” to be recognised only to the extent that it arises from a change in factor (including time) that market participants would take into account.

10.4 CfDs

Under the legislation, there is an obligation placed on licensed electricity suppliers to fund the CfD liabilities as they crystallise through the Supplier Obligation Levy. The future levy amounts which will be received from the licensed suppliers will be accounted for within LCCC and will be triggered by the generation and supply of low carbon electricity.

As at 31 March 2023 LCCC was counterparty to 165 contracts, including HPC (at 31 March 2022: 69 contracts).

10.4.1 Measurement differences relating to day one recognition

All CfDs (including Hinkley Point C) are issued for £nil consideration through the CfD auction process, this being deemed the transaction price. As explained above, the difference between the fair value of the instrument at initial recognition (day one) and the transaction price is deferred unless the fair value at initial recognition is based on observable inputs (which is not currently the case).

The table below represents the difference between the CfD liability at initial recognition and at the reporting date:

	LCCC CfDs (exc. HPC) (£m)	Assets (£m)	LCCC CfDs (exc. HPC) (£m)	Liabilities (£m)	LCCC HPC (£m)	Liabilities (£m)	Departmental group Total (£m)
CfD liability as at 31 March 2021 recognised on the Consolidated Statement of Financial Position	-	(15,731)	(1,202)	(16,933)
Other non-CfD liabilities as at 31 March 2021	-	-	-	-
Carrying value of non-current derivative liabilities as at 31 March 2021	-	(15,731)	(1,202)	(16,933)
Liabilites to assets	(1,469)	1,469	-	-
Re-measurement of the CfD liability	2,201	(1,752)	(9,396)	(8,947)
Payments to the CfD generators	231	39	-	271
Deferred difference recognised during the year	(288)	(1,051)	-	(1,339)
CfD liability as at 31 March 2022 recognised on the Consolidated Statement of Financial Position	676	(17,026)	(10,598)	(26,948)
Other non-CfD liabilities as at 31 March 2022	-	-	-	-
Carrying value of non-current derivative liabilities as at 31 March 2022	676	(17,026)	(10,598)	(26,948)
Liabilites to assets	(3,965)	3,965	-	-
Remeasurement of the CfD liability	9,908	3,101	1,861	14,870
Receipt from/Payments to the CfD generators	(154)	170	-	16
Deferred difference recognised during the year	(335)	(1,045)	-	(1,379)
CfD liability as at 31 March 2023 recognised on the Consolidated Statement of Financial Position	6,130	(10,834)	(8,738)	(13,441)
Other non-CfD liabilities as at 31 March 2023	-	-	-	-
Carrying value of non-current derivative liabilities as at 31 March 2023	6,130	(10,834)	(8,738)	(13,441)

During the year, there is a net reduction of £13,491 million (2021–22: net increase of £10,286 million) in the fair value of CfDs is recognised in the Consolidated Statement of Comprehensive Net Expenditure.

10.4.2 Movement

The following table shows the movement in deferred day one loss:

	LCCC CfDs net liability exc. HPC (£m)	LCCC HPC (£m)	Departmental group Total (£m)
Deferred measurement differences as at 31 March 2021	21,171	50,826	71,997
Measurement differences recognised relating to terminated CfDs (15)	-	(15)
Deferred measurement differences recognised during the year	(1,324)	-	(1,324)
Deferred measurement differences as at 31 March 2022	19,832	50,826	70,658
Measurement differences deferred during the year	1,786	-	1,786
Measurement differences recognised relating to terminated CfDs	(8)	-	(8)
Deferred measurement differences recognised during the year	(1,371)	-	(1,371)
Deferred measurement differences as at 31 March 2023	20,239	50,826	71,065

10.4.3 Fair value measurement of CFDs

The fair value of CfDs represents LCCC’s best estimate of the payments which LCCC will be committed to make, if and when the generators supply low carbon electricity in accordance with their contractual terms. They are based upon the estimates of future electricity prices using an independent price series.

Should no low carbon electricity be supplied in accordance with the contractual terms, then LCCC is not under any obligation to make these payments.

It is highly probable that the departmental group will receive future funding to pay for the CfDs through the Supplier Obligation Levy and LCCC’s management believe it is appropriate to recognise an asset for the timing difference. Therefore, a Supplier Obligation Levy non-current asset is recognised in the Consolidated Statement of Financial Position to match the timing difference with a corresponding entry in the Consolidated Statement of Comprehensive Net Expenditure. For the purposes of fair presentation, this recognition is capped at the amount at which the CfDs are measured in the Consolidated Statement of Financial Position. This would result in the departmental group’s Consolidated Statement of Comprehensive Net Expenditure remaining neutral to the impact of the CfD valuation movements.

Fair value of CfDs (financial liabilities at fair value through profit and loss):
The following table provides an analysis of financial instruments which are measured subsequent to initial recognition at fair value and grouped into input levels 1 to 3 within the fair value hierarchy based on the degree to which the fair value is observable:

	Level 1 (£m)	Level 2 (£m)	Level 3 (£m)	Total (£m)
Contractual fair values - liabilities	-	-	97,591	97,591
Contractual fair values - assets	-	-	-	-
Balance at 31 March 2022	-	-	97,591	97,591
Contractual fair values - liabilities	-	-	87,104	87,104
Contractual fair values - assets	-	-	(2,598)	(2,598)
Balance at 31 March 2023	-	-	84,506	84,506

Reconciliation of CfDs:
The following table shows the impact of the fair values of CfDs, classified under level 3, by using the assumptions described below. The split for CfDs exc. HPC is based on the current valuation over the full remaining life of the contracts.

	CfDs exc. HPC (losses) (£m)	CfDs exc. HPC (gains) (£m)	HPC CfD (£m)	Departmental group total (£m)
Balance at 31 March 2021	36,903	(1)	52,028	88,930
Change in fair value during the year	(450)	-	9,397	8,947
CfDs terminated during the year	(15)	-	-	(15)
Payments to the CfD generators	(271)	-	-	(271)
Balance at 31 March 2022	36,167	(1)	61,425	97,591
Recognition of Hinkley Point C CfD during the year	-	-	-	-
Additions during the year	-	-	-	-
Remeasurement of the CfD liability	(9,636)	(3,358)	(1,861)	(14,855)
Deferred during the year	1,025	761	-	1,786
Receipt from/Payments to the CfD generators	(16)	-	-	(16)
Balance at 31 March 2023	27,540	(2,598)	59,564	84,506

CfDs (excluding HPC) summary:
The table below summarises the CfD portfolio and illustrates the movement in the contractual fair value of CfDs. The table excludes terminated CfDs and HPC.

	Number of CfDs	Fair value at initial recognition (£m)	Fair value at 31 March 2023 (£m)	CfD Asset/Liability in the Statement of Financial Position (£m)	Unamortised deferred difference at reporting date (£m)
CfDs assessed as gains at 31 March 2023	32	-	-	-	-
CfDs assessed as gains at initial recognition	14	(224,166)	(594,119)	(369,953)	(224,166)
CfDs assessed as losses at initial recognition	18	1,454,616	(2,003,595)	(3,458,211)	1,454,616
CfDs assessed as losses at 31 March 2023	132	-	-	-	-
CfDs assessed as gains at initial recognition	9	(42,245)	26,627	68,872	(42,245)
CfDs assessed as losses at initial recognition	123	24,757,743	27,513,222	8,462,621	19,050,601
Total 164	25,945,948	24,942,135	4,703,329	20,238,806

10.4.4 Key inputs and underlying assumptions for CfDs

For the key inputs into the model, the underlying assumptions are set out below.

Estimated future forecast wholesale electricity prices:
Forecast wholesale electricity prices used to estimate the fair value of CfDs are derived from an independent price series (In 2022 the DDM price series was used). Energy price series estimates the wholesale price by:

calculating the short run marginal cost (SRMC) of each plant (including a representation of plants in interconnected markets), taking account of start-up and shut-down costs
calculating the available output of intermittent renewables
calculating the half hourly demand for electricity by taking into account demand side response
determining the marginal plant required to meet demand

Economic, climate, policy, generation, and demand assumptions are external inputs to the model including demand load curves for both business and non-business days and seasonal impacts. Specific assumptions can also be modelled for domestic and non-domestic sectors and smart meter usage.

The forecast trajectory of electricity prices is uncertain. In the valuation, management has used an industry recognised independent price series which is not an outlier. The internal model used to calculate the fair value has been updated for short-term prices, installed capacities, TLM, and load factors.

In the valuation, the wholesale price has been reduced to reflect the price the wind generator is likely to receive. Additionally, wholesale electricity forward prices have been used for the liquid trading horizon (covering the nearest 2 years period).

Estimated future electricity generation:

a. Transmission Loss Multiplier (TLM):
TLM reflects the fact that electricity is lost as it passes through the transmission system from generators to suppliers. If the TLM is incorrect, this will have implications for the volume of electricity subject to CfD payments. Any change in TLM will be corrected through adjustments in strike prices although the change in TLM is expected to be immaterial.

b. Start date:
Generators nominate a Target Commissioning Date (TCD) in their binding application form for a CfD, and this date is specified in their CfD, following contract award. However, the generator is free to commission at any time within their Target Commissioning Window (TCW), a period of one year from the start of the T C W for most technologies, with no penalty, or after the end of the TCW and up to their “Longstop Date” (one to two years after the end of the TCW depending on technology) with a penalty in the form of reduction of contract length for each day they are late in commissioning after the end of the TCW . The contract can be terminated if the generator has not commissioned 95% (or 85% for Investment Contracts and offshore wind) of their revised installed capacity estimate by the Longstop Date. The valuation uses the latest estimate from generators on the start date.

The estimated start dates for reactor one and reactor two of the HPC project are June 2026 and June 2027, respectively. The TCW for reactor one is 1 May 2025 to 30 April 2029. The TCW for reactor 2 is 1 November 2025 to 31 October 2029.

Any change to the start date will change the timing of future cash flows and impact on the discounted fair value.

c. Installed capacity:
The figure for the maximum installed capacity was provided by the generator in its application for a CfD and specified in its CfD contract following allocation. Thereafter the installed capacity figure can only be reduced by the generator for a permitted contractual construction event (which is a narrowly defined concept) or by the difference by which the relevant project has an installed capacity of 95% (or 85% in the case of Investment Contracts and offshore wind) of its current contractual installed capacity figure and 100%. The actual output of the generator will depend on the load factor.

The HPC CfD does not have an installed capacity cap and is only entitled to CfD payment support up to a generation cap of 910,000,000 MWh.

d. Load factor:
Load factor is defined as the actual power output of a project as a proportion of its rated installed capacity. It is a percentage figure which is used to transform installed capacity into actual power output (generation). Load factor assumptions are based on reference factors published by the Department for given technology types; however, actual power outputs are sensitive to technological and environmental factors which may impact actual cash flows. Plant specific load factors (where a minimum of 6 months’ generation data is available) is also available for consideration when valuing the CfDs.

For HPC CfD the generator (NNB Generation Company (HPC) Limited) provides LCCC with a generation profile, which forecasts the generation over the life of the contract.

Strike price:
The strike price is an agreed price which determines the payments made to the generator under the contract with reference to its low carbon output and the market reference price.

The relevant strike price is specified in each CfD and is not intended to change for the duration of the project, other than through indexation to CPI and certain network charges, or in the event of certain qualifying changes in law. The strike price used in the valuation of the CfDs is the 2022-23 strike price and reflects the CPI rate for January 2022, in line with the requirements of the CfD contract.

The announcement made by OFGEM in April 2022 stating that from the 1 April 2023 generators will no longer pay BSUoS charges confirmed the market view at the reporting date which LCCC has already incorporated into the strike price forecast as at the 31 March 2023.

If a CfD in relation to Sizewell C is entered into before the reactor one start date, then the applicable strike price shall be reduced with effect from the date of satisfaction of the Sizewell C condition by £3/MWh. There have been legal developments around R A B and government investment during the year and management recognise that the likelihood of Sizewell C entering in to a CfD is greater than the prior year and have recognised 50% of the strike price adjustment, using £91.00/MWh (2022 - £92.50/MWh) in the valuation, the remaining 50% will be recognised on the government’s final investment decision. The impact of the strike price adjustment crystalising either way is included in the sensitivity analysis in note below.

Equity gain share for Hinkley Point C:
The equity gain share mechanism consists of two separate components: (i) a mechanism to capture gains above specified levels where the HPC project outperforms relative to the original base case assumptions; and (ii) a mechanism to capture gains above specified levels arising from the sale of equity and economic interests (direct or indirect) in the HPC project.

In each case, as and when the Internal Rate of Return (IRR) thresholds are reached:

if the relevant IRR is more than 11.4%, LCCC will receive 30% of any gain above this level
if the relevant IRR is more than 13.5%, LCCC will receive 60% of any gain above this level

No adjustment to the valuation has been made for equity gain share on the grounds that none of the conditions outlined above have been met or are currently forecast to be met.

Construction gain share for Hinkley Point C: HPC come in under budget, the strike price will be adjusted downwards so that the gain (or saving) is shared with LCCC. The gain share is 50/50 for the first billion pounds, with savings in excess of this figure being shared 75% to LCCC and 25% to NNB Generation Company (HPC) Limited (NNBG).

If the outturn cost of construction is less than assumed then by reducing the strike price, the amounts paid out to NNBG under the CfD will reduce and hence the benefit of the lower construction costs is shared between NNBG and ultimately consumers. There is, however, no similar upward adjustment if the construction cost of HPC is over budget.

No adjustment to the valuation has been made for construction gain share on the grounds that there hasn’t been any construction gain share during the year and none is currently forecast.

OPEX reopener for Hinkley Point C:
The strike price may be adjusted upwards if the operational expenditure costs are more than assumed and downwards if they are less. There are two operational expenditure reopener dates, at 15 years and 25 years after the first reactor start date. The rationale behind the reopener is that the strike price is based on long-term assumptions on operational expenditure costs. The reopener provides a way of mitigating long-term cost risks for both parties.

No adjustment to the valuation has been made for OPEX reopener on the grounds that the opex reopener dates have not been reached yet and there is no evidence of operating costs materially differing from initial projections.

10.4.5 Sensitivity analysis

As explained above, long term system forecasts are not generally seen as a single most likely outcome with degrees of uncertainty either side. Rather there are multiple sets of inputs that are internally consistent and credible. A set of these inputs is usually used as a ‘scenario’ and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long term forecasting. Therefore, individual forecasts may use a very different set of assumptions such as generation mix, carbon and fuel costs, electricity demand and interconnector capacity, but still be within what LCCC would describe as the ‘universe of reasonableness’. LCCC’s management has decided to use the reference case scenario of an industry recognised independent forecast that is not an outlier.

An additional element in the calculation of the CfD liability is the discount rate that is applied. Uncertainty increases with time and so the choice of discount rate plays a significant part in determining how much uncertainty is weighted into a present value calculation, a higher discount rate places less weight on increasingly more uncertain years of a present value calculation.

In line with 2021/22, LCCC has this year derived a real discount rate from the HM Treasury nominal discount rate of 1.9% adjusted by the latest CPI inflation forecasts for each modelled year, given that the strike price is indexed to CPI, resulting in the following real discount rates:

Year	Discount rates
2023-24	-2.19%
2024-25	1.28%
2025-26	1.92%
2026-27	1.05%
2027-28 and thereafter	-0.10%

For future year-on-year comparability we include an undiscounted valuation of the CfDs to compare with table above:

Undiscounted valuation of CfDs:

	LCCC CfDs net liability exc. HPC (£m)	LCCC HPC CfD (£m)	Departmental group Total (£m)
As at 31 March 2022	34,844	58,381	93,225
As at 31 March 2023	25,627	60,424	86,051

The following table shows the impact on the fair value of CfDs, classified under level 3, by applying reasonably possible alternative assumptions to the valuation obtained using DDM. Due to the significance and uniqueness of HPC CfD the impact (and certain assumptions) has been shown separately.

	Favourable/ (Unfavourable) changes: HPC CfD (£m)	Favourable/ (Unfavourable) changes: Other CfDs (£m)	Favourable/ (Unfavourable) changes: Total Impact (£m)
Change in fair value of CfDs if:
DDM High Case	31,810	52,605	84,415
DDM Low Case	(16,964)	(29,169)	(46,133)
Discount rate of 3.5%	30,203	5,874	36,077
Discount rate of 0.7%	7,905	835	8,740
Undiscounted	(860)	(685)	(1,545)
Specific to other CfDs exc. HPC:
10% more load factor	-	(2,490)	(2,490)
10% less load factor	-	2,490	2,490
Estimated Commissioning Date moves backward by 1 year	-	(2,839)	(2,839)
Generation starts at the earliest possible date	-	2,957	2,957
Specific to HPC CfD:
10% less load factor	5,956	-	5,956
Generation brought forward one year	840	-	840
Generation start date delayed 15 months from estimated start date	(773)	-	(773)
Sizewell C strike price adjustment (-50% £1.5)	1,793	-	1,793
Sizewell C strike price adjustment (+50% £1.5)	(1,793)	-	(1,793)

The fair value is highly dependent upon the actual capacity generated once the plant is built and the electricity prices which will prevail at the time of generation. The favourable and unfavourable changes show how the impact of changes in capacity and prevailing electricity prices will affect the fair value of CfDs due to the change in the level of cash flows.

Significant unobservable inputs:
The following table discloses the valuation techniques and significant unobservable inputs for CfDs recognised at fair value and classified as Level 3 along with the range of actual values used in the preparation of the financial statements.

	Fair value of CfDs (£m)	Valuation technique	Significant unobservable input	Market Price Range (Min-Max)	Units
2022	97,591	DCF	Electricity prices	37.84-244.00	£/MWh
2023	84,506	DCF	Electricity prices	39.07-141.35	£/MWh

11. Investments and loans in other public sector bodies

	Ordinary shares (£m)	Public Dividend Capital (£m)	Other investments and loans (£m)	Core department and agencies Total (£m)	Elimination of shares and other investments and loans held in NDPBs (£m)	NDPBs Ordinary Shares (£m)	Departmental group Total (£m)
Balance at 1 April 2021	2,609	65	1,427	4,101	(2,950)	574	1,725
Additions	420	-	584	1,004	(629)	-	375
Disposals	(65)	-	-	(65)	65	-	-
Redemptions	-	-	(131)	(131)	91	-	(40)
(Impairments) / Impairment reversal	(6)	-	(23)	(29)	23	-	(6)
Revaluations	(129)	-	-	(129)	-	37	(92)
Unwinding of discount	-	-	14	14	-	-	14
Loans repayable within 12 months transferred to current assets	-	-	(93)	(93)	(16)	-	(109)
Balance at 31 March 2022	2,829	65	1,778	4,672	(3,416)	611	1,867
Transfers in	1	-	(34)	(33)	(1)	-	(34)
Additions	787	-	2,340	3,127	(1,044)	-	2,083
Disposals	(5)	-	-	(5)	5	-	-
Redemptions	-	-	(283)	(283)	203	-	(80)
(Impairments) / Impairment reversal	-	-	(747)	(747)	6	-	(741)
Revaluations	-	-	1,124	1,124	(1)	-	1,123
Unwinding of discount	-	-	1	1	-	-	1
Balance at 31 March 2023	3,612	65	4,179	7,856	(4,248)	611	4,219

11.1 Ordinary Shares in other public sector bodies

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April 2022	2,829	1,277	2,609	1,244
Transfers In	1	-	-	-
Additions	787	-	420	125
Disposals	(5)	-	(65)	-
(Impairments) / Impairment reversal	-	-	(6)	-
Revaluations	-	(1)	(129)	(92)
Balance at 31 Mar 2023	3,612	1,276	2,829	1,277
Comprising
– Ordinary Shares held within the Departmental boundary - held at cost	2,946	-	2,163	-
– Ordinary Shares held outside the Departmental boundary - held at fair value	666	1,276	666	1,277
Balance at 31 March 2023	3,612	1,276	2,829	1,277

Core department: Ordinary Shares in other public sector bodies held within the departmental boundary

In accordance with the FReM, ordinary shares held within the departmental boundary are carried at historical cost less any provision for impairment. They are eliminated on consolidation.

Sizewell C (Holding) Ltd (SZC):

The core department through the Secretary of State (SoS) holds 11,468,409 ordinary shares (31 March 2022: nil), each with a nominal value of £1. The core department invested in additional share capital during the year of £363 million (31 March 2022: £nil million). The core department’s holding had a cost of £363 million at 31 March 2023 (31 March 2022: £nil million).
The principal objective of the company is the development of the Sizewell C nuclear power station in Suffolk.
The carrying value of the assets and liabilities are brought into the consolidated financial statements from 29 November 2022, the share purchase date. The net assets acquired are recorded as a non-operating gain through net expenditure of £541 million, £322 million is attributable to non-controlling interest. The material asset held by the subsidiary company, NNB Generation Company (SZC) Ltd, is the asset under construction of £839 million included in note 7 Property, plant and equipment.

British Business Bank Plc (BBB):

The core department through the Secretary of State (SoS) holds 2,580,311,265 ordinary shares (31 March 2022: 2,155,711,265), each with a nominal value of £1. The core department invested in additional share capital during the year of £424 million (31 March 2022: £295 million). The core department’s holding had a cost of £2,580 million at 31 March 2023 (31 March 2022: £2,156 million). +The principal objective of the company is to address long-standing, structural gaps in the supply of finance and bring together in one place government finance support for small and mid-sized businesses.

UK Green Infrastructure Platform (UKGIP):
The core department through the SoS holds 90% of the share capital of UK Green Infrastructure Platform Limited in the form of 900 ordinary shares (31 March 2022: 900), each with a nominal value of £1.

The core department’s holding had a cost less provision for impairment of £Nil million at 31 March 2023 (31 March 2022: £5 million).

UKGIP was established to enable government to retain an interest in five existing Green Investment Bank (GIB) investments. The Green Investment Group is the remaining 10% shareholder. Following Special Resolutions passed on 06 April 2022 UKGIP is being wound up, via a Members’ Voluntary Liquidation, having fulfilled its objectives to manage government’s interests in the unsold assets from the Green Investment Bank.

UK Shared Business Services Limited (UKSBS):

The core department through the SoS holds 62,016,358 non-voting shares and one voting share in UKSBS, held at cost less provision for impairment of £2 million at 31 March 2023 (31 March 2022: £2 million).
The company is a specialist business services organisation that provides finance, procurement, grants, information systems and HR and payroll services to the public sector. Its main objective is to improve the economy, efficiency and effectiveness of corporate services to BEIS bodies.

Low Carbon Contracts Company Limited (LCCC):

The core department through the SoS holds one ordinary share in LCCC with a nominal value of £1.
The principal objective of the company is to be the counterparty to and manage Contracts for Difference (CfDs) throughout their lifetime.

Electricity Settlements Company Limited (ESC):

The core department through the SoS holds one ordinary share in E S C with a nominal value of £1.
The principal objective of the company is to oversee settlement of the Capacity Market agreements.

Enrichment Holdings Limited (EHL):

The core department through the SoS holds two shares of £1 each in E H L with a nominal value of £2.
EHL has been set up as a holding company, along with a subsidiary company, Enrichment Investments Limited (EIL), solely to hold the government’s one-third share in Urenco Limited, an entity operating in the civil uranium enrichment sector.

BIS (Postal Services Act 2011) Company Limited:

The core department through the SoS holds one ordinary share in B I S (Postal Services Act 2011) Company Limited with a nominal value of £1.
The principal objective of the company is to dispose of the assets transferred to it from the Royal Mail Pension Plan (RMPP).

Postal Services Holding Company Limited (PSH):

The core department through the SoS holds 50,005 ordinary shares in PSH which is 100% of the issued share capital at a historic cost of £430 million at 31 March 2023 (31 March 2022: £430 million). The core department through the SoS also owns one special share in PSH, relating to certain areas for which Special Shareholder’s consent is required.
The core department’s holding had a cost less provision for impairment of £nil at 31 March 2023 (31 March 2022: £nil). PSH is currently in the process of liquidation due to the cessation of its primary activities.
The principal objective of the company prior to cessation was to hold and manage its shares in Post Office Limited (POL), which prior to cessation were transferred to the core department.

Core department: Ordinary Shares held outside of the departmental boundary

Shares held outside of the departmental boundary are carried at fair value through other comprehensive income.

Post Office Limited (POL):

The core department through the SoS holds 50,005 ordinary shares in POL at a nominal value of £1 each which is 100% of the issued share capital. There is a special share in POL (nominal value of £1) which is held directly by the Secretary of State for BEIS.
This shareholding is held at fair value, but as there is no active market for these shares the net asset value of POL is considered to be a reasonable approximation for fair value. The core department invested in additional share capital during the year of £nil (31 March 2022: £125 million). The fair value of the investments, held by the core department, as at 31 March 2023 was £nil (31 March 2022: £nil).
The principal objective of POL is to provide retail post office services through its national network of branches.

British Nuclear Fuels Limited (BNFL):

The core department holds 50,000 ordinary shares in B N F L at a nominal value of £1 each. The Secretary of State for BEIS holds 49,999 ordinary shares and the Treasury Solicitor holds one ordinary share.
The core department’s shareholding is held at fair value, but because there is no active market for these shares the net asset value of B N F L is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2023 was £337 million (31 March 2022: £327 million).
BNFL exists to settle historic liabilities including those arising from BNFLs disposal programmes.

Ordnance Survey Limited (OSL):

The core department through the SoS holds 34,000,002 ordinary shares in OSL at a nominal value of £1 each which is 100% of the issued share capital.
The shareholding is held at fair value, but as there is no active market for these shares the net asset value of O S L is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2023 was £135 million (31 March 2022: £127 million).
The principal objective of OSL is to produce mapping products and mapping data information.

NPL Management Limited (NPLML):

The core department through the SoS holds 76 ordinary shares in NPLML which is 100% of the issued share capital.
NPLML has been set up to manage and operate the National Physical Laboratory.
The shareholding is held at fair value, but as there is no active market for these shares the net asset value of N P L M L is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2023 was £91 million (31 March 2022: £104 million).

NNL Holdings Limited (NNLH):

The core department through the SoS holds two shares of £1 each in NNLH with a nominal value of £1 each.
NNLH has been set up as a holding company, to hold all the shares in the National Nuclear Laboratory Limited.
The shareholding is held at fair value, but because there is no active market for these shares the net asset value of NNLH is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2023 was £102 million (31 March 2022: £108 million).

Departmental group

NDA subsidiaries:
The NDA controls the following subsidiaries, all of which are outside the departmental group boundary and not consolidated into these accounts. The holdings are valued at fair value. As there is no active market, the net assets of the entities are considered the most appropriate approximation for fair value and amounted to £610 million as at 31 March 2023 (31 March 2022: £611 million).

Name	Nature of business	Country of incorporation	Holding entity	Proportion of ordinary shares held
Rutherford Indemnity Limited	Nuclear insurance	Guernsey	NDA	100%
Direct Rail Services Limited	Rail transport services within the UK	UK	NDA	100%
Pacific Nuclear Transport Limited ^{[Note i]}	Transportation of spent fuel, reprocessing products and waste	UK	NDA	72.00%
International Nuclear Services Limited	Contract management and the transportation of spent fuel, reprocessing products and waste	UK	NDA	100%
Radioactive Waste Management	Responsible for planning and delivering geological disposal in the UK	UK	NDA	100%
NDA Properties Limited	Property management	UK	NDA	100%
NDA ARCHIVES LIMITED	Archives activities	UK	NDA	100%
Sellafield	Cleaning-up the UK’s highest nuclear risks and hazards to safeguarding nuclear fuel, materials and waste	UK	NDA	100%
Dounreay Site Restoration Ltd (DSRL)	Responsible for the clean-up and decommissioning of the Dounreay fast breeder reactor research site on the north coast of Scotland.	UK	NDA	100%
Magnox	Responsible for the safe and secure clean-up of 12 nuclear sites and operation of one hydro-electric plant	UK	NDA	100%
Low Level Waste Repository Ltd	Waste management across the UK	UK	NDA	100%
International Nuclear Services France SAS ^{[Note i]}	Transportation of spent fuel	France	NDA	100%
International Nuclear Services Japan KK ^{[Note i]}	Transportation of spent fuel	Japan	NDA	100%

(i) Ownership through International Nuclear Services Limited.

11.2 Public Dividend Capital

	UK Intellectual Property Office (£m)	Met Office (£m)	Total (£m)
Balance at 1 April 2021	6	59	65
Additions	-	-	-
Redemptions	-	-	-
Impairments	-	-	-
Balance at 31 March 2022	6	59	65
Additions	-	-	-
Redemptions	-	-	-
Impairments	-	-	-
Balance at 31 March 2023	6	59	65

The department is required to disclose its share of the net assets and the results for the year of other public sector bodies, which are outside of the departmental boundary. The following disclosures relate to the department’s trading funds.

	UK Intellectual Property Office (£m)	Met Office (£m)
Net Assets/(Liabilities) at 31 March 2022	123	287
Turnover	164	258
Surplus/profit (deficit/loss) for the year before financing	33	12
Net Assets/(Liabilities) at 31 March 2023	134	296
Turnover	154	261
Surplus/profit (deficit/loss) for the year before financing	15	12

The information presented for the reporting year was derived from the draft unaudited accounts of the entities. The information for 2021–22 was derived from their audited accounts. The accounts were prepared on an I F R S basis, in accordance with the requirements of the FReM.

11.3 Loans in public sector bodies

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	1,778	525	1,427	416
Transfers	(34)	(34)	-	-
Additions	2,340	2,082	584	249
Repayments	(283)	(80)	(131)	(40)
Unwinding of Discount	1	1	14	14
Impairments	(747)	(741)	(23)	(6)
Revaluations	1,124	1,124	-	-
Loans repayable within 12 months transferred to current assets	-	-	(93)	(108)
Balance at 31 March 2023	4,179	2,877	1,778	525

Core department

The most significant loans are detailed below.

Energy Efficiency Loans Scheme and Recycling Funds
The core department’s Energy Efficiency Loans Scheme was set up under the Environmental Protection Act 1990 to help businesses and public sector organisations reduce their energy costs by providing interest free loans for the implementation of energy efficiency projects.

The total carrying amount at 31 March 2023 is £238 million (31 March 2022: £281 million), of which the non-current element, reported in the table above, is £172 million (31 March 2022: £219 million) and the current element, reported in note 16, £66 million (31 March 2022: £62 million). All outstanding loans are to public sector organisations and are reported at amortised cost under IFRS 9.

The loans are to non-consolidated bodies and not eliminated on consolidation.

Fleetbank Funding Limited Loan (Enable Funding programme):
The core department’s loan to Fleetbank Funding Limited supports the Enable Funding programme, managed by the British Business Bank. This was launched in November 2014 to improve the provision of asset and lease finance to smaller UK businesses.

The carrying amount at 31 March 2023 is £551 million (31 March 2022: £632 million). The loans are reported at amortised cost under IFRS 9.

The loan is to a consolidated body and eliminated on consolidation.

Northern Powerhouse Investment Limited and Midlands Engine Investment Limited Loans:
The core department has loans with Northern Powerhouse Investment Fund and Midlands Engine Investment Fund. The funds provide commercially-focused finance to help small and medium sized enterprises start up and grow.

The total carrying amount at 31 March 2023 is £373 million (31 March 2022: £292 million). These are equity investments by BEIS in these entities and therefore held at cost under IAS 27.

The loans are to consolidated bodies and eliminated on consolidation.

Met Office Loans:
The core department’s loans with the Met Office fund UK membership of EUMETSAT. EUMETSAT is a non-E U international organisation, set up to develop, launch and monitor meteorological satellites which provide global data for weather forecasting.

The total carrying amount at 31 March 2023 is £236 million (31 March 2022: £230 million), of which the non-current element, reported in the table above, is £205 million (31 March 2022: £202 million) and current element, reported in note 16, £31 million (31 March 2022: £28 million). The loans are reported at amortised cost under IFRS 9.

The loans are to a non-consolidated body and not eliminated on consolidation.

Bulb Energy Ltd (in special administration):
The core department has provided a loan to Bulb Energy Ltd (in administration) to ensure that special administration regime and exit from administration achieves the best outcome practicable for energy customers, taxpayers, and the industry. The loan is repayable by the company to the extent that it has the financial resources to do so. The loan is measured at fair value through profit or loss under IFRS 9. The fair value at 31 March 2023 is £2,406 million ((31 March 2022: £Nil million). This is different to the actual amount that is expected to be repaid by Bulb under the terms of the funding agreement.

An external expert has been engaged to support the Department in determining the year end fair value. Both the external expert and the Department provided inputs and assumptions to the fair value calculation. Overall responsibility for the valuation remains with the Department.

The fair value was calculated using the income approach. The objective of using a valuation technique is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. Given the specific circumstances of this loan, we have considered a discounted cash flow (DCF) analysis of the probability weighted expected recoverable amount under a range of different scenarios to be the most appropriate methodology.

The range of potential outcomes was summarised into several scenarios to estimate the projected value and timing of cashflows to repay the loan. The scenarios consider the risk of potential material movements in the wholesale price of energy and the implications this may have on the wider trading environment.

The discount rates appropriate for the expected recoverable cash flows are estimated using the risk-free rates based on the SONIA zero rate curve (providing a different rate for each payment date) and based on a mid-point adjusted spread of 1.75% derived from the analysis of comparable debt to the loan.

As a final step, probability weightings were assigned to each scenario based on the assessment of their likelihood. The approach to determining the probability weighting percentages to apply to each of the scenarios makes use of all available information allowing us to come to an informed judgment of the expectancy of any of the considered scenarios materialising.

The value of £2,406 million represents the mid-point discount rate estimate of the fair value valuation as at the valuation date within a range between £2,358 million and £2,454 million. We have estimated low and high values based on low and high spreads of 0.75% to 2.75% (+/-1% around the mid-point of 1.75%).

The loan is to a non-consolidated body and not eliminated on consolidation.

11.4 Special shares

The Secretary of State holds one special share in each of the entities listed below. The list includes a summary of the significant terms of shareholding, and not a comprehensive record. Further details can be obtained from the annual report and financial statements of each body or their Articles of Association. The core department does not recognise the special or ‘golden’ shares on its SOFP.

Created in January 2001 (formerly called Royal Mail Holdings plc)
It may be redeemed at any time by the shareholder
The consent of the special shareholder is required for a number of decisions, including:
- appointments to the Board (the special shareholder can also make appointments to the Board)
- setting (and approving any material changes in) the remuneration packages of the Directors
- borrowing
- disposing of substantial assets of the business and shareholdings
- voluntary winding-up of the company
- varying certain of the company’s Articles of Association, including the rights of the special shareholder.

Note: The company is now in members’ voluntary liquidation and control of its affairs has been passed to the Joint Liquidators.

Created in April 2012
Special Shareholder is entitled to attend and speak at any general meeting or any meeting of any other class of shareholders of P O L , but the Special Share does not carry voting rights or any other rights at any such meeting.
It may be redeemed at any time by the Special Shareholder. P O L cannot redeem the Special Share without prior consent of the Special Shareholder.
The consent of the special shareholder is required for a number of decisions, including:
- varying POL’s Articles of Association, including the rights of the special shareholder
- appointment or removal from office of any Director of POL
- approval of (including material variations) Directors’ remuneration and terms of employment
- adoption of (and any material variation in) POL’s strategic plan
- substantial alterations in the nature of the business carried on by POL
- sale of material assets in the absence of which POL would not be able to deliver its strategic plan
- incurring of any borrowing exceeding pre-set limits as agreed with HM Treasury
- issuing or allotment of shares or granting of share rights in the company
- voluntary winding-up of the company or member of the group
- any transaction which will result in a commitment or liability – either individually or when taken together with related relevant transactions – of an amount in excess of £50 million

created in 1985 (but subsequently amended)
no time limit
provides for a 15% limit on any individual foreign shareholding, or group of foreign shareholders acting in concert, in the company
requires a simple majority of the Board and the Chief Executive to be British
requires any Executive Chairman to be British and, if both the Chairman and Deputy Chairman are non-executives, requires at least one of them to be British

created in 1987 (but subsequently amended and transferred to Rolls-Royce Holdings plc).
no time limit
provides for a 15% limit on any individual foreign shareholding, or group of foreign shareholders acting in concert, in the company.
requires a simple majority of the Board to be British
allows either the Chairman or the Chief Executive to be either an EU or US citizen provided that the other is a British citizen
provides for a veto over the material disposal of assets of the group
provides for a veto for a proposed voluntary winding up

British Energy Group plc Special Share created on 13 January 2005 and held jointly by the Secretary of State for Business, Energy and Industrial Strategy and the Secretary of State for Scotland.
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- any purchase of more than 15% of the company’s shares
- the issue of shares carrying voting rights of 15% or more in the company
- variations to the voting rights attaching to the company’s shares
- the giving of consent in respect of the issue of shares by, the sale of shares in or amendments to the Articles of Association of various subsidiaries in certain cases

British Energy Holdings plc Special Share created on 13 January 2005 and held jointly by the Secretary of State for Business, Energy and Industrial Strategy and the Secretary of State for Scotland.
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- the giving of consent in respect of the issue of shares by, the sale of shares in or amendments to the Articles of Association of various subsidiaries in certain case

British Energy Generation Ltd Special Share created in 1996 is held solely by the Secretary of State for Business, Energy and Industrial Strategy.
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- the disposal of any of the nuclear power stations owned by the company
- prior to the permanent closure of such a station, the disposal of any asset which is necessary for the station to generate electricity

British Energy plc Special Share created in 1996 is held solely by the Secretary of State for Business, Energy and Industrial Strategy.
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- the giving of consent in respect of the issue of shares by, the sale of shares in or amendments to the Articles of Association of various subsidiaries in certain cases
The company has no significant assets or liabilities as a result of the restructuring scheme, which came into effect on 14 January 2005.

Created in 1996.
The Secretary of State for Business, Energy and Industrial Strategy has a Special ‘A’ Share (there is also a ‘B’ Share held by British Energy).
The consent of the Special Shareholder is required for any of the following:
- to change any of the provisions in the Memorandum of Association or Articles of Association
- to alter the share capital or the rights attached thereto
- the company to create or issue share options
- the ‘B’ Special Shareholder or any of the Ordinary shareholders to dispose or transfer any of their rights in their shares
- the company to pass a members voluntary winding-up resolution
- the company to recommend, declare or pay a dividend
- the company to create, issue or commit to give any loan capital
- the company to issue a debenture
- the company to change its accounting reference date

Incorporated in 2020.
The Secretary of State for Business, Energy and Industrial Strategy has a Special ‘B’ Share.
The written consent of the Special Shareholder is required for any of the following:
- any change in the nature or scope of the business of the Group or any commencement of new activity outside its existing course of business
- any amendments to the company’s Articles of Association or any other governing and constitutional documents
- any change to the location of the Group’s executive management team, headquarters or centre of operations
- any Group Member entering into, or amending, any contract, arrangement or relationship which may prejudice the Group’s ability to enter into contracts, arrangements or relationships with certain parties
- any change to the technical and technology standards of any of the Group’s operations
- the sale by any Group member of any product or service which is going to be used for a defence or national security application
- the entry by any Group member into arrangements notifiable under a tax disclosure regime
- any change to the jurisdiction of tax residence
- any change to the corporate structure or activities of any Group member which may impact the jurisdiction of tax residence or have a negative reputational impact arising from tax matters

12. Other financial assets

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	-	1,967	7,099	1,769	5,713
Additions	-	15	1,238	269	1,724
Repayments	-	(283)	(1,285)	(102)	(1,024)
Effective Interest	-	7	7	15	15
Unwinding of Discount	-	2	2	3	3
Amortisation	-	-	5	-	4
Revaluations	-	(113)	(294)	38	703
Impairments	-	-	(32)	(25)	(39)
Balance at 31 Mar	-	1,595	6,740	1,967	7,099
Comprising
Repayable launch investments	12.1	252	252	463	463
Other loans and investments	12.2	1,343	6,488	1,504	6,636
Balance at 31 Mar	-	1,595	6,740	1,967	7,099

Other financial assets analysed between current and non-current assets

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Due within 12 months	-	-	223	223
Due after 12 months	1,595	6,740	1,744	6,876
Total	1,595	6,740	1,967	7,099

12.1 Repayable launch investments

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	463	463	485	485
Repayments	(261)	(261)	(49)	(49)
Effective Interest	7	7	15	15
Revaluations	43	43	12	12
Balance at 31 Mar	252	252	463	463

12.2 Other loans and investments

	Gilts and bonds (£m)	Term deposits (£m)	Private sector loans (£m)	Private sector shares	Investment funds (£m)	Other investments (£m)	Total (£m)
Balance at 1 April 2021	42	5	1,952	198	2,961	70	5,228
Additions	4	-	770	112	836	2	1,724
Redemptions	(4)	(5)	(281)	(36)	(577)	(72)	(975)
Revaluations	-	-	(181)	202	670	-	691
Unwinding of Discount	-	-	3	-	-	-	3
Impairments	-	-	(39)	-	-	-	(39)
Amortisation	-	-	4	-	-	-	4
Reclassifications	-	-	(274)	286	(12)	-	-
Balance at 1 April 2022	42	-	1,954	762	3,878	-	6,636
Additions	-	1	345	85	807	-	1,238
Redemptions	(38)	-	(536)	(14)	(436)	-	(1,024)
Revaluations	(3)	-	(87)	(139)	(108)	-	(337)
Unwinding of Discount	-	-	2	-	-	-	2
Impairments	-	-	(32)	-	-	-	(32)
Amortisation	-	-	5	-	-	-	5
Reclassifications	-	-	(199)	206	(7)	-	-
Balance at 31 March 2023	1	1	1,452	900	4,134	-	6,488
Of the total
– Core department and agencies	-	-	447	657	239	-	1,343
– NDPBs and other designated bodies	1	1	1,005	243	3,895	-	5,145
Balance at 31 March 2023	1	1	1,452	900	4,134	-	6,488

Core department

The most significant loans and investments are detailed below.

Future Fund: Private sector loans and Private sector shares:
Future Fund investments are held by the core department. The scheme launched on 20 May 2020 as a COVID-19 business support scheme and was open to new applicants till 31 January 2021. The scheme is administered by the British Business Bank (BBB) on behalf of the core department. The department issued convertible loans on commercial terms to eligible businesses, in amounts from £125,000 to £5 million, subject to at least equal match funding from private investors. The policy aim was to support the development trajectory of innovative, high-growth, UK-based businesses.

An external expert has been engaged as an external valuer, to support the department in determining the quarterly and year end fair values. The external expert developed the valuation model and owns the intellectual property in relation to it. Both the external expert and B B B provide inputs and assumptions to the valuation model. Overall responsibility for the valuation remains with the department, which retains the right to override any valuation that is suggested by the external expert. The department did not override any aspects of the valuation at the reporting date.

	Private sector loans (£m)	Private sector shares (£m)	Total (£m)
Balance at 1 Apr 2022	516	520	1,036
Additions	-	-	-
Transfers (conversions to equity)	(199)	199	-
Fair value gains/(losses)	(62)	(104)	(166)
Exits	(11)	(8)	(19)
Balance at 31 Mar 2023	244	607	851

Measurement and carrying values:
Future Fund Convertible Loan Notes (CLNs) and equity shares are financial assets measured at fair value through profit or loss under IFRS 9. The convertible element means contractual cash flows are not solely payments of principal and interest. Future Fund holdings in the form of equity shares arise primarily as a result of a convertible loan converting into shares following a financing event. Equity interests also arise following a sale or an IPO in which investors, including Future Fund, receive share consideration in the form of shares in the acquiring entity.

The estimates for CLNs and equity shares are based on the fair value definition provided in IFRS 13, which is that fair value reflects “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”.

The model values CLNs pre-conversion and equity shares post-conversion. The pre-conversion valuation includes the outstanding debt, the conversion option (which has yet to be exercised) and the potential future equity value. The post-conversion valuation is an equity valuation only.

The fair value of the option to convert the CLN into equity is based on a risk-neutral framework, checked against real world parameters to ensure that the valuations are reasonable. The amount of equity owned post-conversion is known, and the equity value estimate is informed based on information provided as part of the conversion. The valuation considers market data alongside company specific data in arriving at the estimated fair values. Post-conversion, equity values are reassessed for any key events, or risk factors.

The assumptions which have been assessed as being most significant to the fair value estimates with respect to the CLNs are listed below.

Arm’s length assumption – a transaction negotiated between independent parties was arranged to issue the CLNs, such that all the parties are acting in their own self-interest. Transaction price is generally taken to be the best evidence of a financial instrument’s initial fair value. As the department is investing alongside third-party investors on the same terms, the transaction price has been taken as representative of the CLNs fair value at inception.
Share equivalence assumption (pari passu) – all shares within the capital structure of companies within the Future Fund are treated equally and therefore are assumed to have equal value. The implication of this assumption is that CLNs are recognised at fair value.
Data cut off timing – there was a data cut-off at 3 April 2023 for extracting data from the scheme’s online portal to input into the valuation model, pertaining to the position of the underlying borrowers as at the valuation date.
Fully diluted share capital (‘FDSC’) – Where there are any data flaws in FDSC submitted by borrowers, it has been assumed that the FDSC remains consistent with inception until a financing event takes place.

For equity shares, conversion or exit events (i.e. shares issued in a new company in exchange for existing shares) are used as an equity value anchor point for each position given that at this point, BEIS’s equity amount is known, and corresponding equity value estimates are able to be informed based on the contractual conversion mechanisms or agreed terms for shareholders. Equity values from converted position are manually reviewed quarterly on a triggered basis, subject to agreed thresholds relating to various factors (see below). Equity values from exit events are also reviewed each quarter and updated based on information submitted or prevailing capital market pricing.

Some factors that impact these assessments include:

Actual or potential events of default of borrowers.
Actual or potential further financing rounds of the borrowers and the pricing of these rounds.
Market and sector movements, including movements in sector indices.
Borrower specific information, including financial and non-financial information such as cash balances, revenue and EBITDA, employee growth and KPI improvement/ deterioration.

The valuation of converted equity relies primarily on the Average Price per share (APPS), which is derived from observable market parameters such as recent funding rounds and conversion events. The APPS is then overlaid with adjustments which are based on market movements, individual company performance, and an assessment cash depletion. These adjustments are not applied as valuation inputs to derive the APPS, rather, they are ‘topside’ adjustments made to account for various factors that impact the individual portfolio companies.

There are limitations to the data included in the valuation model. The valuation of the Future Fund relies on company specific information being provided by investee companies on a quarterly basis. This information is taken from an online portal at the reporting date and contains data from the latest submission from each company. Given that the information is self-reported by the companies, there is a risk that inconsistencies could arise which may impact on the valuation. A dedicated team within BBB monitors data quality within the online portal to reduce this risk.

The fair value of the Future Fund at the reporting date, 31 March 2023, was £851 million (31 March 2022: £1,036 million).

Departmental group

Private sector loans:
British Business Bank (BBB), Fleetbank Funding Ltd (FFL) and UK Research and Innovation (UKRI) have entered into loan agreements with parties within the private sector. The loans within the departmental group are carried at historic cost as a proxy for amortised cost because the NDPBs and other designated bodies have determined that there is no material difference between historical cost and amortised cost.

As at 31 March 2023, £1,005 million of loans were held by NDPBs and other designated bodies (31 March 2022: £1,243 million).

The value of loans held by BBB as at 31 March 2023 was £503 million (31 March 2022: £527 million). The conditions attached to each loan vary depending on the details of the arrangement. Repayment schedules have been agreed and all loans are expected to be repaid at the end of the loan term. BBB provides invoice discount finance and peer to peer lending through the investment programme funds which were valued at £155 million at 31 March 2023 (31 March 2022: £176 million). BBB provides loans to start ups and small businesses via The Start Up Loans Company which were valued at £182 million at 31 March 2023 (31 March 2022: £179 million). The amortised cost valuations include expected credit loss (ECL) provisions taking account of the impacts of COVID-19 based on the available information at the reporting date. Further information on the ECL provisions are given in note 24.

During 2022–23, FFL made loans of £nil million (31 March 2022: £126 million) to private companies through the Enable Loan Programme scheme. The value of loans held by FFL as at 31 March 2023 was £355 million (31 March 2022: £569 million).

Private sector shares:
At 31 March 2023 £213 million of private sector shares were held by NDPBs and other designated bodies (31 March 2022: £180 million). These were held by, BBB, BIS (Postal Services Act 2011) Company Ltd, Nesta Trust, and UKRI. These are measured at ‘fair value through profit or loss’, with fair value movements going directly to the SOCNE.

The fair values are estimated based on a variety of valuation techniques, adopted by the investment managers that comply with the International Private Equity and Venture Capital Valuation (IPEV) Guidelines or the valuation guidelines produced by the British Venture Capital Association (BVCA). Valuation techniques used include the use of earnings multiples, discounted cash flows analysis, and net asset values.

Investment funds:
BBB, Nesta Trust, BIS (Postal Services Act 2011) Company Limited, Northern Powerhouse Investment Limited and Midlands Engine Investments Limited hold investment funds. The value invested by NDPBs and other designated bodies at 31 March 2023 was £3,895 million (31 March 2022: £3,646 million). In accordance with IFRS 9, the investments are measured at ‘fair value through profit or loss’ with fair value movements going directly to the SOCNE.

BBB held investment funds valued at £2,989 million at 31 March 2023 (31 March 2022: £2,788 million). The most significant investment is a long-term venture and growth capital investment fund in British Patient Capital valued at £1,222 million at 31 March 2023 (31 March 2022: £1,169 million). BBB also has investments as part of their non-peer to peer investment programme which were valued at £623 million at 31 March 2023 (31 March 2022: £542 million), the Business Finance Partnership valued at £224 million at 31 March 2023 (31 March 2022: £248 million), and the Enterprise Capital Fund valued at £440 million at 31 March 2023 (31 March 2022: £426 million).

The fair value of the investments in BIS (Postal Services Act 2011) Company Limited (BPSA) as at 31 March 2023 was £118 million (31 March 2022: £140 million). These investments primarily comprised investments in European and North American unquoted shares.

13. Recoverable contract costs

The departmental group has commercial agreements in place under which some or all of the expenditure required to settle nuclear provisions will be recovered from third parties. Net recoverable costs at 31 March 2023 were £992 million (31 March 2022: £3,071 million). Further details can be found in NDA’s annual report and accounts.

Recoverable contract costs relating to nuclear provisions

	Departmental group 31 March 2023 (£m)	Departmental group 31 March 2022 (£m)
Gross recoverable contract costs	4,461	6,626
Less applicable payments received on account	(3,452)	(3,152)
Less associated contract loss provisions	(17)	(403)
Balance at 31 Mar	992	3,071

The balances above relate to the NDA . The table below shows the movements in gross recoverable contract costs during the year.

Movements in gross recoverable contract costs

	Departmental group 31 March 2023 (£m)	Departmental group 31 March 2022 (£m)
Gross recoverable contract costs at 1 April	6,626	4,895
Increase/(decrease) in year	(1,700)	2,051
Unwinding of discount	(72)	(6)
Release in year - continuing operations	(254)	(203)
Amortisation of recoverable contract costs	(139)	(111)
Balance at 31 Mar	4,461	6,626

The gross balance of recoverable contract costs of £4,461 million (31 March 2022: £6,626 million) comprises £1,164 million (31 March 2022: £1,303 million) of past costs which were incurred before the revenue recognition period of the related contracts and will be amortised in future years in line with revenue and £3,297 million (31 March 2022: £5,323 million) of probable future costs which form part of the nuclear decommissioning provision (note 20.1) and will be released as they are incurred.

The movement in the gross recoverable contract costs during the year broken down by the type of costs are detailed in the table below.

	Departmental group 31 March 2023 Historic costs (£m)	Departmental group 31 March 2023 Future costs (£m)	Departmental group 31 March 2023 Total costs (£m)	Departmental group 31 March 2022 Historic costs (£m)	Departmental group 31 March 2022 Future costs (£m)	Departmental group 31 March 2022 Total costs (£m)
Balance at 1 April	1,303	5,323	6,626	1,414	3,481	4,895
Increase/(decrease) in the year	-	(1,700)	(1,700)	-	2,051	2,051
Unwinding of discount	-	(72)	(72)	-	(6)	(6)
Amortisation	(139)	-	(139)	(111)	-	(111)
Release in year	-	(254)	(254)	-	(203)	(203)
Balance at 31 Mar	1,164	3,297	4,461	1,303	5,323	6,626

The historic costs within the above are deemed contract assets under IFRS 15 ‘Revenue from Contracts with Customers’. The opening balances, amortisation in period and closing balances for each main contract type are shown below.

	Departmental group 31 March 2023 Spent fuel reprocessing and associated waste management (£m)	Departmental group 31 March 2023 Spent fuel receipt and management (£m)	Departmental group 31 March 2023 Total (£m)	Departmental group 31 March 2022 Spent fuel reprocessing and associated waste management (£m)	Departmental group 31 March 2022 Spent fuel receipt and management (£m)	Departmental group 31 March 2022 Total (£m)
Balance at 1 April	808	495	1,303	883	531	1,414
Amortisation	(82)	(57)	(139)	(75)	(36)	(111)
Balance at 31 Mar	726	438	1,164	808	495	1,303

Contract assets under IFRS 15 are deemed financial instruments for the purposes of IFRS 9 ‘Financial Instruments’ and, therefore, are ordinarily required to be reviewed for expected credit loss impairment. The above contract asset balances comprise costs which have been previously incurred and are now being amortised in each reporting period. They are not related to or dependent on the future payments still to be made under each contract and therefore a credit loss impairment is not required.

14. Investments in joint ventures and associates

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	376	1,504	348	1,395
Additions	-	(13)	-	55
Dividends	-	(87)	(1)	(85)
Disposals	-	20	-	(30)
Profit/(loss)	(52)	306	29	159
Impairments	-	-	-	(15)
Revaluations	-	78	-	25
Balance at 31 Mar	324	1,808	376	1,504

Core department

OneWeb Holdings Limited (OneWeb)

In 2020-21 the core department made a £374 million equity investment in OneWeb, which develops cutting-edge satellite technology in the UK and in the US. The core department holds at 31 March 2023 17.6% (31 March 2022: 17.6%) of the ordinary shares in OneWeb. The core department accounts for its investment in OneWeb as an associate using the equity method. The value of the core department’s holding at 31 March 2023 is £324 million (31 March 2021: £376 million), reflecting the core department’s share of post-acquisition net profit or (loss) of the associate.

OneWeb’s group financial statements are prepared in accordance with UK -adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The financial statements are prepared to 31 March and are presented in US dollars.

The principal place of business is West Works Building, 195 Wood Lane, London.

Summarised financial information	2022‑23 (£m)	2021‑22 (£m)
Current assets	398	880
Non-current assets	2,054	1,541
Current liabilities	(176)	(82)
Non-current liabilities	(306)	(216)
Revenue	25	7
Profit/(loss) from continuing activities	(293)	(285)

Other financial information	2022‑23 (£m)	2021‑22 (£m)
Cash and cash equivalents	183	366
Current financial liabilities (excl trade and other payables and provisions)	(49)	(53)
Non-current financial liabilities (excl trade and other payables and provisions)	(296)	(204)
Interest income	-	-
Finance costs and interest expense	(17)	(9)

Department group

The Francis Crick Institute Limited

The Francis Crick Institute (the Crick) was established in 2010 to deliver a world class interdisciplinary biomedical research centre. UKRI holds 42% (31 March 2022: 42%) of the ordinary shares in the Crick. The remaining shares are held by Cancer Research UK, University College London, the Wellcome Trust, Kings College London and Imperial College of Science, Technology and Medicine. The department accounts for its investment in the Crick as a joint venture under the equity method. The value of the departmental group’s investment at 31 March 2023 is £316 million (31 March 2022: £301 million), reflecting the departmental group’s share of post-acquisition net profit or (loss) of the joint venture.

The Crick’s financial statements are prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (Charities SORP 2nd Edition (FRS 102)). The financial statements are prepared to 31 March and presented in pounds sterling.

The principal place of business is Midland Road, London.

Summarised financial information	2022‑23 (£m)	2021‑22 (£m)
Non-current assets	482	532
Current assets	155	73
Current liabilities	(81)	(43)
Revenue	210	178
Profit/(loss) from continuing activities	(9)	(14)

Other financial information	2022‑23 (£m)	2021‑22 (£m)
Cash and cash equivalents	12	46
Depreciation and amortisation	(35)	(38)
Capital commitments	5	5

Urenco

Urenco is an international supplier of enrichment services. The department holds 33% (31 March 2022: 33%) of the ordinary share capital through Enrichment Holdings Limited. The department accounts for its investment in Urenco as an associate using the equity method. At 31 March 2023, the departmental group’s holding is valued at £839 million (31 March 2022: £549 million).

Urenco’s group financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and IFRS as issued by the IASB . The financial statements are prepared to 31 December and are presented in euros.

The principal place of business is Bells Hill, Stoke Poges, Buckinghamshire.

Summarised financial information	2022‑23 (£m)	2021‑22 (£m)
Non-current assets	5,332	4,017
Current assets	2,038	1,701
Current liabilities	(396)	(657)
Non-current liabilities	(4,326)	(3,288)
Revenue	(1,463)	(1,435)
Income tax expense	104	178
(Profit)/loss from continuing activities	(1,000)	(313)

Other financial information	2022‑23 (£m)	2021‑22 (£m)
Cash and cash equivalents	654	470
Current financial liabilities (excluding trade and other payables and provisions)	148	(461)
Non-current financial liabilities (excluding trade and other payables and provisions)	1,252	(970)
Depreciation and amortisation	(315)	(285)
Interest income	188	(60)
Interest expense	(247)	115

Other

There are other joint ventures and associates which are not material and further information can be found in the financial statements of UKRI, UKAEA and UKCI.

15. Trade and other receivables

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Amounts falling due within 1 year
Trade receivables	1,703	1,967	84	537
Other receivables
– VAT and other taxation	42	234	30	199
– Staff receivables	1	1	1	1
– RPS receivables	35	35	30	30
– Other	1,272	1,542	2,156	2,193
Contract assets	-	44	-	63
Prepayments and accrued income	344	832	366	866
	3,397	4,655	2,667	3,889
Amounts falling due after more than 1 year
Trade receivables	22	72	18	74
RPS receivables	48	48	43	43
Other receivables	315	354	440	445
Contract assets	-	5	-	5
Prepayments and accrued income	4	31	3	31
	389	510	504	598
Total receivables at 31 March	3,786	5,165	3,171	4,487

Core department

Other receivables due within one year held by the core department includes £271 million (2021-22: £1.9 billion) in relation to estimated COVID-19 business support grants payments due back to the department from local authorities. This balance includes some amounts due to local authorities from the department which have not been separated out into payables and which are offset within the receivables balance above. Further details on COVID-19 business support grants estimates are included in note 1.26.

Other receivables for the core department include amounts of £140 million (31 March 2022: £140 million) due within one year and £312 million (31 March 2022: £435 million) due after more than one year relating to receipts due from the Mineworkers’ Pension Scheme. Certain benefits payable to members and beneficiaries of the scheme were guaranteed by the government after privatisation of the British Coal Corporation in 1994. The agreement relating to the guarantee entitles the government to a portion of any periodic valuation surpluses as determined by the Government Actuary’s Department, most recently as at September 2017. Amounts receivable have been measured initially at fair value, estimated by discounting future receipts at the nominal rate of 3.7% as prescribed by HM Treasury, and subsequently at amortised cost. The total (undiscounted) amount in cash terms due to the department as at 31 March 2023 is £488 million (31 March 2022: £631 million) as annual receipts up to 2027. A contingent asset in relation to a similar financial guarantee for the British Coal Staff Superannuation Scheme is disclosed in note 26.

Energy Support Schemes

Trade receivables due within one year includes £1,554 million in relation to the Energy Price Guarantee Scheme.

Other receivables due within one year includes £284 million in relation to the Energy Business Support Scheme and £216 million in relation to the Energy Bills Support Scheme Alternative Funding.

Further details on Energy Support Schemes is included in note 4.4.

Agencies

The Redundancy Payment Service (RPS) receivable is shown net of expected credit losses. The expected credit loss is calculated by the Insolvency Service using a model which is approved by HMRC. The model calculates the recoverable debt as £83 million as at 31 March 2023 (31 March 2022: £73 million). In line with IFRS 9, RPS debts have been grouped into similar types, in this case they have been grouped between preferential or non-preferential debts. Analysis of historic trends of recovery of these types of debts has revealed that the best estimate of recovery is 6.6% for non-preferential and 33.5% for preferential (31 March 2022: 6.2% for non-preferential and 34.6% for preferential).

16. Investments and loans in public sector bodies: current

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	562	561	588	572
Transfers	30	30	-	-
Additions	3,362	3,362	2,693	2,693
Repayments	(3,334)	(3,334)	(2,812)	(2,812)
Loans repayable within 12 months transferred from non-current assets	4	4	93	108
Balance at 31 Mar	624	623	562	561

Core department

The most significant item included above is a loan facility to Post Office Limited (POL). The core department has made available to POL a revolving loan facility of up to £950 million. This is to help the company fund its daily in-branch working capital requirements to deliver services through the network such as social benefits payments and access to cash. An additional short-term facility of up to £50 million to fund its same day liquidity requirements has been made available if required. These facilities will expire on 31 March 2025. The outstanding balance on these facilities at 31 March 2023 was £522 million (31 March 2022: £467 million) which is included in the £624 million total above (31 March 2022: £562 million).

17. Cash and cash equivalents

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	4,412	5,821	1,952	3,444
Net change in cash and cash equivalent balances	(2,546)	(2,392)	2,460	2,377
Balance at 31 Mar	1,866	3,429	4,412	5,821
The following balances were held at
– The Government Banking Service (GBS)	1,865	2,917	4,411	5,503
– Commercial banks and cash in hand	1	512	1	318
Balance at 31 Mar	1,866	3,429	4,412	5,821

18. Trade payables and other liabilities

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Amounts falling due within 1 year
VAT, social security and other taxation	14	125	12	119
Trade payables	(25)	337	50	391
Other payables	362	1,068	101	883
Contract liabilities (see note 18.1)	-	754	1	648
Other accruals and deferred income	4,372	6,476	1,778	3,598
Amounts issued from the Consolidated Fund for supply but not spent at year end	1,735	1,735	4,273	4,273
Consolidated Fund extra receipts due to be paid to the Consolidated Fund: Received	131	149	140	148
	6,589	10,644	6,355	10,060
Amounts falling due after more than 1 year
Trade payables	-	4	-	5
Contract liabilities (see note 18.1)	-	1,437	-	1,626
Other payables, accruals and deferred income	1,848	2,265	1,650	2,006
	1,848	3,706	1,650	3,637
Total payables at 31 Mar	8,437	14,350	8,005	13,697

18.1 Contract liabilities

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	1	2,274	1	1,958
Additions	-	289	1	12
Change in measurement	-	304	-	123
Release to SOCNE	(1)	(676)	(1)	181
Balance at 31 Mar	-	2,191	1	2,274
Of the total
– Due within 1 year	-	754	1	648
– Due in over 1 year	-	1,437	-	1,626
Balance at 31 Mar	-	2,191	1	2,274

Included under Other payables, accruals and deferred income are:

Core department

Promissory note liabilities with maturities of less than one year of £19 million (31 March 2022: £63 million) and with maturities greater than one year of £1,874 million (31 March 2022: £1,649 million) which relate to various ODA (official development assistance) programmes to which the department has contributed.

Other accruals and deferred income amounts falling due within 1 year include £986 million for the Energy Price Guarantee and £1,926 million for the Energy Bill Relief Scheme.

Departmental group

The majority of contract liabilities are the sums received on account by the Nuclear Decommissioning Authority relating to income from long term contracts to be recognised within one year of £737 million (31 March 2022: £637 million) and after one year of £1,437 million (31 March 2022: £1,625 million); more details are available in the Nuclear Decommissioning Authority’s accounts.

19. Lease liabilities

	31 March 2023 Core and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core and agencies (£m)	31 March 2022 Departmental group (£m)
Land
Not later than 1 year	-	1	-	1
Later than 1 year and not later than 5 years	-	3	-	3
Later than 5 years	-	13	-	15
	-	17	-	19
Less interest element	-	(3)	-	(5)
Present value of obligations	-	14	-	14
Buildings
Not later than 1 year	24	40	28	42
Later than 1 year and not later than 5 years	18	62	45	87
Later than 5 years	10	108	31	132
	52	210	104	261
Less interest element	(3)	(31)	(3)	(35)
Present value of obligations	49	179	101	226
Other
Not later than 1 year	4	6	3	6
Later than 1 year and not later than 5 years	5	6	-	1
Later than 5 years	-	-	-	-
	9	12	3	7
Less interest element	-	-	-	-
Present value of obligations	9	12	3	7
Total present value of obligations	58	205	104	247
Current	28	45	31	49
Non-current	30	160	73	198

Lease liability - additional analysis	31 March 2023 Core and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core and agencies (£m)	31 March 2022 Departmental group (£m)
Interest on lease liabilities	1	4	1	4
Income of sub-leasing right-of-use assets	(2)	(1)	(2)	(2)
Expenses relating to short term liabilities	-	1	-	3
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	1	10	1	4
Gains or losses arising from sale and leaseback transactions	-	-	-	-

The departmental group adopted IFRS 16 ‘Leases’ from 1 April 2021, in agreement with HM Treasury. Please see note 1 for further information on the adoption of IFRS 16 ‘Leases’.

20. Provisions for liabilities and charges

	Note	2022‑23 Core department and agencies (£m)	2022‑23 Departmental group (£m)	2021‑22 Core department and agencies (£m)	2021‑22 Departmental group (£m)
Current liabilities
Not later than 1 year		3,678	7,685	269	3,598
Total current liabilities		3,678	7,685	269	3,598
Non‑current liabilities
Later than 1 year and not later than 5 years		1,161	16,642	1,310	16,990
Later than 5 years		542	108,724	706	224,899
Total non-current liabilities		1,703	125,366	2,016	241,889
Total at 31 March		5,381	133,051	2,285	245,487
Total provisions
Nuclear	20.1	868	126,034	1,058	238,256
Other	20.2	4,513	7,017	1,227	7,231
Total at 31 March		5,381	133,051	2,285	245,487

The provision liabilities in tables 31.1 and 31.2 below have been discounted to present value using discount rates as provided by HM Treasury. Discounting as at 31 March 2022 and 31 March 2023 has been applied to nominal cash flows which include allowance for future inflation using a forecast of consumer price inflation provided by HM Treasury except where a more appropriate forecast has been identified for specific provisions. The impact of the change in the discounting approach is included in the ‘Change in discount rate’ movement of provisions.

	31 March 2023 Nominal discount rate	31 March 2023 Inflation rate	31 March 2023 Equivalent real discount rate	31 March 2022 Nominal discount rate	31 March 2022 Inflation rate	31 March 2022 Equivalent real discount rate
Cash outflows expected within 2 years	3.27%	7.40%	(3.85%)	0.47%	4.00%	(3.39%)
Cash outflows expected between 2‑5 years	3.27%	1.65%	1.59%	0.47%	2.15%	(1.64%)
Cash outflows expected between 5‑10 years	3.20%	2.00%	1.18%	0.70%	2.00%	(1.27%)
Cash outflows expected after 10 years	3.08%	2.00%	1.06%	0.71%	2.00%	(1.27%)

Allowances for future inflation and discounting can impact on reported liabilities significantly; uninflated, undiscounted equivalent values are provided in the descriptions of the provisions below to illustrate the effect.

20.1 Nuclear provisions

	British Energy (£m)	UK Atomic Energy Authority Decommissioning (£m)	Core department and agencies: Total (£m)	NDA Decommissioning (£m)	Contract loss (£m)	Departmental group: Total (£m)
Balance at 1 April 2021	632	443	1,075	135,118	-	136,193
Net amount deducted from recoverable contract costs	-	-	-	-	(201)	(201)
Unwinding of discount	(12)	-	(12)	(87)	(4)	(103)
Change in discount rate	29	14	43	90,462	7	90,512
Provided in the year	51	32	83	14,469	702	15,254
Recoverable contract costs - release in year	-	-	-	(203)	-	(203)
Provisions utilised in the year	(131)	-	(131)	(2,993)	(72)	(3,196)
Balance at 31 March 2022	569	489	1,058	236,766	432	238,256
Net amount deducted from recoverable contract costs	-	-	-	-	387	387
Unwinding of discount	(16)	(7)	(23)	(3,042)	(3)	(3,068)
Change in discount rate	(73)	(43)	(116)	(115,953)	113	(115,956)
Provided in the year	88	-	88	10,536	-	10,624
Provisions not required written back	(4)	(12)	(16)	-	(919)	(935)
Recoverable contract costs - release in year	-	-	-	-	-	-
Provisions utilised in the year	(123)	-	(123)	(3,141)	(10)	(3,274)
Balance at 31 March 2023	441	427	868	125,166	-	126,034
Estimated forward discounted cash flows as at 31 March 2023
Not later than 1 year	95	30	125	3,933	-	4,058
Later than 1 year and not later than 5 years	318	233	551	15,244	-	15,795
Later than 5 years	28	164	192	105,989	-	106,181
Total forward cash flows as at 31 March 2023	441	427	868	125,166	-	126,034

Core department

British Energy:
As a result of the restructuring of British Energy (BE) in January 2005, the government assists BE (now EDF Energy Nuclear Generation Limited) in meeting its contractual historic fuel liabilities. The provision is based on the forecast payment schedule up to 2029 which is set out in the waste processing contracts agreed between BE, BNFL and the core department. The discounted liability at 31 March 2023 is £442 million (31 March 2022: £569 million). Payments are adjusted in line with the Retail Prices Index and the liability includes allowance for future inflation based on a forecast for the Index published by the Office for Budget Responsibility. The undiscounted liability at 31 March 2023, at prices as at the reporting date so excluding the impact of future inflation, is £442 million (31 March 2022: £508 million).

UK Atomic Energy Authority (UKAEA) Decommissioning:
The provision represents the estimated costs of decommissioning the Joint European Torus facility at UKAEA’s Culham site, including the storage, processing and eventual disposal of radioactive wastes. The core department retains the liability for these costs. Cost estimates in the detailed Life Time Plan for decommissioning are reviewed annually and include an element of uncertainty given that much of the work will not be undertaken until well into the future; timing of expenditure is dependent on the closure date of the facility, expected to be the end of 2023. The discounted liability at 31 March 2023 is £455 million (31 March 2022: £489 million); the undiscounted liability at 31 March 2023, at prices as at the reporting date so excluding the impact of future inflation, is £434 million (31 March 2022: £447 million).

Departmental group

NDA Decommissioning:
The NDA’s nuclear decommissioning liability represents NDA’s best estimate of the costs of decommissioning plant and equipment on each of the designated nuclear licensed sites in accordance with the published strategy.

The programme of decommissioning work will take until 2137 but, in preparing the estimate, the N D A has focused in particular on the first 20 years which represent £62 billion out of the total £124 billion provision (31 March 2022: £73 billion out of £237 billion). The estimates are necessarily based on assumptions about the processes and methods likely to be used to discharge the obligations and reflect the latest technical knowledge, existing regulatory requirements, government policy and commercial agreements. Given the very long timescale and the complexity of the plants and material being handled, considerable uncertainty remains in the cost estimate, particularly in the later years. Discounting of the forward cash flow estimates to present value also has a significant impact on the liability reported in the Statement of Financial Position of £124 billion at 31 March 2023 (31 March 2022: £237 billion). The undiscounted equivalent of this reported liability is £173 billion at 31 March 2023 (31 March 2022: £149 billion). The Departmental Group auditors continue to include an emphasis of matter paragraph in their audit certificate concerning the overall measurement uncertainty.

The NDA reviews the cost estimates each year, reflecting changes in the site lifetime plans and other assumptions. Major changes applied in the reporting period included:

A change in the estimate of the Magnox and Dounreay programme, reflecting updated estimates of the cost, duration and timing of the decommissioning of the sites. In particular for the Magnox sites, the learnings from Trawsfyndd (the lead and learn site) has been reflected in cost estimates for the other sites. The impact of the overall change (discounted) was an increase of £9.1 billion.
Updates to the Sellafield lifetime plan, reflecting multiple changes in the estimates of the cost, duration and timing of projects, operations and decommissioning on the site. The impact of this (discounted) was an increase of £0.5 billion.

The NDA has commercial agreements in place under which a portion of the expenditure required to settle certain elements of the decommissioning provision are recoverable from third parties. Changes in future cost estimates of discharging these particular elements are therefore matched by a change in recoverable contract costs. In accordance with IAS 37, these recoverable amounts are not offset against the decommissioning provision but are treated as a separate asset (note 13).

Sensitivity analysis:
The overall decrease in the provision was £112 billion (2022: £101 billion increase) of which the Authority estimates that £18 billion related to changes in price levels (2022: £7 billion). The change in discount rates (see page 52) in the current financial year produced a decrease of £134 billion (2022: £84 billion increase). The undiscounted value of the nuclear provision is £173 billion (2022: £149 billion). The effect of applying discounting is to reduce the provision by £48 billion (2022: increase the provision by £88 billion). The discounted value of the nuclear provision is currently lower than the undiscounted value due to the real terms discount rates being positive (see page 52).

An increase of 0.5% in the discount rate (producing a more positive discount rate) would reduce the provision to £110 billion (2022: £195 billion), whilst a decrease in discount rate of 0.5% (producing a negative, or less positive, discount rate) would increase the provision to £143 billion (2022: £294 billion).

Analysis of expected timing of discounted cash flows for the N D A Nuclear Provision is as follows:

	Sellafield (£m)	Magnox (£m)	Nuclear Waste Services (£m)	Nuclear Transport Services (£m)	2022‑23 Total (£m)	2021‑22 Total (£m)
Up to 1 year	2,929	843	161	0	3,933	3,265
2 to 5 years	11,066	3,472	707	10	15,255	15,192
6 to 20 years	30,048	9,553	3,504	75	43,180	54,366
21 to 50 years	26,072	11,273	3,430	0	40,775	77,380
50 years +	13,745	5,000	2,507	0	21,252	86,774
	83,860	30,141	10,309	85	124,395	237,004
Deduction in respect of Site Licence Companies pension receivable from NDA					771	(211)
Total NDA Decommissioning Provisions					125,166	236,766

Sensitivity	Waste (£m)	Research (£m)	Sellafield (£m)	Fuel M&G (£m)	2022‑23 Total (£m)	2021‑22 Total (£m)
Increase	59,276	3,014	15,886	3	78,179	245,695
Reduction	(9,954)	(3,014)	(2,855)	(6)	(15,829)	(43,894)

The NDA calculates its provision based on management’s best estimate of the future costs of the decommissioning programme, which is expected to take until 2137 to complete. The NDA also considers credible risks and opportunities which may increase or decrease the cost estimate, but which are deemed less probable than the best estimate. These are the basis of the sensitivities identified above, and the key sensitivities are as follows:

Waste activities cover the Geological Disposal Facility (GDF), the Low Level Waste Repository, and activities at the Springfields and Capenhurst sites with the key sensitivities being in the timing and costs of constructing and operating the GDF , which have sensitivities ranging from a reduction of £2,629 million to an increase of £15,773 million dependent on the location and construction requirements of the facility. The current planned date for the facility to receive waste is 2050. NDA has identified a risk that the construction and opening of the facility may be delayed beyond 2050 (see the Governance Statement – in NDA’s annual report and accounts). A delay to this date may increase the cost of the facility itself, along with the cost of interim storage of waste at sites across the NDA estate. A delay of a small number of years is considered to be within the overall tolerance of the estimate for GDF construction and waste transfer, and is not considered to have a material impact on the provision estimate.

Sensitivities for the other elements of waste activities range from a reduction of £226 million to an increase of £113 million.
Sellafield represents activities associated with operation of the site, reprocessing and eventual decommissioning, and includes all site overheads. Principal sensitivities are around the cost of delivering the plan, particularly the costs of new construction, decommissioning and post operational clean out (POCO) work in the long-term (beyond the next 20 years). The potential costs range from a £9,954 million reduction against the current estimate, to a £59,726 million increase.
The programme of work at the Magnox sites and Dounreay includes a combination of hazard reduction, a Care and Maintenance period (at certain sites) followed by final site clearance. The current cost estimate represents management’s assessment of the most probable estimate of the required duration and cost of decommissioning and long-term management of the sites. A 10% variation in the cost estimate would increase or decrease costs by £3,014 million.

Further details are reported in the financial review on page 46 of the annual report and in the NDA annual report and accounts.

Contract loss:
Contract loss provisions have been recognised by the Nuclear Decommissioning Authority to cover anticipated shortfalls between total income and total expenditure on relevant long term contracts. The amounts are disclosed net after deduction of amounts relating to recoverable contract costs (note 13). The amount provided in the year for contract losses relates to changes in estimates of the costs of existing contracts. The discounted liability at 31 March 2023 is £nil million (31 March 2022: £433 million). Further detail, including movement on the gross provision, can be found in the accounts of the NDA .

20.2 Other provisions

	Energy schemes (£m)	Post Office Limited (£m)	Concessionary fuel (£m)	Legacy ailments (£m)	Business support grant (£m)	Other (£m)	Total core and agencies (£m)	Coal Authority (£m)	Early departure costs and restructuring (£m)	Other (£m)	Total departmental group (£m)
Balance at 31 March 2021	-	-	303	257	-	131	691	2,529	80	234	3,534
IFRS16 transfer to lease liabilities	-	-	-	-	-	-	-	(13)	-	-	(13)
Balance at 1 April 2021	-	-	303	257	-	131	691	2,516	80	234	3,521
Reclassifications	-	65	-	-	-	(65)	-	-	-	-	-
Change in discount rate	-	-	16	18	-	1	35	2,759	2	22	2,818
Provided in the year	-	514	-	20	-	33	567	347	1	70	985
Provisions not required written back	-	-	(5)	-	-	(5)	(10)	-	(3)	(9)	(22)
Provisions utilised in the year	-	-	(31)	(20)	-	(7)	(58)	(46)	(8)	(3)	(115)
Unwinding of discount	-	-	(1)	1	-	2	2	42	(1)	1	44
Balance at 31 March 2022	-	579	282	276	-	90	1,227	5,618	71	315	7,231
Change in discount rate	-	3	(59)	(56)	-	(7)	(119)	(4,466)	6	(73)	(4,652)
Provided in the year	3,130	180	176	75	-	449	4,010	1,062	-	12	5,084
Provisions not required written back	-	(122)	-	-	-	(360)	(482)	-	(8)	(21)	(511)
Provisions utilised in the year	-	(43)	(35)	(20)	-	(23)	(121)	(43)	(7)	(3)	(174)
Unwinding of discount	-	3	(4)	(1)	-	-	(2)	40	(1)	2	39
Other movements	-	-	-	-	-	-	-	-	-	-	-
Balance at 31 March 2023	3,130	600	360	274	-	149	4,513	2,211	61	232	7,017
Estimated forward discounted cash flows as at 31 March 2023
Not later than 1 year	3,130	239	43	27	-	114	3,553	49	10	15	3,627
Later than 1 year and not later than 5 years	-	361	139	91	-	19	610	210	7	20	847
Later than 5 years	-	-	178	156	-	16	350	1,952	44	197	2,543
Total forward cash flows as at 31 March 2023	3,130	600	360	274	-	149	4,513	2,211	61	232	7,017

Core department

Energy schemes:
The provision covers the cost to the core department relating to:
1. a. The Energy Bills Discount Scheme (EBDS) - On 9 January 2023, the government announced the Energy Bills Discount Scheme and came into force on 26 April, which was designed to support businesses with high energy costs and it’s expected to run until 31 March 2024.
2. The value of the provision is based on the expected baseline support as quoted by Office of Budget Responsibility (OBR) economic and fiscal outlook March 2023. The total liability as at 31 March 2023 is £144 million
3. b. The Energy Price Guarantee (EPG) - On 8 September 2022, the government announced the Energy Price Guarantee for domestic users on existing variable and fixed rate tariffs to take effect from 1 October 2022 across Great Britain and 1 November 2022 in Northern Ireland. The scheme was expected to run for two years until 30 September 2024. A further announcement on 17 October 2022 stated that the Energy Price Guarantee was expected to run to April 2023 (i.e. the scheme ends 31 March 2023). The Chancellor subsequently announced in the Autumn Statement on 17 November 2022 that the Energy Price Guarantee would be extended to 31 March 2024.
4. The value of the provision is based on the cost to the department to compensate energy suppliers for the discounts applied to consumer tariffs and is based on the difference between the reference price (i.e., the OFGEM price cap) and the Energy Price Guarantee price. The total liability as at 31 March 2023 is £2,986 million.

Post Office Limited:
Post Office Limited has undertaken to make payments to individuals (postmasters and former postmasters) in three schemes to compensate a) those who had been wrongly convicted of fraud, theft and false accounting, later overturned by the court (compensation for Overturned Convictions), b) those who were affected by financial discrepancies related to previous versions of Post Office’s Horizon I T system (the Horizon Shortfall Scheme (HSS)), and c) postmasters who were not previously paid during a period of suspension (Postmaster Suspension Pay). The company will be unable to fund the full amount of compensation estimated to be payable and still continue to maintain levels of public service provision deemed necessary by the department. As the sole shareholder in the company, the Secretary of State has undertaken to provide an amount of funding to the Post Office to support compensation payments for approved claims to the extent that the company is unable to fund them without adverse impact on its services to the public. Furthermore, the department is itself delivering a scheme (the ‘GLO scheme’) to provide additional compensation for members of the group litigation Alan Bates and others v Post Office Limited.

The liability estimate is based on information provided by the Post Office (for the HSS and for compensation for postmasters with overturned convictions and for unpaid suspension pay) and BEIS for the GLO scheme. These liabilities are uncertain both in relation to total amount and timing of payments. The main uncertainties will be described in the Post Office accounts for 2022-23 and relate principally to the distribution of heads of loss.

The total discounted liability as at 31 March 2023 is estimated at £600 million (31 March 2022: £579 million); the undiscounted liability as at 31 March 2023 is £614 million (31 March 2022: £584million).

Concessionary fuel:
The provision covers the cost of the core department’s responsibility, arising from government announced guarantees, to provide either solid fuel or a cash alternative to ex-miners formerly employed by British Coal and their dependants and to certain former employees who lost their entitlement as a consequence of the restructuring and run down of UK Coal in 2013 and 2015; it includes administration costs. Of the total of 29,749 beneficiaries at 31 March 2023, 26,073 have opted for the cash alternative at an average cost per beneficiary of £1,288 per annum; the average annual cost of solid fuel for the remainder is £1,244 per beneficiary excluding delivery costs and VAT . The provision is based on standard female mortality rates and assumes beneficiaries will continue to switch their entitlement from solid fuel to cash in line with rates observed in the recent past. Costs are expected to be incurred up to 2082. The discounted liability as at 31 March 2023 is £361 million (31 March 2022: £282 million); the undiscounted liability as at 31 March 2023, at prices as at the reporting date so excluding the impact of future inflation, is £379 million (31 March 2022: £255 million).

Legacy ailments:
The provision is an estimate of the cost to the core department of future personal injury compensation claims relating to:
1. a. Former employees of British Shipbuilders and its subsidiaries arising primarily from exposure to asbestos. The department assumed responsibility for the liabilities of the former Corporation on its abolition in March 2013. The discounted liability as at 31 March 2023 is £106 million (31 March 2022: £132 million). The estimated liability is based on an actuarial review as at 31 March 2019 and includes allowance for future inflation judged appropriate by the actuary. The current estimate is that liabilities will extend up to 2048.
2. b. Former British Coal mineworkers who suffered personal injuries between 1947 and 1994. Responsibility for payment of compensation transferred to the department on 1 January 1998 by a restructuring scheme under the Coal Industry Act 1994. The discounted liability as at 31 March 2023 is £168 million (31 March 2022: £144 million). The undiscounted liability, at prices as at the reporting date so excluding the impact of future inflation, is £178 million (31 March 2022: £129 million). The estimate is based on forecasts of settlement of claims, taking account of discussion with the department’s legal advisors and claim handlers and recent actuarial estimates. The current estimate is that liabilities will extend up to 2050.
The estimates include legal and administrative costs and are subject to some uncertainty.

Departmental group

Coal Authority:
The Coal Authority provision relates predominantly to the Coal Authority’s responsibilities for mine water treatment, public safety and subsidence, and subsidence pumping stations. Significant uncertainties are associated with estimation of likely costs in respect of these liabilities. The discounted liability at 31 March 2023 is £2,344 million (31 March 2022: £5,618 million). The undiscounted liability at 31 March 2023 is £3,511 million (31 March 2022: £8,459 million). Further details are reported in the Coal Authority annual report and accounts.

Early departure costs and restructuring:
£50 million (31 March 2022: £57 million) of the restructuring provision relates to site licence companies and includes continuing annual payments under early retirement arrangements to individuals who retired early, or had accepted early retirement, before 31 March 2023. These payments include those made to the date at which the recipients would have reached normal retirement age, and those which continue for the remainder of the recipients’ lives. The provision is calculated using UK life expectancy estimates published by the Office of National Statistics and is subject to the uncertainty inherent in those estimates. A variance from the life expectancy estimate of one year would increase or decrease the future cash flows by approximately £5 million discounted).

21. Financial guarantees, loan commitment liabilities and reinsurance contracts

	31 March 2023 Core Department and Agencies (£m)	31 March 2023 Departmental Group (£m)	31 March 2022 Core Department and Agencies (£m)	31 March 2022 Departmental Group (£m)
Balance at 1 April	16,213	16,406	19,902	20,048
Additions	526	580	2,440	2,546
Net remeasurement	451	414	(4,653)	(4,712)
Repayment	(48)	(48)	(993)	(993)
Called	(5,833)	(5,833)	(483)	(483)
Balance at 31 March	11,309	11,519	16,213	16,406
Comprising
– Financial guarantee liabilities	11,296	11,296	15,837	15,837
– Loan commitment liabilities	-	210	346	538
– Reinsurance contracts	13	13	30	31
Balance at 31 March	11,309	11,519	16,213	16,406
Of which
– Current liability	11,304	11,343	16,195	16,234
– Non-current liability	5	176	18	172
Balance at 31 March	11,309	11,519	16,213	16,406

Core department

Financial guarantees

The total estimated liability for financial guarantees of £11,296 million as at 31 March 2023 for the core department (31 March 2022: £15,837 million) relates to the following schemes:

Scheme	31 March 2023 (£m)	31 March 2023 (£m)
Bounce Back Loans Scheme (BBLS)	9,708	13,953
Coronavirus Business Interruption Loan Scheme (CBILS)	1,102	1,439
Coronavirus Large Business Interruption Loan Scheme (CLBILS)	52	115
Recovery Loan Scheme (RLS)	422	299
Other guarantee schemes	12	31
Total	11,296	15,837

Guarantee schemes established in response to the COVID-19 pandemic

The core department invited UK commercial finance providers to participate in 4 schemes to facilitate access to debt finance by businesses across the UK adversely impacted by the COVID-19 pandemic. Eligible businesses could apply to lenders accredited under the following schemes for loans, with the department assuming all or part of the credit risk incurred by lenders up to set limits per borrower and within specific allocations to each lender, which were set by BBB. From the four guarantee schemes established by the department in response to the COVID-19 pandemic only Recovery Loan Scheme (RLS) remains open.

The Recovery Loan Scheme supports small and medium sized businesses to access the finance they need to grow and invest. The scheme was extended to borrowers on 1 August 2022, with maximum borrowing per GB business of £2 million and £1m for NI Protocol businesses, duration of loan facilities of three months to six years and the core department assuming 70% of the credit risk incurred by accredited lenders from lending under the scheme. The scheme is scheduled to close on 30 June 2024.

A guarantee is recognised on the Statement of Financial Position and included in the liability when a lender makes an offer of a loan facility to a borrower. There is no direct relationship between the department and borrowers; quantification of the guarantees in terms of numbers and amounts above is based on information provided by lenders. The schemes are operated on behalf of the department by the British Business Bank via the network of accredited lenders.

Liability measurement

In accordance with the FReM and IFRS 9 for these guarantees (note 1), the guarantee liabilities are measured at a value equal to the guaranteed proportion of lifetime expected credit losses (ECL) on the underlying loan facilities. They are not crystallised obligations at the reporting date but present value estimates of future expected payments to reimburse guarantee holders for credit losses incurred less any amounts expected to be recovered from borrowers subsequent to a guarantee claim.

The liabilities are estimated using IFRS 9 compliant ECL models developed by a third party specialist in conjunction with BBB specifically for these schemes. The models are operated by BBB within a formal control environment and in accordance with the Bank’s internal governance procedures and the department’s framework for business critical models which complies with quality assurance best practice in the government’s ‘Review of quality assurance of government models’ by Sir Nicholas Macpherson. The models apply assumptions which have a material impact on the reported liabilities. Key modelling assumptions are set by expert judgement and reviewed by subject matter experts in the department and Bank. Independent assurance on the original model design was provided by the Government Actuary’s Department.

For each individual guarantee, the model estimate of probability of default over the lifetime of the underlying loan facility is combined with an estimate of the outstanding exposure at default (taking account of the contractual repayment profile and estimates of the outstanding balances at default) and with an estimate of the amount likely to be recovered post-default (taking into account the type of collateral held by the lender where relevant), to estimate the ECL value, i.e., the expected value estimate of the guarantee liability. Model estimates are adjusted at scheme level if considered necessary to ensure reported liability values reflect all relevant reasonable and supportable information.

Estimation uncertainty – BBLS, CBILS and RLS

Whilst all schemes are subject to significant estimation uncertainty, the liabilities for BBLS, CBILS and RLS are material to the department’s financial position and therefore estimation uncertainty may result in material changes to the estimates in future reporting periods as more data becomes available. Liability values are estimated by the model for each underlying loan based on data from lenders and other sources. Key data includes: a) the amount guaranteed at origination in the scheme for each loan and its contractual repayment profile and status (whether performing, past due or in default); b) borrower credit reference information from third parties; c) macroeconomic forecasts from independent specialist economic analysts; and d) for BBLS, the probability that the loan may have been contracted fraudulently by the borrower, that is in deliberate contravention of borrower eligibility criteria.

Uncertainty risk in the modelled liability relates primarily to estimates of a) probability of default of individual loans which is materially impacted by b) the effect of current and future macroeconomic conditions on borrowers’ ability to repay and c) recoveries from borrowers post claim, additionally for BBLS, d) levels of borrowing in breach of scheme rules due to fraud or error. The analysis below indicates the sensitivity of the model to changes in inputs. The changes applied do not constitute forecasts and the impacts shown are to model estimates before application of post-model adjustments which have been disclosed separately.

a) Probability of default (prior to adjustment for future macroeconomic conditions and fraud risk)
Probability of default is subject to uncertainty, in particular arising from the unconventional credit policy and underwriting of the underlying loans compared to any other loan portfolio in the lending industry. The analysis below shows the impact on the model liability estimate had the model estimate of probability of default for each loan facility been lower or higher by the percentages shown. This analysis is applied to probability of default as standalone excluding sensitivities to future macroeconomic conditions and fraud risk.

Sensitivity analysis: Impact on model liability estimate of changes to probabilities of default	BBLS £m	CBILS £m	RLS £m
Probabilities of default for BBLS loans lower by 20%	(837)	-	-
Probabilities of default for loans lower by 33%	-	(195)	(81)
Model liability estimate	9,348	1,026	391
Probabilities of default for loans higher by 50%	-	269	110
Probabilities of default for BBLS loans higher by 25%	961	-	-

The percentage changes are relative, meaning (by way of an illustrative example only) that an increase of 20% to a probability of default of 1% would increase probability of default to 1.2%. The percentage changes take into account the risk profiles of the individual schemes. The CBILS and RLS loan portfolio are subject to lenders’ credit policy and underwriting reviews, with risk profiles more closely aligned to commercial lending portfolios, meaning they have a lower risk profile than the BBLS loan portfolio.

The sensitivities for CBILS and RLS have been set as the equivalent of a one notch movement downwards or upwards on the Moody’s granular rating scale from the model estimates of probability of default. Lower percentage changes have been applied to BBLS as a borrower self-certification product without the usual commercial lender credit policy and underwriting procedures and with higher model estimates of probability of default which limit the scope for credit quality deterioration. The percentages for BBLS are equivalent to half a notch movement on the Moody’s granular rating scale.

The model adjusts the estimate of probability of default for each loan facility to take account of i) forward macroeconomic conditions and, for BBLS, ii) levels of borrowing in breach of scheme rules due to fraud or error:

i) Forward macroeconomic conditions
A probability weighted view of forward economic conditions is applied by the model to adjust probability of default, based on potential scenarios provided by an independent specialist economic forecasting firm.

Source: Oxford Economics

Economic scenarios provided by Oxford Economics for IFRS 9 ECL measurement, March 2023.

The above charts show the values of economic indicators for the different scenarios over the 5 year period from December 2022 which were applied in the model with the following weightings:

Scenario	Probability weighting in model
Mild upside	10 %
Base	55 %
Downside	25 %
Severe downside	10 %

The sensitivity analysis below shows the impact on the model liability estimates had the probability of each individual economic scenario shown been set at 100% with zero probability for the others.

Sensitivity analysis: Impact on model liability estimate of 100% weighting applied to individual economic scenarios	BBLS £m	CBILS £m	RLS £m
Mild Upside	(578)	(98)	(41)
Base	(563)	(94)	(40)
Model liability estimate	9,348	1,026	391
Downside	1,004	165	71
Severe Downside	1,167	199	83

ii) Risk of borrowing in breach of scheme rules due to fraud or error
The risk of guarantee claims for loan defaults arising from borrowing in breach of scheme rules due to fraud or error despite lender checks having been undertaken in accordance with scheme loan eligibility criteria is considered to be material for BBLS only. The model probability estimate of default due to fraud or error for the outstanding BBLS loan facilities at 31 March 2023 is estimated to be 4.39% (31 March 2022: 3.49%). The model probability estimate of default due to fraud or error for the outstanding BBLS loan facilities is calculated based on the portfolio lifetime estimate of fraud and error 5.90% (31 March 2022: 4.24%) adjusted to remove the fraud that has already been observed in the portfolio through claimed and settled loan statuses 1.51% (31 March 2022: 0.75%). The portfolio lifetime estimate of fraud and error is made up of two components: the fraud incidence and the loss occurrence, these are detailed and explained in sections 1) and 2) below. Uncertainties continue to be present in the estimate, which result due to data limitations, these are detailed under each of the two components of the estimate.

The analysis in the table below shows the impact on the model liability estimate in the scenario that facilities that have not moved to the demand stage result in a loss, or in a scenario that these facilities repay in full with no loss.

Sensitivity analysis: Impact on model liability estimate of changes in fraud probability	BBLS ECL 31 March 2023 £m	BBLS ECL 31 March 2022 £m
Probability of fraud with a lower fraud loss emergence rate 2.71% (2021-22: 1.49%)	(291)	(490)
Model liability estimate 4.39% (2021-22: 3.49%)	9,348	13,211
Probability of fraud with a higher fraud loss emergence rate 5.99% (2021-22: 7.25%)	274	919

1) Sampled loans
The portfolio lifetime fraud incidence was calculated based on a statistically significant sample of 1,067 loans which were analysed for fraud risk indicators. The model probability estimate of default due to fraud or error for the outstanding BBLS loan facilities included in the 2022‑23 accounts is based on portfolio lifetime fraud incidence rate of 8.9% (31 March 2022: 8.0%).

Data limitations

It is known that not all indicators of fraud and error are fully reflected in the estimate. The estimate is based on analysis of the sample against a number of fraud risk indicators. However, since the work was completed, it has been widely accepted that there are a number of fraud risk indicators which the sampling exercise did not take into account. Whilst work has been performed to validate the potential impact of these risk indicators, there is not currently sufficiently robust data available to quantify their impact. These risk indicators are discussed further below.
The risk indicators identified and not considered in the sampling work performed include turnover inflation, misuse of funds, backdated director appointment, unusual activity, dissolution objections and sole traders. The department has worked to quantify the impact of these indicators on the fraud rate estimate. Under IFRS 9, all information that is reasonable and supportable, obtained without undue cost or effort, should be included within the ECL. The impact of these fraud risk indicators either cannot be supported by verifiable or observable evidence, or it would require undue cost or effort in order to produce a robust estimate, and as such, have not been included within the fraud rate estimate at year end. The department has spent a significant sum in producing its estimate and has determined that it would not be a good use of taxpayer’s money to refine an estimate which is going to naturally become more robust over time as loans default, and claims are made on the guarantee due to fraud.

Whilst there are limitations to the data supporting the estimate, the department has used all supportable information that is available at the year end, to determine its estimate of fraud in the BBLS portfolio.

2) Loss as a result of fraud
During 2021-22 and 2022-23, as more information on repayments has become available, analysis has been performed over the expected loss to the department as a result of fraud.

The loans in the sample noted above, continue to be monitored with focus on the loans that have been identified as suspected fraud. These are monitored to identify how the loans perform in respect of repayments and defaults and is compared with the wider 1,067 sample as well as the whole BBLS portfolio. This gives an insight into the potential loss rates that could occur as a result of those loans identified as suspected fraud, which is currently estimated as 66.32% (31 March 2022: 52.94%). The expected loss rate is applied to the fraud and error incidence rate of 8.9% (31 March 2022: 8.0%) to derive the portfolio lifetime fraud and error estimate of 5.90% (31 March 2022: 4.24%).

Data limitations

The estimate of 66.32% loss as a result of fraud is based on the performance to date of the 95 loans from the sample that were identified as ‘suspected fraud’. This sample has been assessed as representative of the wider portfolio, however as further repayment data becomes available on a wider number of loans, this estimate could change.
A loan classified as being suspected fraud but which was repaid in part or in full, for example, a borrower may have overstated turnover but still repaid the loan, which would not lead to fraud loss. However, the cost of arrangement fees and interest costs covered by the department are technically irregular as the loan shouldn’t have been issued. The department is not able to estimate these costs.

Fraud and error estimate in the model
The 5.90% fraud rate is a lifetime portfolio fraud and error rate and has been adjusted for fraud that has already been observed in the portfolio. As at 31 March 2023 there have been 23,307 suspected fraud cases that have been claimed, settled or in default. This equates to 1.51% of the 1.54m BBLS loans provided. Subtracting the observed fraud from 5.90% results in an adjusted portfolio fraud rate of 4.39%.

The data limitations detailed above could result in both increases and decreases to the fraud estimate, meaning that at this stage it is unclear what the overall impact would be. In subsequent years, further information such as additional repayment data will be available which will inform, and allow refinement of, the fraud estimate.

As the loan portfolio matures, and further repayments data becomes available, the estimated loss as a result of the fraud rate will continue to be revised.

The fraud estimate still includes expert judgement, the significance of which will decrease as further information on losses becomes available. The department will continue to refine its estimate of fraud and error in the BBLS to take into account information that becomes available.

CBILS and RLS
As noted above, fraud is considered to be material for BBLS only and as such an explicit fraud rate has not been built into the ECL calculations for CBILS, CLBILS and RLS. For these schemes estimated fraud losses are integrated into the credit loss estimates. The assessment made over the levels of fraud in the CBILS and RLS , the only schemes of these three which have a liability that is material to the accounts, are detailed below.

The repayment data as at 31 March 2023 for CBILS and RLS is included in the table below:

Sensitivity analysis: Impact on model liability estimate of changes in fraud probability	BBLS ECL 31 March 2023	BBLS ECL 31 March 2022	Outstanding facilities - Repayments in arrears	Outstanding facilities- Repayments in default	Facilities fully repaid
CBILS	-	-	1.43 %	5.07 %	26.8 %
RLS	£3.4 bn	87.72 %	1.88 %	6.97 %	3.43 %

The evaluation of information currently available supports the department’s original assessment that the scheme is not affected by elevated levels of fraud. Normal control and verification procedures carried out in the banking industry were required to be completed ahead of a CBILS and RLS loan being awarded, this significantly reduced the risk within the portfolio. Therefore, losses as a result of fraud in the CBILS and RLS portfolio are not expected to be either materially different from a commercial lending book, or material in their own right.

As at 31 March 2023 the repayment data for these schemes shows an increase in the share of facilities in default which is the result of more borrowers in the portfolio failing. This is particularly prevalent given the market and economic conditions observed in the last year. Considering that the default rates for CBILS and RLS are trending proportionally to the expected credit losses as calculated by the ECL model, the department considers this as evidence that levels of fraud are consistent with the commercial lending levels.

The information used to inform the conclusion that the scheme is not affected by elevated levels of fraud, is supported by the best information that is available at 31 March 2023. As further information on repayments, claims and defaults becomes available in the future, the department will continue to monitor this assessment.

b) Recoveries post guarantee claim
The model estimates comprise expected values estimates for the amounts to be paid out on guarantee claims less the department’s share of estimated recoveries from borrowers post claim. The schemes are deemed to be non-investment grade, with a 40% variation in recoveries appropriate based on industry studies. The analysis shows the impact on the model liability estimates had the estimates of amounts to be recovered been higher or lower by 40%.

Sensitivity analysis: Impact on model liability estimate of changes in estimates of recoveries post guarantee claim	BBLS (£m)	CBILS (£m)	RLS (£m)
Recovery amounts higher by 40%	(360)	(104)	(40)
Model liability estimate	9,348	1,026	391
Recovery amounts lower by 40%	360	104	40

Adjustments to model estimates
Post model adjustments have been made to the total model liability estimates for each scheme, based on expert management judgement, to take account of the current exceptional uncertainty around future macroeconomic conditions primarily driven by high inflation.

a) Inflation post model adjustment
Due to a model limitation, where the current economic environment of high inflation combined with below-inflation interest rates was not present in the historic data used to develop the model, a £470m PMA was implemented in the final valuation of the lifetime ECL across the all the schemes. The PMA is supported by benchmarking, which shows clear evidence of significant PMAs across all other lender’s interim financial statements for related reasons.

The PMA caps the beneficial impact of inflation at the point where the model ceases to track well against actuals in the model’s development period but allows the variable to move freely below this level. This method allows inflation to provide some positive effects while limiting the model to only produce outputs in a range that can be relied upon to be accurate and reasonable.

The breakdown of the reported liability for each scheme providing information on the total model liability and overlay adjustments based on expert management judgements are shown in the table below.

	BBLS (£m)	CBILS (£m)	RLS (£m)
Model liability estimate	9,348	1,026	391
Post model adjustments	360	77	31
Reported liability	9,708	1,102	422

22. Retirement benefit obligations

The departmental group consolidates nine defined benefit pension arrangements from its designated bodies including:

UK Research and Innovation (UKRI)
Nuclear Decommissioning Authority (NDA)
Nuclear site licence companies (SLCs)

All schemes are accounted for in accordance with IAS 19 ‘Employee Benefits’. They are subject to the UK regulatory framework and under the scope of the scheme specific funding requirement. The schemes’ trustees are responsible for operating these defined benefit plans and have a statutory responsibility for ensuring the schemes are sufficiently funded to meet current and future benefit payments.

Defined benefit scheme liabilities expose the departmental group to material financial uncertainty, arising from factors such as changes in life expectancy and in the amount of pensions payable. Some scheme investments, such as equities, should offer long-term growth in excess of inflation, but can be more volatile in the shorter term than government bonds.

The details of each scheme are discussed below.

UKRI

UKRI operates the legacy Medical Research Council (MRC) funded defined benefit, final salary pension scheme (MRCPS).

Following the transfer of MRC research units and employees to universities, a University section was set up to account for the obligations to individuals that remain in the MRCPS . During the period obligations of £10.4 million were recognised under Section 75 (S.75) of the 1995 Pensions Act in respect of liabilities of transferred employees; the University section, has been set up within MRCPS to manage S.75 liabilities. These costs are reflected in the valuation of the pension scheme.

A full actuarial evaluation was undertaken as at 31 December 2019 which was rolled forward by the actuary to determine the approximate position as at 31 March 2023. The key assumptions are discount rate of 4.65% (2021-22: 2.70%) and rate of increase in pension payments of 2.60% (2021-22: 3.00%). A decrease of 1% in the discount rate would lead to an increase of approximately 16% in the total liability, while a decrease of 1% in the rate of increase in pensions would lead to an approximate 10% reduction. As at 31 March 2023, the weighted average maturity of the scheme as a whole is 16 years.

Further details regarding the nature of the benefits provided, regulatory framework, actuarial assumptions, sensitivity analysis, key risks and risk management policy including asset-liability matching strategies, and any funding arrangements or funding policy that may affect future contributions can be found in the accounts of UKRI.

NDA

Two defined benefit pension schemes relate to the NDA – the Closed and Nirex sections of the Combined Nuclear Pension Plan (CNPP). Both are closed to new entrants. Full actuarial evaluations were undertaken as at 31 March 2019. The actuaries rolled forward the results to determine approximate positions as at 31 March 2023.

As at 31 March 2023, the weighted average duration of the combined schemes is 17.2 years.

Further details regarding the nature of the benefits provided, regulatory framework, actuarial assumptions, sensitivity analysis, key risks and risk management policy including asset-liability matching strategies, and any funding arrangements or funding policy that may affect future contributions can be found in the accounts of NDA.

SLCs

There are 6 defined benefit final salary pension schemes relating to the 4 SLCs comprising: a) the LLWR section of the CNPP (for L L W Repository Limited), b) the SLC section of the Magnox Electric Group of the Electricity Supply Pension Scheme (ESPS) and the Magnox Section of the CNPP (for Magnox Limited), c) the Group Pension Scheme SLC section of the CNPP and the Sellafield section of the CNPP (for Sellafield Limited) and d) the Dounreay Section of the CNPP (for Dounreay Site Restoration Limited). All are closed to new entrants. The most recent triennial actuarial valuations were undertaken as at 31 March 2019 for all the SLCs schemes except for the ESPS for Magnox Limited (with most recent funding valuation undertaken at 31 March 2022). The actuaries rolled forward the results to determine approximate positions as at 31 March 2023.

As at 31 March 2023, the weighted average duration of the combined schemes is 17.2 years.

Further details regarding the nature of the benefits provided, regulatory framework, key risks and risk management policy including asset-liability matching strategies, and any funding arrangements or funding policy that may affect future contributions can be found in the CNPP Statement of Investment Principles at www.cnpp.org.uk/document-library/, and in the Electricity Supply Pension Scheme’s Annual Reports at www.espspensions.co.uk/#useful-documentation.

	31 March 2023 Funded pension schemes (£m)	31 March 2022 Funded pension schemes (£m)
Present value of defined benefit obligation at 1 April	8,493	8,475
Interest cost	218	169
Current service cost	218	238
Past service cost	-	7
Benefits paid, transfers in and expenses	(281)	(277)
Actuarial (gains)/losses in financial assumption	(544)	(107)
Actuarial (gains)/losses on defined benefit obligation due to demographic assumptions	(2,515)	(25)
Actuarial (gains)/losses arising from experience adjustments	86	(9)
Employee contributions	20	22
Present value of defined benefit obligation at 31 March	5,695	8,493
Fair value of assets at 1 April	8,716	8,083
Expected return on plan assets	226	161
Employer contributions	193	236
Benefits paid, transfers in and expenses	(281)	(277)
Actuarial gains/(losses)	(1,521)	491
Employee contributions	20	22
Fair value of assets at 31 March	7,353	8,716
Net (asset)/liability at 31 March	(1,658)	(223)

(The prior year numbers have been represented to combine benefits paid and transfers in.)

The decrease in the net liability at 31 March 2023 compared to 31 March 2022 is primarily due to an increase in the discount rate applied to all defined benefit obligations between 31 March 2022 and 31 March 2023. This is partially offset by the increase in inflation rate applied to all defined benefit obligations between 31 March 2022 and 31 March 2023.

Net (asset)/liability by scheme

	31 March 2023 Present value of defined benefit obligation (£m)	31 March 2023 Fair value of assets (£m)	31 March 2023 Net liability/ (asset) (£m)	31 March 2022 Present value of defined benefit obligation (£m)	31 March 2022 Fair value of assets (£m)	31 March 2022 Net liability/ (asset) (£m)
UK Research and Innovation - Medical Research Council (a)	1,217	1,954	(737)	1,650	2,070	(420)
LLW Repository Ltd - LLWR section of CNPP (b)	27	34	(7)	50	36	14
Magnox Ltd - SLC section of Magnox Electric Group of ESPS (c)	2,203	2,519	(316)	3,006	3,398	(392)
Magnox Ltd - Magnox section of CNPPS (b)	108	140	(32)	180	159	21
Sellafield Ltd - Group Pension Scheme SLC section of CNPP	415	593	(178)	652	727	(75)
Sellafield Ltd - Sellafield section of CNPPS (b)	1,426	1,832	(406)	2,606	2,011	595
Dounreay Site Restoration Ltd - Dounreay section of CNPP	206	158	48	206	158	48
Nuclear Decommissioning Authority (b)	91	121	(30)	143	157	(14)
Total net (asset)/liability at 31 March	5,693	7,351	(1,658)	8,493	8,716	(223)

Pension scheme assets are recognised to the extent that they are recoverable and pension scheme liabilities are recognised to the extent that they reflect a constructive or legal obligation. The accounting judgements applied in recognising net assets for each pension scheme are summarised below:
(a) The net asset is recognised as UKRI derives benefits from the reduced contributions to the scheme.
(b) Accounting surpluses in respect of NDA and NDA Group businesses’ participation in the non-GPS Sections of the CNPP can be recognised as an asset because the employers have an unconditional rght to a refund of surplus.
(c) The Principal Employer (with any other Participating Employer in respect of the relevant section) has an unconditional right to a refund of surplus.

Asset allocation

	31 March 2023 (£m)	31 March 2022 (£m)
Equities	2,364	2,742
Property	1,086	1,174
Government bonds	856	2,051
Corporate bonds	477	492
Other growth assets	768	2,020
Other	1,800	237
Balance at reporting date	7,351	8,716

The Magnox schemes had a total asset balance of £2,659 million (31 March 2022: £3,557 million), of which £25 million (31 March 2022: £1,379 million) were government bond assets, £382 million (31 March 2022: £1,462 million) were other growth assets which were not quoted in an active market, £378 million (31 March 2022: £403 million) were property assets and £175 million (31 March 2022: £189 million) were corporate bonds. The Sellafield schemes had £2,424 million (31 March 2022: £2,738 million) of total assets, the majority of which, excluding the amount held in the Trustees’ bank account and some private equity investments due to their illiquid nature, had a quoted market value in an active market. The UKRI-MRC scheme’s total assets of £1,956 million (31 March 2022: £2,070 million) included £1,124 million (31 March 2022: £1,263 million) of quoted equities and £376 million (31 March 2022: £444 million) of property assets.

Expected contribution over the next accounting period

It is possible that the actual amount paid might be different to the estimated amount. This may be due to contributions, benefits payments or pensionable payroll differing from expected, changes to schemes’ benefits or settlement/curtailment events that are currently unknown.

	31 March 2023 (£m)	31 March 2022 (£m)
UK Research and Innovation	21	23
LLW Repository Ltd – LLWR section of CNPP	2	2
Magnox Ltd – S L C section of Magnox Electric Group of ESPS	21	21
Magnox Ltd – Magnox section of CNPP	5	5
Sellafield Ltd – Group Pension Scheme SLC section of CNPP	5	5
Sellafield Ltd – Sellafield section of CNPP	90	90
Dounreay Site Restoration Ltd – DSRL section of CNPP	8	8
Nuclear Decommissioning Authority	0	0
Total	152	154

Major actuarial assumptions for SLC schemes

	Dounreay Site Restoration Limited 2022‑23	Dounreay Site Restoration Limited 2021‑22	LLW Repository Limited 2022‑23	LLW Repository Limited 2021‑22	Magnox Limited (ESPS) 2022‑23	Magnox Limited (ESPS) 2021‑22	Magnox Limited (CNPP) 2022‑23	Magnox Limited (CNPP) 2021‑22	Sellafield Limited (CNPP) 2022‑23	Sellafield Limited (CNPP) 2021‑22	Sellafield Limited (GPS) 2022‑23	Sellafield Limited (GPS) 2021‑22
Discount rate	2.6%	2.6%	4.7%	2.6%	4.7%	2.7%	4.7%	2.6%	4.7%	2.6%	4.7%	2.7%
Inflation (Retail Price Index)	3.5%	3.5%	3.1%	3.5%	3.3%	3.8%	3.1%	3.5%	3.1%	3.5%	3.2%	3.7%
Life expectancy in years at 65, currently aged 65 (male)	21.2	21.2	21.3	21.2	22.3	22.5	21.2	21.3	21.3	21.2	21.3	21.2
Life expectancy in years at 65, currently aged 45 (male)	22.6	22.6	22.6	22.6	22.9	23.2	22.6	22.4	22.6	22.6	22.6	22.6
Life expectancy in years at 65, currently aged 65 (female)	23.6	23.6	23.7	23.6	24.1	24.5	23.6	23.2	23.7	23.6	23.7	23.6
Life expectancy in years at 65, currently aged 45 (female)	25.1	25.1	25.1	25.1	24.9	25.3	25.0	24.5	25.1	25.1	25.1	25.1
Life expectancy in years at 60, currently aged 60 (male)	-	-	-	-	26.9	27.1	25.9	25.9	-	-	-	-
Life expectancy in years at 60, currently aged 40 (male)	-	-	-	-	27.7	27.9	27.4	27.1	-	-	-	-
Life expectancy in years at 60, currently aged 60 (female)	-	-	-	-	28.9	29.3	28.4	27.9	-	-	-	-
Life expectancy in years at 60, currently aged 40 (female)	-	-	-	-	29.8	30.1	29.9	29.2	-	-	-	-

Major actuarial assumptions for NDA and UKRI

	Nuclear Decommissioning Authority (Closed) 2022‑23	Nuclear Decommissioning Authority (Closed) 2021‑22	Nuclear Decommissioning Authority (Nirex) 2022‑23	Nuclear Decommissioning Authority (Nirex) 2021‑22	UK Research and Innovation 2022‑23	UK Research and Innovation 2021‑22
Discount rate	4.7%	2.7%	4.7%	2.7%	4.7%	2.7%
Inflation (Retail Price Index)	3.2%	3.7%	3.2%	3.8%	n/a*	n/a*
Life expectancy in years at 65, currently aged 65 (male)	21.3	21.2	21.3	21.2	22.4	22.3
Life expectancy in years at 65, currently aged 45 (male)	22.6	22.6	22.6	22.6	24.0	23.9
Life expectancy in years at 65, currently aged 65 (female)	23.7	23.6	23.7	23.6	23.6	23.5
Life expectancy in years at 65, currently aged 45 (female)	25.1	25.1	25.1	25.1	25.1	25.0

*UKRI applies an consumer price index inflation rate rather than retail price index inflation rate. The inflation rates were 2.60% for 2022-23 (2021-22: 3.00%).

Sensitivity analysis

The table shows the increase in liability that would result from changes in these actuarial assumptions:

	Dounreay Site Restoration Limited (£m)	LLW Repository Limited (£m)	Magnox Limited (£m)	Sellafield Limited (£m)	Nuclear Decommissioning Authority (£m)	UK Research and Innovation (£m)
1 percentage point decrease in annual discount rate	-	-	-	-	-	198
1 percentage point increase in inflation assumption	-	-	-	-	-	122
0.5 percentage point decrease in annual discount rate	27	4	157	210	9	-
0.5 percentage point increase in inflation assumption	27	4	154	210	11	-
1 year increase in life expectancy	7	1	100	53	3	40

23. Capital and other commitments

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Contracted capital commitments	23.1	2	2,696	6	2,543
Other financial commitments	23.2	1,470	2,168	718	1,186
Total		1,472	4,864	724	3,729

23.1 Capital commitments

Contracted capital commitments not otherwise included in these financial statements.

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
– Property, plant and equipment	-	449	2	332
– Intangible assets	2	2	4	130
– Loans, Investments	-	2,245	-	2,081
Total	2	2,696	6	2,543

Departmental group

Capital commitments as at 31 March 2023 include the following significant items:

Property, plant and equipment commitments for United Kingdom Research and Innovation (UKRI) of £283 (31 March 2022: £297 million).
Investment commitments of £2,174 million (31 March 2022: £1,870 million) for the British Business Bank (BBB) related to undrawn investment commitments, £111 million (31 March 2022: £125 million) for Northern Powerhouse Investment Limited relating to capital calls to be utilised over the next six years, £58 million (31 March 2022: £78 million) for Midlands Engine Investments Limited relating to capital calls to be utilised over the next seven years and £99 million (31 March 2022: £77 million) for the BIS (Postal Services Act 2011) Company Limited, which has capital calls relating to investments in respect of its private equity and property funds financial instruments.

23.2 Other financial commitments

The departmental group has entered into non-cancellable contracts (which are not leases, PFI contracts or other service concession arrangements) for subscriptions to international bodies and various other expenditures. Future payments to which the departmental group is committed are as follows:

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Not later than one year	694	1,008	390	640
Later than 1 year and not later than 5 years	636	992	185	392
Later than 5 years	140	168	143	154
Total	1,470	2,168	718	1,186

23.2.1 International subscriptions

The financial commitments payable include subscriptions payable to international bodies, analysed by the period in which the payments are due:

Organisation	Within 1 year (£m)	Later than 1 year and not later than 5 years (£m)	Later than 5 years (£m)	31 March 2023 Total (£m)	31 March 2022 Total (£m)
International Atomic Energy Agency	15	63	86	164	179
European Space Agency	313	473	-	786	-
Other subscriptions	12	33	43	88	102
Total Core Department and Agencies	340	569	129	1,038	281
European Organisation for Nuclear Research (CERN)	167	104	-	271	231
Institut Laue Langevin (ILL)	21	60	-	81	35
Other subscriptions	126	192	28	346	191
Total Departmental Group	654	925	157	1,736	738

Notes:
The departmental group is required to subscribe to a number of bodies on an on-going and continuous basis. These subscriptions are paid in euros, swiss francs and pounds sterling. The subscriptions described below are paid in euros or swiss francs and amounts paid are subject to fluctuations due to exchange rate differences.
1. a. The core department is responsible for paying in the UK ’s annual subscriptions to the International Atomic Energy Agency (IAEA). The IAEA is the UN-affiliated organisation responsible for ensuring the safe, secure and peaceful use of civil nuclear technologies, through monitoring nuclear safeguards, setting international standards and guidance for nuclear safety and security promoting nuclear applications for development.
2. b. The UK Space Agency pays international subscriptions to the European Space Agency (ESA) 3 times a year and these amounts are agreed several years in advance. The payments reported reflect existing commitments on forward exchange contracts placed with the Bank of England to cover periods to January 2026. The annual subscriptions are to be set at a minimum of €300 million and will be aligned with the agreed ESA programmes activity. It is expected that these amounts will be paid by means of forward exchange contracts or amounts translated on the date of payment.
3. c. United Kingdom Research and Innovation (UKRI) shares the funding of the capital and running costs of CERN with other major scientific nations. There is a notice of withdrawal period of 12 months after the end of the current calendar year.
4. d. The UK , through UKRI , has signed up to International Conventions, with respect to Institut Laue-Langevin (ILL). The 5th protocol of the Intergovernmental Convention was signed in July 2013 and will remain in force until 31 December 2023. Thereafter it shall be tacitly extended from year to year unless any of the governments give written notification to the other governments of its intention to withdraw from the Convention. Any such withdrawal will take effect upon the expiry of 2 years from the date of receipt of the notification by any of the other governments or on such later date as may be specified in the notification.

23.2.2 Other commitments

The financial commitments payable in future years include payments due under non-cancellable contracts to the organisations below.

Organisation	Note	Within 1 year (£m)	Later than 1 year and not later than 5 years (£m)	Later than 5 years (£m)	31 March 2023 Total (£m)	31 March 2022 Total (£m)
Met Office	a	113	-	-	113	101
Various suppliers	b	33	21	-	54	110
Other commitments		208	46	11	42	226
Total Core Department and Agencies		354	67	11	209	437
Other commitments		-	-	-	224	11
Total Departmental Group		354	67	11	433	448

Core department:
The nature of the most significant contracts is described below:
1. a. The core department has entered into contractual commitments which include agreements with the Met Office (a trading fund owned by the department) to provide meteorological services including the Public Weather Service agreement which the department manages on behalf of the government and for which the forward commitment is separately itemised above; the current Customer Supplier Agreement for the Public Weather Service remains in force until 31 March 2026, at which point this will be updated. This Agreement may be terminated by mutual consent of all the Parties after an agreed period of notice, which will not be less than 12 months.
2. b. The core department has entered into contractual commitments with various suppliers in relation to the Net Zero Innovation Programme and Energy Innovation Programme, which provide funding for low-carbon technologies and systems to tackle climate change.

Departmental group:
UKRI have contractual obligations for grant commitments which are not included in the table above. The total commitment as at 31 March 2023 is £9,511 million (31 March 2022: £10,527 million). Further details can be found in the UKRI annual report and accounts.

24. Financial instruments

The carrying amounts of financial instruments in each of the IFRS 9 categories are shown below.

	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Financial assets
At amortised cost
Cash and cash equivalents	17	1,866	3,429	4,412	5,821
Receivables (i)	15	3,438	4,253	2,802	3,522
Loans to public sector bodies (ii) & (iii)	11.3, 16	1,665	1,094	1,735	1,086
Other financial assets and private sector loans	12.2	202	1,148	195	1,411
Total financial assets at amortised cost		7,171	9,924	9,144	11,840
Elected at fair value through other comprehensive income (FVTOCI)
Ordinary shares in public sector companies (iv)	11.1	666	1,276	666	1,277
Other financial assets	12.2	51	77	42	67
Total financial assets elected at FVTOCI		717	1,353	708	1,344
Mandatory at fair value through profit or loss (FVTPL)
Repayable launch investments	12.1	252	252	463	463
Derivatives - forward contracts		8	8	-	-
Derivatives - Contracts for Difference (CfD)	10	-	6,130	-	-
Loans to public sector bodies (ii) & (iii)	11.3, 16	2,592	2,406	150	-
Other financial assets and private sector loans (vii)	12.2	1,090	5,263	1,267	5,158
Total financial assets mandatory at FVTPL		3,942	14,059	1,880	5,621
Public dividend capital
Public dividend capital	11.2	65	65	65	65
Total public dividend capital		65	65	65	65
Financial liabilities
At amortised cost
Payables (ii)	18	(2,217)	(3,418)	(4,576)	(5,819)
Total financial liabilities at amortised cost		(2,217)	(3,418)	(4,576)	(5,819)
Mandatory at fair value through profit or loss (FVTPL)
Derivatives - forward contracts		-	(1)	-	-
Derivatives - Contracts for Difference (CfD)	10	-	(19,572)	-	(26,948)
Total financial liabilities mandatory at FVTPL		-	(19,573)	-	(26,948)
Designated at fair value through profit or loss (FVTPL)
Loan commitment liabilities	21	-	(210)	-	(194)
Total financial liabilities designated at FVTPL		-	(210)	-	(194)
Financial guarantee and loan commitment liabilities
Financial guarantee liabilities (vi)	21	(11,296)	(11,296)	(15,837)	(15,837)
Loan commitment liabilities	21	-	-	(346)	(346)
Total financial guarantee and loan commitment liabilities		(11,296)	(11,296)	(16,183)	(16,183)

Notes:
1. i.The amounts disclosed above as payables and receivables exclude any assets or liabilities which do not arise from a contractual arrangement.
2. ii. Loans to public sector bodies comprises the loans detailed in note 16 and Other loans and investments in Other public sector bodies detailed in note 11.3.
3. iii. Loans to public sector bodies in the core department for 2022–23 excludes £546 million (2021–22: £452 million) related to the loan investments in the Northern Powerhouse Investments Limited, Midlands Engine Investments Limited, Cornwall and Isles of Scilly Investments Limited and UK Climate Investments LLP , as these are accounted for at cost under IAS 27 – Separate Financial Statements. Loans to the British Business Bank with a value of £186 million are classified as fair value through profit and loss.
4. iv. Ordinary shares in public sector companies excludes bodies that are consolidated in the departmental group, as these are held at cost, see note 11.1.
5. v. Trade credit reinsurance contracts worth £31 million (2021–22: £31 million), included within note 21, are excluded from this table as they are held under IFRS 4 – Insurance Contracts.
6. vi. Under an adaptation of the FREM for I F R S (note 1), financial guarantees for the BBLS, CBILS, CLBILS, and RLS schemes (note 21) are measured at lifetime expected credit losses which is not a measure of fair value but is to be treated as such for the purpose of comparison of fair value to the value in the SOFP.
7. vii. Future Fund convertible loans and equity with a value of £861 million (2021–22: £1,036 million), included within other financial assets, are detailed in note 12.2.

Financial risk management

IFRS 7 ‘Financial Instruments: Disclosure’ requires the disclosure of information which will allow users of financial statements to evaluate the significance of financial instruments on the departmental group’s financial performance and position and the nature and extent of its exposure to risks arising from these instruments.

As the cash requirements of the departmental group are largely met through the estimates process, financial instruments play a more limited role in creating risk than would apply to a private sector body of a similar size.

The departmental group is however exposed to credit, market, interest rate, liquidity and commodity price risks due to the specific programmes and activities undertaken in pursuance of the departmental group’s objectives.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Significant credit risks can be summarised below.

Core department

Investment funds:
Investee companies may not perform as expected and the departmental group may not recover its initial investment. The core department minimises the risk by monitoring the overall performance of the funds and to secure value for the core department as an investor. This includes a full evaluation of each business case submitted prior to committing funds.

Financial guarantees:
The core department is exposed to credit risk from borrower default on lending against which the department has issued guarantees, primarily in relation to the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Recovery Loan Scheme (RLS) (note 21). The guarantees were issued to lenders and do not impact on the contractual obligation of borrowers to repay loans. Proportions of lending guaranteed are 100% for BBLS and 80% for CBILS and CLBILS , and 80% or 70% for RLS . An estimate of collateral security held by lenders for CBILS, RLS and CLBILS, which will reduce the department’s exposure, has been included in the reported liability. Any payment by the department under a guarantee entitles it to a commensurate proportion of sums subsequently recovered from the borrower.

As at 31 March 2023 the core department was exposed to total guaranteed lending under these schemes of £41,894 million (31 March 2022: £59,065 million). The guarantees will expire over the next 10 years as the underlying debt is repaid. The department’s reported liability of £11,284 million as at 31 March 2023 (31 March 2022: £15,806) has been measured as the present value of expected payments to reimburse guarantee holders for credit losses incurred less amounts expected subsequently to be recovered from borrowers, that is, as lifetime expected credit losses as defined for financial guarantees by IFRS 9. Accredited scheme lenders are responsible for collections and recoveries of amounts advanced to borrowers. Lenders are required to follow their own recovery processes, whilst fulfilling their regulatory responsibility to ensure fair and consistent treatment of customers. For BBLS , a recoveries framework, developed in conjunction with lenders, provides guidance to lenders on best practice in the context of the scheme rules. Lenders’ operation of the schemes, including recoveries processes and performance, is assessed and reviewed by the British Business Bank.

Financial guarantees have also been issued under the Enterprise Financial Guarantee and ENABLE schemes. The Enterprise Financial Guarantee scheme facilitates lending to viable businesses with the maximum obligation capped at £80.6 million at 31 March 2023 (31 March 2022: £106 million). The ENABLE guarantee scheme aims to encourage lending to smaller businesses with the department guaranteeing a portion of net losses on designated loan portfolios of participating banks in excess of an agreed ‘first loss’ threshold. As at 31 March 2023 the department had approved guarantee facilities totalling £2.3 billion under ENABLE (31 March 2022: £1.63 billion restated), of which £918 million was effective (31 March 2022: £500 million restated) with a potential maximum liability of £583 million (31 March 2022: £309 million restated). An aggregate liability of £12.3 million for both schemes as at 31 March 2023 (31 March 2022: £30.6 million) has been reported on the Statement of Financial Position.

Loan commitments:
The core department has measured expected credit losses on outstanding loan commitments as at 31 March 2023 at £nil million (31 March 2022: £346 million).

NDPBs and other designated bodies

The British Business Bank (BBB) investments are assessed by BBB’s valuation committee. BBB produces credit risk ratings for its investments based upon a risk grading of the financial obligor and the estimated loss given default on that investment. Risk drivers which are assessed in setting the ratings include the financial viability and lending safety of the investment and, if available, the rating assigned by an external credit agency. This is mitigated by new product approval processes that assess default and loss rates, due diligence of delivery partners underwriting methods, and portfolio monitoring and default models being put in place.

Cash and cash equivalents:
The departmental group held cash and cash equivalents of £3,429 million as at 31 March 2023 (31 March 2022: £5,821 million). The cash and cash equivalents are held with banks and financial institutions which are rated A A - to A A + based on S&P ratings. Impairment on cash and cash equivalents has been measured on the 12-month expected loss basis and reflects the short maturities of the exposures. The departmental group considers that cash and cash equivalents have a low credit risk based on the external credit ratings of the holding parties.

Loan commitment liabilities:
BBB’s ECF loan commitments were designated to be measured at FVTPL (fair value through profit or loss) and the credit risk is, therefore, reflected in their fair value. These had a fair value of £209 million as at 31 March 2023 (31 March 2022: £194 million).

Collateral:
The departmental group holds collateral over loans held at amortised cost. The collateral held is in the form of cash and buildings. The value of the loan assets held which are secured by collateral is £997 million (31 March 2022: £964 million). The value of the collateral held is lower than the value of the assets secured by the collateral. The collateral was considered in estimating the ECL .

Credit risk rating and loss allowance

The departmental group has these financial assets subject to the expected credit loss model.

trade receivables, contract assets, and lease receivables
loans, bonds, and term deposits
cash and cash equivalents

Trade receivable, contract assets and lease receivables

The core department applies the IFRS 9 simplified approach using an allowance matrix to measure the lifetime expected loss allowance for trade receivables in accordance with the FReM guidance.

Trade receivables are grouped based upon credit risk characteristics and the number of past due days. Default is defined as 90 days past due. The loss rates are estimated using the historic data for each aging group. Forward-looking information such as macroeconomic factors and entity specific situations are considered for entities with significant outstanding balances. Balances with other core central government departments are excluded from recognising stage-1 and stage-2 impairments following the FREM adaptions.

The loss allowance for trade receivables in the core department is shown below.

	Current	1‑30 days	31‑60 days	61‑90 days	91+ days	31 March 2023 Core department: Total
Expected Loss rate	0%	0%	23%	1%	100%	-
Gross carrying amount- trade receivables (excluding other government debt) (£m)	8	1	0	0	1	10
Loss allowance (£m)	0	0	0	0	1	1

	Current	1‑30 days	31‑60 days	61‑90 days	91+ days	31 March 2022 Core department: Total
Expected Loss rate	1%	3%	8%	24%	60%	-
Gross carrying amount- trade receivables (excluding other government debt) (£m)	12	7	0	0	1	20
Loss allowance (£m)	0	0	0	0	1	1

The loss allowance for trade receivable balances held by ALBs has been assessed at an organisational level and the total loss allowance estimated is immaterial for detailed disclosure on loss rates.

The movement in the allowance for provisions in respect of trade receivables during the year is disclosed below reflecting the allowance per the expected credit loss model under IFRS 9.

	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Balance at 1 April	9	17	14	20
Net remeasurement	1	3	(5)	(3)
Write-off	-	-	-	-
Balance at 31 Mar	10	20	9	17

Loans, bonds, and term deposits

Where possible, the departmental group monitors changes in credit risk by tracking published external credit ratings. For all assets other than those held by British Business Bank (BBB), an internal credit rating system, which was developed based on other established methodologies, was used to assign credit risks for loans that do not have external credit rating. 12-month and lifetime probabilities of default are based upon Moody’s published research on the global default rate adjusted for historical repayment data and any macro‑economic pressures which could impact the entity’s ability to repay the loan.

The BBB investments are assessed by BBB’s Valuation Committee. BBB produces credit risk ratings for its investments based upon a risk grading of the financial obligator and the estimated Loss Given Default on that investment. Further details can be found in BBB’s annual report and accounts.

The following table presents an analysis of credit quality of loans, bonds and term deposits. It indicates whether assets were subject to a 12-month ECL or lifetime ECL allowance, and whether they were credit-impaired.

The table below shows an analysis of credit quality of loans, bonds and term deposits. It indicates whether assets were subject to a 12-month ECL or lifetime ECL allowance, and whether they were credit-impaired.

Credit rating	31 March 2023 Amortised cost: 12 month ECL (£m)	31 March 2023 Amortised cost: Lifetime ECL not impaired (£m)	31 March 2023 Amortised cost: Lifetime ECL impaired (£m)	31 March 2023 Amortised cost: Total (£m)	31 March 2022 Amortised cost: 12 month ECL (£m)	31 March 2022 Amortised cost: Lifetime ECL not impaired (£m)	31 March 2022 Amortised cost: Lifetime ECL impaired (£m)	31 March 2022 Amortised cost: Total (£m)
Low risk financial assets	1,698	-	-	1,698	1,931	-	-	1,931
Medium risk financial assets	310	42	-	352	308	17	11	336
High risk financial assets	168	49	-	217	182	54	-	236
Default financial assets	-	-	32	32	-	-	56	56
Gross carrying amount	2,176	91	32	2,299	2,421	71	67	2,559
Loss allowance	(16)	(15)	(26)	(57)	(16)	(13)	(34)	(63)
Net carrying amount	2,160	76	6	2,242	2,405	58	33	2,496

The departmental group does not hold any loans, bonds and term deposits measured at FVTOCI.

The movement in the allowance for impaired loans, bonds and term deposits at amortised cost during the year was as follows.

	31 March 2023 12 month ECL (£m)	31 March 2023 Lifetime ECL not impaired (£m)	31 March 2023 Lifetime ECL credit impaired (£m)	31 March 2023 Total (£m)	31 March 2022 12 month ECL (£m)	31 March 2022 Lifetime ECL not impaired (£m)	31 March 2022 Lifetime ECL credit impaired (£m)	31 March 2022 Total (£m)
Balance at 1 April	16	13	34	63	18	18	49	85
Additions	10	-	3	13	9	1	1	11
Net remeasurement	(4)	1	(12)	(15)	(9)	(7)	(7)	(23)
Transfer to credit loss 12 month	-	3	2	5	-	1	1	2
Transfer to credit loss not impaired	(3)	-	1	(2)	(1)	-	(1)	(2)
Transfer to credit loss impaired	(2)	(1)	-	(3)	(1)	1	-	-
Written-off	(1)	(1)	(2)	(4)	-	(1)	(9)	(10)
Balance at 31 Mar	16	15	26	57	16	13	34	63

Market risk

This is the risk that fair values and future cash flows will fluctuate due to changes in market prices. Market risk generally comprises of foreign currency risk, interest rate risk and other market risk.

Foreign currency risk

Core department:
The core department is exposed to a small amount of currency risk with respect to Repayable Launch Investment contracts where income due from aircraft or engine sales may initially be based in U S dollars, but it is minimal in the context of the overall Repayable Launch Investment portfolio. Otherwise the core department’s exposure to foreign currency risk during the year was insignificant. Foreign currency income was negligible, and foreign currency expenditure was a small percentage of total expenditure (less than 1%).

All material assets and liabilities are denominated in pounds sterling.

Agencies:
UKSA pays an annual subscription in euros to the European Space Agency (ESA) and enters into forward contracts to mitigate the risk. These derivative contracts are designated as cash flow hedges.

NDPBs and other designated bodies:
BIS (Postal Services Act 2011) Company Limited, UKRI and Nesta Trust are subject to minor foreign currency risk through the maintenance of bank accounts in foreign currencies (predominantly US dollar and euros) to deal with day-to-day overseas transactions.

Interest rate risk

Core department:
The core department does not invest or access funds from commercial sources so is not exposed to interest rate risk.

NDPBs and other designated bodies:
BBB holds both fixed and variable rate investments. Interest rate risk is regularly monitored to ensure that the mix of fixed and variable borrowing is appropriate. BBB does not use derivatives to hedge interest rate risk.

The impact of interest rates affects the discount rate used to arrive at the fair value of the CfD liability held by LCCC. Changes in interest rates which affect the discount rate would therefore affect the Statement of Financial Position valuation. However, the departmental group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

Other market risk

Core department:
The core department is exposed to wider risks relating to the performance of the economy as a whole. The main risks resulting from a downward movement in the economy include failures of investee companies of investment funds and loan defaults. For further information on the assessment of market risk in relation to Repayable Launch Investments, see note 11.1.

NDPBs and other designated bodies:
The Nesta Trust is exposed to equity price risk due to its investment of a portion of its endowment assets in publicly listed equity investments. Nesta Trust minimises this risk by investing for the medium to long term, diversifying its equity investments over a number of managers with complementary styles, and invests in investment funds with large institutional investors. The performance of these investment managers is monitored regularly.

The valuations of fair value through profit or loss financial assets are based on the valuations provided by the fund managers in line with International Private Equity and Venture Capital (IPEV) valuation guidelines or the valuation guidelines produced by the British Venture Capital Association (BVCA). Valuation techniques used include the use of earnings multiples, discounted cash flows analysis, and net asset values. These valuations take into account the impact of the COVID-19 pandemic as at 31 December 2021.

Inflation risk

The amounts payable under the CfD contracts will be affected by the indexation of strike prices to reflect inflation and changes to wholesale electricity prices resulting from inflation. While inflation rates have seen a substantial increase during the year, the group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

Core department and agencies:

In common with other government departments, the future financing of its liabilities is to be met by future grants of supply, voted annually by Parliament. There is no reason to believe that future approvals will not be forthcoming, therefore, on this basis the liquidity risk to the core department and its agencies is minimal.

NDPBs and other designated bodies:

Information about the departmental group’s objectives, policies and processes for managing and measuring risk can be found in the governance statement.

Commodity price risk

Commodity price risk is the risk or uncertainty arising from possible price movements. The amounts payable under the CfD contracts are exposed to price risk through the fluctuations in future actual wholesale electricity prices, specifically, on how they will differ from the current forecast of future prices in the central scenario. However, the LCCC and the departmental group are not financially exposed to this risk because the liability is funded through a levy on suppliers.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels are defined as:

Level 1 – uses quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – uses inputs for the assets or liabilities other than quoted prices, that are observable either directly or indirectly
Level 3 – uses inputs for the assets or liabilities that are not based on observable market data, such as internal models or other valuation method

The table below shows the departmental group’s financial assets and liabilities measured at fair value.

Financial assets

	Note	31 March 2023 Level 1 (£m)	31 March 2023 Level 2 (£m)	31 March 2023 Level 3 (£m)	31 March 2023 Total (£m)	31 March 2022 Level 1 (£m)	31 March 2022 Level 2 (£m)	31 March 2022 Level 3 (£m)	31 March 2022 Total (£m)
Financial liabilities
FVOCI elected Equity investments
Ordinary shares in public sector bodies	11.1	-	1,276	-	1,276	-	1,277	-	1,277
Private sector shares	12.2	3	49	24	76	5	41	23	69
Total financial assets at FVOCI		3	1,325	24	1,352	5	1,318	23	1,346
FVTPL mandatory Debt and venture capital investments
Public sector loans	11.3	-	-	2,406	2,406	-	-	-	-
Repayable launch investments	12.1	-	-	252	252	-	-	462	462
Private sector loans	12.2	-	-	308	308	-	-	586	586
Investment funds	12.2	162	-	3,972	4,134	281	-	3,597	3,878
Equity investments
Private sector shares	12.2	32	-	185	217	37	-	136	173
Future Fund shares	12.2	-	-	607	607	-	-	519	519
Derivatives – forward contracts		-	8	-	8	-	-	-	-
Derivatives – CfD		-	-	6,130	6,130	-	-	-
Total financial assets at FVTPL mandatory		194	8	13,860	14,062	318	-	5,300	5,618
Total financial assets measured at fair value		197	1,333	13,884	15,414	323	1,318	5,323	6,964
Financial liabilities
FVTPL mandatory
Loan commitment liabilities	21	-	-	(210)	(210)	-	-	(538)	(538)
Derivatives – CfD	10	-	-	(19,572)	(19,572)	-	-	(26,948)	(26,948)
Total liabilities at FVTPL mandatory		-	-	(19,782)	(19,782)	-	-	(27,486)	(27,486)
FVTPL designated
Derivatives – forward contracts		-	(2)	-	(2)	-	-	-	-
Total financial liabilities at FVTPL designated		-	(2)	-	(2)	-	-	-	-
Total financial liabilities measured at fair value		-	(2)	(19,782)	(19,784)	-	-	(27,486)	(27,486)

Notes:

Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period. There were no transfers between levels during the year. Specific valuation techniques used to value financial instruments include:

the fair value of the CfD has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term of the CfD
for details regarding the fair value measurement of RLI’s, refer to note 12.1
the fair value of forward foreign exchange contracts is determined using forward exchange rate at the reporting date based on level 2 inputs, with the resulting value discounted back to present value
other techniques, such as discounted cash flow analysis or for non-quoted ordinary shares and investment funds that are not actively traded, the net assets of the company/ underlying fund are used – these are classified as level 3
the fair value of public sector shares are based upon net assets and classified as level 2

We align the presentation of Contract for Differences as FVTPL mandatory in line with the financial instruments main table.

Changes in level 3 instruments

The tables below show the changes in level 3 instruments, excluding CFDs disclosed in note 10.

2023

	Ordinary shares in unlisted private equities (£m)	Public sector loans (£m)	Repayable launch investments (£m)	Investment funds and other financial investments (£m)	Loan Commitment Liabilities (£m)	Future Fund loans (£m)	Total (£m)
Balance at 1 April 2022	159	-	462	3,667	(539)	1,035	4,784
Additions	78	2,025	-	809	(451)	-	2,461
Repayments/disposals	(1)	-	(261)	(326)	-	(18)	(606)
Revaluations	(21)	381	-	(89)	780	(166)	885
Transfers	7	-	-	(7)	-	-	-
Gains and losses recognised in SOCNE	(13)	-	51	(18)	-	-	20
Balance at 31 March 2023	209	2,406	252	4,036	(210)	851	7,544

2022

	Ordinary shares in unlisted private equities (£m)	Public sector loans (£m)	Repayable launch investments (£m)	Investment funds and other financial investments (£m)	Loan Commitment Liabilities (£m)	Future Fund loans (£m)	Total (£m)
Balance at 1 April 2021	29	-	485	2,756	(146)	1,030	4,154
Additions	106	-	-	874	(1,795)	46	(769)
Repayments/disposals	(1)	-	(49)	(611)	-	(47)	(708)
Revaluations	22	-	-	660	1,402	6	2,090
Transfers	12	-	-	(12)	-	-	-
Gains and losses recognised in SOCNE	(9)	-	26	1	-	-	18
Balance at 31 March 2022	159	-	462	3,668	(539)	1,035	4,785

Maturity profiles - discounted cashflows for CfDs

The table below shows the maturity profile of the discounted cashflows for the CfDs.

	less than 1 year (£m)	2‑5 years (£m)	more than 5 years (£m)	Total (£m)
As at 31 March 2022	(3,904)	2,639	28,213	26,948
As at 31 March 2023	(178)	1,252	18,498	19,572

25. Contingent liabilities

Core department – unquantifiable contingent liabilities

Financial Reporting Council funding

A guarantee has been given to the Financial Reporting Council that, if the Council’s general voluntary funding from external sources falls sufficiently for the core department to have to consider making legislation to activate the statutory levy under section 17 of the Companies (Audit, Investigations and Community Enterprise) Act 2004, the core department will make such a grant to cover the Council’s costs as is sufficient to meet the preconditions in those levy raising powers provided the requisite funding has not been made available through another grant.

Deeds relating to the Mineworkers’ Pension Scheme and British Coal Staff Superannuation Scheme under Paragraph 2(9) of Schedule 5 to the Coal Industry Act 1994

Government guarantees were put in place on 31 October 1994, the day the schemes were changed to reflect the impact of privatisation of the coal industry. They are legally binding contracts between the scheme Trustees and the Secretary of State for Business, Energy and Industrial Strategy. The guarantees ensure that benefits earned by scheme members during their employment with British Coal, and any benefit improvements from surpluses which were awarded prior to 31 October 1994, will always be paid and will be increased each year in line with the Retail Prices Index. If, at any periodic valuation, the assets of the Guaranteed Fund of either scheme were to be insufficient to meet its liabilities, the assets must be increased to bring the Fund back into balance. This is a long-term contingent liability dependent on the performance of the schemes’ investments and their mortality experience. Further details regarding the schemes can be found in note 15.

Indemnity to Public Appointment Assessors

The Cabinet Secretary has provided a government-wide indemnity to Public Appointments Assessors (PAAs) against personal civil liabilities incurred in the execution of their PAA functions.

Compensation for exclusion from grant scheme

The core department may become liable for funding the costs of compensation to certain claimants whose applications to the GB Non-Domestic Renewable Heat Incentive scheme had been rejected, following a court judgment that their applications for accreditation had not been processed in full accordance with scheme regulations.

Claims for judicial review

A contingent liability exists in relation to claims for judicial review in relation to the transfer of the business of Bulb Energy Limited (in special administration). British Gas and E.ON have made applications in the Court of Appeal seeking permission to appeal the judgment of the High Court which found in favor of the Department. The financial impact is dependent on the outcome of the case which currently cannot be reliably estimated.

Energy Price Guarantee Scheme

The core department has recognised a provision for payments made under the Energy Price Guarantee (EPG) for the period from 1 April 2023 to 30 June 2023. From 1 July 2023, household energy bills fell below the EPG. However, should household energy bills increase above the Energy Price Guarantee price, the core department may need to make payments under the Energy Price Guarantee. The liability has not been estimated due to dependence on ongoing policy decisions.

Energy Bill Discount Scheme

The Energy Bill Discount Scheme (EBDS) was announced on 9 January and came into force on the 26 April. The E B D S will provide all eligible businesses and other non-domestic energy customers with a discount on high gas and electricity bills in the period between 1 April 2023 until 31 March 2024, following the end of the EBRS. It will also provide businesses in sectors with particularly high levels of energy use and trade intensity with a higher level of support as they are less able to pass these higher costs on to customers due to international competition. The price reduction will be linked to the wholesale element of a non-domestic customer’s gas and electricity bill and government will reimburse suppliers in accordance with the scheme. The total cost of the scheme cannot be reliably estimated.

Core department – quantifiable contingent liabilities

Wave Hub transfer

The core department has indemnified Cornwall Council up to 2028 in respect of the transfer of Wave Hub to a maximum of £5 million.

EBSS Alternative Funding

The core department has made a commitment under the EBSS Alternative Funding. Applications remained open until 31 May 2023, with payments being finalised by 30 June 2023. The total cost of the EBSS Alternative Funding is estimated to be £19 million.

EPG Alternative Fuel Payment Alternative Fund

The core department has made a commitment under the EPG Alternative Fuel Payment Alternative Fund. Applications remained open until 31 May 2023, with payments being finalised by 31 July 2023. The total cost of the EPG Alternative Fuel Payment Alternative Fund is estimated to be £13 million.

Non-Domestic Alternative Fuel Payment Scheme

The core department has made a commitment under the Non-Domestic Alternative Fuel Payment Scheme. Applications remained open until 28 April 2023. The total cost of the EBSS Alternative Funding and EPG Alternative Fuel Payment Alternative Fund is estimated to be £1.7 million.

EPG PPM

In the Spring Budget on 15 March 2023, the Chancellor announced that the government will align charges for comparable direct debit and Pre-Payment Meter customers, ensuring that customers on Pre-Payment Meters no longer pay a premium for their energy costs. This scheme applies to customers in Great Britain only and runs from 1 July 2023 to 31 March 2024, the end of the Energy Price Guarantee. Looking ahead, the government will ensure the Pre-Payment Meter premium is ended on a permanent basis. OFGEM is reviewing Pre-Payment Meter costs and is considering additional regulatory options, including options for ending the Pre-Payment Meter standing charge premium for readiness to be implemented from April 2024. The estimated cost is £59 million, with a range of £45 million to £99 million, based on Q3 Ofgem price cap projections and the best available evidence on the number of Pre-Payment Meter customers.

Departmental group - unquantifiable contingent liabilities

The departmental group has the following unquantifiable contingent liabilities. Other liabilities are disclosed in our partner organisation accounts.

Coal Authority - Environmental Legal Claims

Under the Environmental Information Regulations 2004 - The Coal Authority is aware of potential legal proceedings in respect of past fees paid for Mining Information. In the eventuality of receiving formal notification to commence legal proceedings, the Coal Authority will strongly defend its position.

Coal Authority - Legal claims

The Coal Authority is subject to various claims and legal actions in the ordinary course of its activities. Where appropriate, provisions are made in the accounts on the basis of information available and in accordance with guidance provided under the FReM and IFRS . The Coal Authority does not expect that the outcome of the above issues will materially affect its financial position.

Coal Authority - Restructuring Scheme

Where liabilities transferred under the various Coal Authority Restructuring Schemes (CARS) have crystallised due to planning conditions, agreements, claims etc, provision has been made in these financial statements. It has not, however, been possible to quantify contingent liabilities that may arise in the future. It is expected that any costs will be covered by future allocations of grant in aid.

Coal Authority - Subsidence damage and public safety liabilities

Licensees of mining operations are required to provide security to the Coal Authority to cover the anticipated future costs of settling subsidence damage liabilities within their areas of responsibility. Outside the areas of responsibility of the holders of licences under Part II of the 1994 Act, the Coal Authority is responsible for making good subsidence damage. Where an area of responsibility is extinguished this would transfer to the Coal Authority who would become responsible for the discharge of outstanding subsidence liabilities. The Coal Authority also has an ongoing liability to secure and keep secured the majority of abandoned coal mines. In all cases the liability for operating collieries is the responsibility of the licensees/ lessees and security is held to address those liabilities. The above liabilities have been provided for within the Public Safety and Subsidence provision based on analysis of trends and claims experience. However, it is possible that significant, unexpected events outside of this provision may materialise. It is expected that any deficit will be covered by future allocations of grant in aid.

CNPA - Legal Claims

There are a number of potential liabilities in respect of claims from employees. The timing and amounts of any payment are uncertain. These liabilities have not been provided for as the CNPA believes that the claims are unlikely to be successful and unlikely to lead to a transfer of economic benefits.

Insolvency Service – Legal Cases

Due to the nature of the work undertaken by the Agency, there are a number of ongoing legal cases giving rise to contingent liabilities. The legal cases included as contingent liabilities all relate to either present obligations or probable obligations where reliable estimates cannot be made or possible obligations where the Agency has issued civil proceedings through the courts, and the outcome is dependent on court rulings and findings not wholly within the agency’s control. The agency has 66 contingent liabilities relating to defended cases where it is possible but not probable that payment may be made in the future. The aggregate value of these cases has been estimated using a standard multiplier which we have applied to agency costs on these cases. This methodology is based on observed trends in historic settlements. There are 50 cases liabilities estimated to crystalise within 1-year and the remaining 15 to crystalise within 1 – 2-years.

NDA – Pension Schemes

Whilst not the lead employer, the NDA is the lead organisation and has ultimate responsibility for certain nuclear industry pension schemes, including the Combined Nuclear Pension Plan and the Magnox section of the ESPS . Provisions for known deficits are included within Nuclear Provisions. However, movements in financial markets may adversely impact the actuarial valuations of the schemes, resulting in an increase in scheme deficits and consequent increase in nuclear provision.

NDA – Renewal of an uncapped indemnity in the Sellafield Replacement Sea Line (RSL) Lease

NDA has entered with two landlords, The Crown Estate and Baron Egremont, for the renewal of an uncapped indemnity in the Sellafield Replacement Sea Line (RSL) Lease.

A pipeline runs from the Sellafield Nuclear Plant site over foreshore and seabed owned by two separate third party landowners, The Crown Estate (TCE) and Baron Egremont of the Leconfield Estate (Egremont). The Replacement Sea Line (RSL) is a critical asset for the delivery of nuclear safety and the environmental performance of the Sellafield Site.

These are long standing liabilities, with the lease arrangement for the unlimited liabilities in place since 1991. This lease pre-dates the formation of NDA in 2004, following the introduction of new guidelines and status of Sellafield as part of central government (2016) meant such indemnities now require government approval.

UKRI – (STFC) Reprocessing and staff commitments

A contingent liability exists in respect of the Science and Technology Facilities Council (STFC)’s share of Institut Laue-Langevin (ILL) unfunded provisions for staff related costs (e.g. early retirement) and costs associated with reprocessing fuel elements.

Others

There are a number of potential liabilities for the departmental group in respect of claims from suppliers, employees and third parties which depend on actual or potential proceedings. The timing and amounts of any liabilities are uncertain.

Departmental group - quantifiable contingent liabilities

The departmental group has the following contingent liabilities quantifiable contingent liabilities of more than £1 million in either this financial year or prior financial year. Other liabilities are disclosed in our partner organisation accounts.

NDA – AGR Transfer (£18,515 million)

On 23 June 2021 the NDA , government and EDF Energy entered into new decommissioning arrangements for seven Advanced Gas-cooled Reactor (AGR) stations in which government has directed NDA to take on the future ownership of the stations for decommissioning. The work will be undertaken by the NDA subsidiary Magnox Limited. The NDA will recognise the estimated future liability in its financial statements for each of the stations at the respective points at which NDA takes ownership. The completion and timing of the transfer of ownership is currently uncertain and contingent on the fulfilment of a number of conditions by the parties involved. The NDA therefore recognises a contingent liability for the future decommissioning costs of the stations. This has been estimated by the current owner of the stations at £18,515 million (undiscounted) in its most recently published financial statements.

26. Contingent assets

Core department - quantifiable contingent assets

Deed relating to the British Coal Staff Superannuation Scheme (BCSSS) under Paragraph 2(9) of Schedule 5 to the Coal Industry Act 1994 (£1.9 billion)

Within 12 months of 31 March 2033, the trustee of the BCSSS shall pay to ‘the Guarantor’ (the Secretary of State) any surplus remaining on the scheme net of any amount retained for the obligation. The value of the surplus will depend on the value of scheme assets in relation to outstanding obligations. Based on the Government Actuary’s Department’s estimate of a £1.9 billion surplus as at 31 March 2021, the core department considers a receipt from the scheme to be probable.

Departmental group - unquantifiable contingent assets

Coal Authority - restructuring schemes

By virtue of the seventh and ninth Coal Authority Restructuring Schemes (CARS 7 and 9) the Coal Authority is the beneficiary of restrictive covenants and clawback provisions relating to land and properties sold by the British Coal Corporation. In the event that the purchasers are able to retrospectively secure added value by obtaining planning consent for alternative uses the Authority will receive a share of the added value. Quantification of this asset is not possible.

The core department is the parent of the bodies listed in note 28 ‘List of bodies within the departmental group’ – these bodies are regarded as related parties and various material transactions have taken place during the reporting period between members of the departmental group. The related parties of the consolidating bodies are disclosed in their respective accounts. The core department is also the sponsor of UK Intellectual Property Office (UKIPO), Met Office (Trading Funds), Ordnance Survey, NPL Management Limited, NNL Holdings Limited and British Nuclear Fuels.

The core department has engaged in material transactions with other consolidated bodies, other government bodies, and devolved administrations (the Northern Ireland Executive, Scottish Government and Welsh Government). The most significant of these transactions have been with the Exchequer Consolidated Fund and Contingencies Fund, United Kingdom Research and Innovation, Post Office Limited, and Nuclear Decommissioning Authority.

Ministers, board members, key managers of the departmental group or other related party who have undertaken any material transactions with the core department during the year are listed below. Details of the department’s ministers and senior managers are shown in the Remuneration Report.

A family member of a minister of the core department (Amanda Solloway MP) is a member of Nottinghamshire Borough Council. The department provided New Burdens funding of £0.3 million to help local councils with the administrative burden of working on grant schemes.

The partner of a former minister of the core department (Jackie Doyle-Price MP) is a member of Thrurrock Borough Council. The department provided £10.5 million to Thurrock Borough Council. This is working with local authorities to recover irregular grant payments made as a result of fraud or error in the various business support grant schemes and to help with the administrative burden of working with New Burdens grant schemes.

A former minister of the core department (Jane Hunt MP) is a member of Charnwood Borough Council. The department provided Energy Bill Support Scheme funding of £0.6 million to Charnwood Borough Council. This scheme is part of the government’s support to households which is delivered by local authorities.

The Permanent Secretary of the core department, Sarah Munby, is an unpaid Non-Executive of UK Government Investments (UKGI) which is a government company wholly owned by HM Treasury and for which the department was charged £3.5 million for the provision of shareholder services.

A close family member of Sarah Munby is a board member of Defence Science and Technology Laboratory (DSTL) which is an executive agency of the Ministry of Defence. The core department incurred £3.6 million worth of transactions with DSTL, mainly in the form of R&D grant funding.

In the course of allocating funding during the year, UKRI entered into material transactions with various Higher Education Institutions. Where these bodies have board members who are also members of university councils, each body operates a policy that precludes interested parties from voting on the funding to the university in which they have an interest. Further details of these transactions can be found in statutory accounts of UKRI.

A number of BEIS partner organisations entered into transactions with the Government Property Agency (GPA) in relation to rental payments for office accommodation. In the ordinary course of business, several BEIS partner organisations entered into transactions with BT Group plc for telecommunications services.

28. List of bodies within the departmental group

The table below shows the list of BEIS organisations included in the Government Resources and Accounts Act 2000 (Estimates and Accounts) Order 2022 - known as the Designation Order. And amendments from the Government Resources and Accounts Act 2000 (Estimate and Accounts) (Amendment) Order 2022 - known as the Amendment Order. Additionally, Sizewell C has been consolidated as a result of an in-year share puchase which missed the Amendment Order cut off date, the consolidation has been agreed and directed by HM Treasury.

Section (a) includes bodies consolidated within the departmental group accounts. Section (b) includes bodies within the departmental group but not consolidated - such as where net assets are not considered material to the departmental group accounts.

As a result of changes made in the 2022–23 Designation Order and Amendment Order some additional bodies are now included in the departmental group accounts boundary. Boundary changes have not impacted on previously reported financial results.

(a) Bodies consolidated in departmental group accounts for 2022–23

Designated body	Status	Notes
Agencies
Companies House	Executive agency	-
Insolvency Service	Executive agency	-
UK Space Agency	Executive agency	-
NDPBs and other designated bodies
Advisory, Conciliation and Arbitration Service^{[Note 1]}	NDPB	-
Central Arbitration Committee	NDPB	Consolidated by ACAS
Certification Office for Trade Union and Employers’ Associations	Other public body	Consolidated by ACAS
BIS (Postal Services Act 2011) Company Limited	Other public body	-
British Business Bank plc	Other public body	-
BBB Patient Capital Holdings Limited		Consolidated by British Business Bank plc
British Business Investments Ltd		Consolidated by British Business Bank plc
British Business Finance Ltd		Consolidated by British Business Bank plc
British Business Financial Services Ltd		Consolidated by British Business Bank plc
British Business Aspire Holdco Ltd		Consolidated by British Business Bank plc
British Patient Capital Limited		Consolidated by British Business Bank plc
Capital for Enterprise Fund Managers Limited		Consolidated by British Business Bank plc
Capital for Enterprise (GP) Limited		Consolidated by British Business Bank plc
Capital for Enterprise Limited		Consolidated by British Business Bank plc
The Start-Up Loans Company		Consolidated by British Business Bank plc
British Technology Investments Limited	Other public body	-
Civil Nuclear Police Authority^{[Note 1]}	NDPB	-
Coal Authority^{[Note 1]}	NDPB	-
Committee on Fuel Poverty	NDPB	Costs are included in the core department’s expenditure
Committee on Radioactive Waste Management	NDPB	Costs are included in the core department’s expenditure
Competition Service	NDPB	-
Competition Appeal Tribunal	NDPB	-
The Copyright Tribunal	NDPB	No accounts produced as costs are included in the core department’s expenditure. It is funded by the core department and operated by UK Intellectual Property Office.
Cornwall and Isles of Scilly Investments Limited	Other public body	-
Council for Science and Technology	Expert committee	No accounts produced as costs are included in the core department’s expenditure.
Diamond Light Source Limited	Other public body	This is a special purpose vehicle for the government’s investment in Urenco Limited.
Enrichment Holdings Ltd	Other public body	-
Enrichment Investments Limited		Consolidated by Enrichment Holdings Limited.
Electricity Settlements Company Ltd	Other public body	-
Fleetbank Funding Limited	Other public body	This is a vehicle for the government to facilitate the Enable Funding Scheme.
The Financial Reporting Council Limited	Other public body	-
UK Accounting Standards Endorsement Board Limited		Consolidated by The Financial Reporting Council Limited
Great British Nuclear Limited	Other public body	-
Harwell Science and Innovation Campus Public Sector Limited Partnership	Other public body	Joint venture owned by UKRI and UK Atomic Energy Authority
Industrial Development Advisory Board	Expert committee	No accounts produced. Funded by the core department and operated by the Insolvency Service. Costs are included as part of the core department.
Low Carbon Contracts Company Ltd	Other public body	-
Low Pay Commission	NDPB	No accounts produced as costs are included in the core department’s expenditure
Midlands Engine Investments Limited	Other public body	-
Magnox Limited		Consolidated by Nuclear Decommissioning Authority
Radioactive Waste Management Limited		Consolidated by Nuclear Decommissioning Authority
Sellafield Limited		Consolidated by Nuclear Decommissioning Authority
Dounreay Site Restoration Limited		Consolidated by Nuclear Decommissioning Authority
LLW Repository Limited		Consolidated by Nuclear Decommissioning Authority
Nuclear Waste Services Limited		Consolidated by LLW Repository Limited
Nuclear Liabilities Financing Assurance Board	Expert committee	Costs are included in the core department’s expenditure.
Office of Manpower Economics^{[Note 1]}	Office of department	No accounts produced as costs are included in the core department’s expenditure.
Oil and Gas Authority operating as North Sea Transition Authority	NDPB	-
Postal Services Holding Company Limited	Other public body	Company in liquidation. Former holding company for the government’s investment in Post Office Limited.
Regulatory Policy Committee	NDPB	No accounts produced as costs are included in the core department’s expenditure.
Salix Finance Ltd	NDPB	-
Sizewell C Limited	Other public body	Consolidated from acquisition date (29th November 2022) in agreement with HMT .
Sizewell C (Holding) Limited	Other public body	Consolidated from acquisition date (29 November 2022) in agreement with HMT .
UK Climate Investments LLP	Other public body	Limited Liability Partnership between BEIS and UK Green Investment Bank
UK Climate Investments Apollo Limited		Consolidated by UK Climate Investments LLP
UK Climate Investments Dazzle Limited		Consolidated by UK Climate Investments LLP
UK Climate Investments Etna Limited		Consolidated by UK Climate Investments LLP
UK Climate Investments H1 Limited		Consolidated by UK Climate Investments LLP
UK Climate Investments Indigo Limited		Consolidated by UK Climate Investments LLP
UK Climate Investments Kijani Limited		Consolidated by UK Climate Investments LLP
UK Climate Investments Lakeside Limited		Consolidated by UK Climate Investments LLP
UK Climate Investments VC Limited		Consolidated by UK Climate Investments LLP
UK Green Infrastructure Platform Limited	Other public body	Investment vehicle managed by UK Green Investment Bank Limited on behalf of BEIS.
United Kingdom Research and Innovation	NDPB
Medical Research Council^{[Note 1]}		Former Research Council now part of UKRI
Innovate UK Loans Limited		Consolidated by UKRI
Knowledge Transfer Network Limited		Consolidated by UKRI
STFC Innovations Limited		Consolidated by UKRI
UK Shared Business Services Limited	Other public body	-
United Kingdom Atomic Energy Authority^{[Note 1]}	NDPB	gov.uk/ukaea (corporate) ccfe.ukaea.uk (fusion research)
AEA Insurance Limited		Consolidated by United Kingdom Atomic Energy Authority
UK Fusion Solutions Ltd		Consolidated by United Kingdom Atomic Energy Authority

(b) Bodies not consolidated in departmental group accounts for 2022–23

Designated body	Status	Notes
British Hallmarking Council	NDPB	Turnover and net assets are not material to departmental group accounts.
Climate Change Committee (formerly the Committee on Climate Change)^{[Note 1]}	NDPB	Turnover and net assets are not material to departmental group accounts.
Daresbury SIC (PubSec) LLP	Other public body	A joint venture between UKRI and Halton Borough Council. Turnover and net assets are not material to Departmental Group accounts.
East Midlands Early Growth Fund Limited	Other public body	Recorded as investment in core department accounts. Turnover and net assets are not material to departmental group accounts.
Groceries Code Adjudicator	Other public body - office holder	Turnover and net assets are not material to departmental group accounts.
NDA Archives Limited	Other public body	subsidiary of NDA . Turnover and net assets are not material to departmental group accounts.
Pubs Code Adjudicator	Other public body - office holder	Turnover and net assets are not material to departmental group accounts.
Research Sites Restoration Limited	Other public body	Subsidiary of NDA . No costs or activities incurred in 2022-23 as the activities transferred to Magnox in 2016-17.
Rule Committee (as mentioned in section 127(2) of the Land Registration Act 2002)	NDPB	Turnover and net assets are not material to departmental group accounts.
Small Business Commissioner	NDPB	Turnover and net assets are not material to departmental group accounts.

Notes:

Entities fall in scope of the Trade Union (Facility Time Publication Requirements) Regulations 2017. Disclosure regarding Facility Time can be found in the relevant accounts.

29. Events after the reporting period

Non-adjusting events

Transfer of UK Climate Investments to FCDO

On 31 March 2023, the department entered into an agreement to transfer UK Climate Investments to the Foreign Commonwealth and Development Office. The transfer is planned to take place when the transfer price is known, which will be determined when the BEIS accounts are signed. The department has determined that the event is a non-adjusting subsequent event, accordingly the statement of financial position has not been adjusted.

OneWeb

On 26 July 2022 Eutelsat Communications and OneWeb’s leading shareholders signed a Memorandum of Understanding with a view to a business combination between the two companies via a share exchange transaction, aimed at creating a global leader in connectivity. The Extraordinary General Meeting of Eutelsat shareholders approved the combination on 28 September 2023, resulting in the successful completion of the transaction. Upon completion, HMG took ownership of approximately 11% of Eutelsat Group’s shares, which are listed on the Paris and London Stock Exchanges.

Horizon Europe and Copernicus

On 7 September 2023, the UK government and European Commission concluded negotiations and reached an agreement in principle on the association of the UK to Horizon Europe and Copernicus under the Trade and Cooperation Agreement. Following the announcement, both parties are working together with the aim of promptly adopting the necessary legal instruments subject to prior approval by the Council of the European Union. It is estimated that the UK will contribute €2.6 billion per year on average for its participation in these programmes.

29.1 Date Accounts authorised for issue

BEIS’s Accounting Officer has authorised these Accounts to be issued on the same day as they were certified.

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	Note	31 March 2023 Core department and agencies (£m)	31 March 2023 Departmental group (£m)	31 March 2022 Core department and agencies (£m)	31 March 2022 Departmental group (£m)
Cash flows from operating activities
Net (expenditure)/income		(62,548)	65,843	(26,332)	(138,949)
Adjustment for non-cash expenditure		4,128	(119,815)	(2,462)	113,999
(Increase)/decrease in inventories		-	5	-	(2)
(Increase)/decrease in trade and other receivables	15	(615)	(678)	977	1,137
Less movements in receivables relating to items not passing through the Consolidated Statement of Comprehensive Net Expenditure		7	7	(5)	(5)
Increase/(decrease) in trade payables and other liabilities	18	432	653	2,390	2,935
Less movements in payables relating to items not passing through the Consolidated Statement of Comprehensive Net Expenditure		2,403	1,823	(2,690)	(3,239)
Use of provisions	20	(244)	(3,448)	(189)	(3,311)
Interest on lease liabilities		1	4	1	4
Financial guarantees called in	21	(5,833)	(5,833)	(483)	(483)
Expenditure funded by the National Insurance Fund (RPS)	4.1	264	264	261	261
Payments to retirement benefit obligations		-	(189)	-	(231)
Net cash outflow from operating activities		(62,005)	(61,364)	(28,532)	(27,884)
Cash flows from investing activities
Purchase of property, plant and equipment		(19)	(1,194)	(35)	(415)
Purchase of investment property		-	(2)	-	-
Purchase of intangible assets		(23)	(34)	(20)	(33)
Proceeds of disposal of property, plant and equipment		-	2	-	4
Proceeds of disposal of investment property		-	-	2	2
Proceeds of disposal of assets held for sale		-	6	-	5
Current loans redeemed	16	3,334	3,334	2,812	2,812
Current loans made to Post Office Limited	16	(3,362)	(3,362)	(2,693)	(2,693)
Repayments of loans and investments		304	885	179	513
Payments (to)/from the Contracts for Difference generators	10	-	(16)	-	(271)
Other investments and loans made		(2,353)	(2,810)	(850)	(1,360)
Launch investment receipts	12.1	261	261	49	49
Venture capital fund redemptions		2	243	4	459
Venture capital fund investments		(3)	(509)	(2)	(614)
Dividends from Joint ventures and associates	14	-	87	1	85
Disposal of Joint venture and associates		-	(20)	-	30
Investment in Joint ventures and associates	14	-	13	-	(55)
Investment in shares		(787)	-	(420)	(125)
Repayment of shares	5	-	65	-
Net cash outflow from investing activities		(2,641)	(3,116)	(908)	(1,607)
Cash flows from financing activities
From Consolidated Fund (supply) – current year		62,133	62,133	31,815	31,815
Payment of lease liabilities		(28)	(50)	(31)	(50)
Advances from the Contingencies Fund		3,532	3,532	3,381	3,381
Repayments to the Contingencies Fund		(3,532)	(3,532)	(3,381)	(3,381)
From the National Insurance Fund		268	268	261	261
Payments in respect of the National Insurance Fund	4.1	(264)	(264)	(261)	(261)
Net financing		62,109	62,087	31,784	31,765
Net increase/(decrease) in cash and cash equivalents in the period before adjustment for receipts and payments to the Consolidated Fund		(2,537)	(2,393)	2,344	2,274
Receipts due to the Consolidated Fund which are outside the scope of the Department’s activities		747	757	841	828
Payments of amounts due to the Consolidated Fund		(756)	(756)	(725)	(725)
Net increase/(decrease) in cash and cash equivalents in the period after adjustment for receipts and payments to the Consolidated Fund		(2,546)	(2,392)	2,460	2,377
Cash and cash equivalents opening balance		4,412	5,821	1,952	3,444
Cash and cash equivalents at the end of the period	17	1,866	3,429	4,412	5,821

	Note	General fund (£m)	Revaluation reserve (£m)	Taxpayers’ equity (£m)
Balance at 1 April 2021		(14,423)	419	(14,004)
Net parliamentary funding – drawn down		31,815	-	31,815
Net parliamentary funding – deemed		1,928	-	1,928
National Insurance Fund – RPS		256	-	256
Supply (payable)/receivable adjustment	18	(4,273)	-	(4,273)
Income payable to the Consolidated Fund		(230)	-	(230)
Net expenditure for the year		(26,332)	-	(26,332)
Non-cash adjustments
Auditors’ remuneration	4.1	2	-	2
Movement in reserves
Other comprehensive net expenditure for the year		-	(39)	(39)
Transfers between reserves		2	(2)	-
Other movements		-	-	-
Balance at 31 March 2022		(11,255)	378	(10,877)
Balance at 1 April 2022		(11,255)	378	(10,877)
Net parliamentary funding – drawn down		62,133	-	62,133
Net parliamentary funding – deemed		4,273	-	4,273
National Insurance Fund - RPS		268	-	268
Supply (payable)/receivable adjustment	18	(1,735)	-	(1,735)
Income payable to the Consolidated Fund		(142)	-	(142)
Decrease in RPS receivables	15	7	-	7
Net expenditure for the year		(62,548)	-	(62,548)
Non-cash adjustments
Auditors’ remuneration	4.1	2	-	2
Movement in reserves
Other comprehensive net income for the year		-	16	16
Transfers between reserves		3	(3)	-
Other movements		2	-	2
Balance at 31 March 2023		(8,992)	391	(8,601)

	Note	General fund (£m)	Revaluation reserve (£m)	Taxpayers’ equity (£m)	Charitable funds - unrestricted/ restricted (£m)	Non-controlling interest (£m)	Total reserves (£m)
Balance at 1 April 2021		(166,449)	1,907	(164,542)	472	299	(163,771)
Net parliamentary funding – drawn down		31,815	-	31,815	-	-	31,815
Net parliamentary funding – deemed		1,928	-	1,928	-	-	1,928
Grants from BIS (sponsoring department)
National Insurance Fund - RPS		256	-	256	-	-	256
Supply (payable)/receivable adjustment	18	(4,273)	-	(4,273)	-	-	(4,273)
Income payable to the Consolidated Fund		(711)	-	(711)	-	-	(711)
Net expenditure for the year		(138,949)	-	(138,949)	-	-	(138,949)
Amounts paid from distributable reserves		(81)	-	(81)	-	-	(81)
Non-cash adjustments
Auditors’ remuneration	4.1	2	-	2	-	-	2
Movements in reserves
Other Comprehensive net (expenditure)/ income for the year		194	187	381	-	-	381
Transfers between reserves		259	(76)	183	(3)	(180)	-
Minority interest		-	-	-	-	29	29
Other movements		15	(7)	8	-	-	8
Balance at 31 March 2022		(275,994)	2,011	(273,983)	469	148	(273,366)
Balance at 1 April 2022		(275,994)	2,011	(273,983)	469	148	(273,366)
Net parliamentary funding – drawn down		62,133	-	62,133	-	-	62,133
Net parliamentary funding – deemed		4,273	-	4,273	-	-	4,273
National Insurance Fund - RPS		268	-	268	-	-	268
Supply (payable)/receivable adjustment	18	(1,735)	-	(1,735)	-	-	(1,735)
Income payable to the Consolidated Fund		(715)	-	(715)	-	-	(715)
Decrease in RPS receivables		7	-	7	-	-	7
Net expenditure for the year		65,843	-	65,846	-	-	65,843
Amounts paid from distributable reserves		(88)	-	(88)	-	-	(88)
Non-cash adjustments
Auditors’ remuneration	4.1	2	-	2	-	-	2
Movements in reserves
Other comprehensive net (expenditure)/income for the year		333	364	697	-	-	697
Transfers between reserves		123	(80)	43	(43)	-	-
Minority interest		-	-	-	-	75	75
Other movements		54	(6)	48	-	539	587
Balance at 31 March 2023		(145,496)	2,289	(143,207)	426	762	(142,019)

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Consolidated Statement of Comprehensive Net Expenditure

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Statement of Changes in Taxpayers’ Equity (core department and agencies)

Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Notes to the accounts

1. Accounting policies, judgments, and estimates

1.1 Basis of accounting

1.2 Accounting convention

1.3 Presentational currency

1.4 Basis of consolidation

1.5 Changes in accounting policies

1.6 New accounting standards adopted in the year and FREM changes

1.7 Applicable accounting standards issued but not yet adopted

IFRS 17 ‘Insurance Contracts’

1.8 Operating income

Operating income from contracts with customers

Levies

Grant income

Income from the Mineworkers’ Pension Scheme

1.9 Staff costs

1.10 Grants payable

1.11 Taxation

1.12 Property, plant, and equipment (PPE)

Valuation of PPE

Revaluation of PPE

Depreciation of PPE

1.13 Investment property

1.14 Intangible non-current assets

1.15 Impairment of PPE and intangible non-current assets

1.16 Cash and cash equivalents

1.17 Leases

Assumptions

Measurement of right-of-use assets

Measurement of lease liabilities

Classification

Finance leases: recognition and measurement

Operating leases: recognition and measurement

1.18 Subsidiaries, associates, and joint ventures

1.19 Financial instruments

Financial assets

Financial liabilities

1.20 Financial guarantee and loan commitment liabilities

Financial guarantee contract liabilities

Loan commitments at below market rate

1.21 Pensions

Funded defined-benefit pension schemes

Unfunded defined benefit pension schemes

Defined contribution pension schemes

1.22 Provisions

Nuclear decommissioning provisions

1.23 Insurance and reinsurance contracts

1.24 Contingent assets and liabilities

Contingent liabilities

Contingent assets

1.25 Third party assets

1.26 Judgements, estimates and assumptions

Funding to Bulb Energy Ltd (in special administration) (notes 4.1 and 11.3)

Energy Price Guarantee (various notes)

Fair value measurement of Hinkley Point C CfD

Deferral of differences between fair value and transaction price for CfDs

Income recognition (note 6.1)

COVID-19 business support grant expenditure (note 4.4)

Restart Grant, Omicron Hospitality and Leisure Grant and Additional Restrictions Grant

Energy Price Guarantee (various notes)

Energy Bill Relief Scheme (various notes)

COVID-19 Local Restriction Support Grants (Various)

2. Reporting by operating segment

3. Staff costs

4. Operating expenditure

4.1 Purchase of goods and services

Core department

Departmental group

4.2 Depreciation and impairment charges

4.3 Provision, financial guarantee and other liabilities expenses

4.4 Grants expenditure

Core department

5. Finance expense

6. Income