Corporate report

Financial statements

Published 18 November 2024

Consolidated Statement of Comprehensive Net Expenditure

for the year ended 31 March 2024

	Note	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Revenue from contracts with customers	6.1	(72)	(4,096)	(16)	(1,873)
Other operating income	-	(13)	(39)	(6)	(7)
Total operating income	-	(85)	(4,135)	(22)	(1,880)
Staff costs	3	324	635	242	543
Purchase of goods and services	4.1	255	2,064	(538)	1,439
Depreciation and impairment charges	4.2	64	246	24	256
Provision, financial guarantee and other liabilities expenses	4.3	91	(17,066)	3,466	(105,190)
Grants	4.4	7,628	3,337	46,296	42,147
Other operating expenditure	-	-	(7)	1	1
Total operating expenditure	-	8,362	(10,791)	49,491	(60,804)
Net operating expenditure	-	8,277	(14,926)	49,469	(62,684)
Finance income	6.2	(527)	(465)	(111)	(112)
Finance expense	5	31	1,456	(26)	(2,961)
Contracts for difference derivatives	9	-	5,874	-	(12,433)
Share of post-tax loss/(profits) of associates and joint ventures	13	-	(73)	-	(340)
Net expenditure for the year from operations	-	7,781	(8,134)	49,332	(78,530)
Net expenditure for the year	-	7,780	(8,132)	49,332	(78,530)
Other comprehensive income and expenditure
Net (gain)/loss on:
Revaluation of property, plant and equipment		-	(6)	-	(37)
Items that may be reclassified subsequently to net operating costs:
Revaluation of investments		358	272	(19)	(19)
Actuarial (gains)/losses		-	(1)	-	(17)
Total other comprehensive net income and expenditure		358	265	(19)	(73)
Comprehensive net expenditure for the year		8,139	(7,869)	49,313	(78,603)

All operations are continuing.

The notes on pages 153 to 231 form part of these accounts.

Consolidated Statement of Financial Position

as at 31 March 2024

	Note	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m	1 April 2022 Core department £m	1 April 2022 Departmental group £m
Non-current assets
Property, plant and equipment	7	11	2,769	44	1,434	44	563
Right of use assets	8	125	201	21	95	31	103
Investment properties		-	63	-	60	-	58
Intangible assets		29	39	24	34	25	33
Investment and loans in public bodies	10	1,959	859	3,386	3,634	659	1,265
Other financial assets	11	258	258	341	341	320	320
Recoverable contract costs	12	-	582	-	992	-	3,071
Derivative financial instruments	9, 21	-	2,9883	-	2,596	-	-
Investment in joint ventures and associates	13	-	921	-	938	-	628
Trade and other receivables	14	225	313	316	436	438	529
Retirement benefit obligations	19	-	663	-	920	-	-
Total non-current assets		2,607	9,551	4,132	11,480	1,517	6,570
Current assets
Inventories		-	15	-	15	-	20
Non-current assets held for sale		-	-	-	1	-	1
Trade and other receivables	14	476	1,104	2,659	3,220	212	869
Investments and loans in public bodies	10	2,961	2,961	67	66	63	62
Derivative financial instruments	9,21	-	17	-	2	-	-
Cash and cash equivalents	15	1,025	2,737	1,098	2,083	2,232	2,995
Total current assets		4,462	6,834	3,824	5,387	2,507	3,947
Total assets		7,069	16,385	7,956	16,867	4,024	10,517
Current liabilities
Trade payables and other liabilities	16	(4,687)	(7,922)	(7,094)	(9,631)	(4,511)	(6,693)
Lease liabilities	17	(9)	(18)	(15)	(25)	(19)	(28)
Provisions for liabilities and charges	18	(342)	(4,427)	(3,660)	(7,654)	(191)	(3,395)
Financial guarantees, loan commitment liabilities and re-insurance contracts		-	-	-	-	(346)	(346)
Derivative financial instruments	9,21	-	(3,055)	-	(630)	-	-
Total current liabilities		(5,038)	(15,422)	(10,769)	(17,940)	(5,067)	(10,462)
Non-current assets plus/less net current assets/ liabilities		2,031	963	(2,813)	(1,073)	(1,043)	55
Non-current liabilities
Trade payables and other liabilities	16	-	(1,340)	-	(1,493)	(388)	(2,166)
Lease liabilities	17	(122)	(196)	(7)	(77)	(15)	(77)
Provisions for liabilities and charges	18	(1,405)	(104,830)	(1,553)	(125,004)	(1,329)	(241,020)
Derivative financial instruments	9, 21	-	(88,996)	-	(87,110)	-	(97,591)
Retirement benefit obligations	19	-	-	-	-	-	(197)
Total non-current liabilities		(1,527)	(195,362)	(1,560)	(213,684)	(1,732)	(341,051)
Total assets less total liabilities		504	(194,399)	(4,373)	(214,757)	(2,775)	(340,996)
Taxpayers’ equity and other reserves
General fund		415	(195,557)	(4,820)	(216,173)	(3,203)	(341,825)
Revaluation reserve		89	612	447	876	428	827
Non-controlling interests		-	546	-	540	-	2
Total equity		504	(194,399)	(4,373)	(214,757)	(2,775)	(340,996)

The notes on pages 153 to 231 form part of these accounts.

Jeremy Pocklington
Permanent Secretary and Principal Accounting Officer
6 November 2024

Consolidated Statement of Cash Flows

for the year ended 31 March 2024

The Statement of Cash Flows shows the changes in cash and cash equivalents of the department during the reporting period. The statement shows how the department generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of service costs and the extent to which these operations are funded by way of income from the recipients of services provided by the department. Investing activities represent the extent to which cash inflows and outflows have been made for resources which are intended to contribute to the department’s future public service delivery.

	Note	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Cash flows from operating activities
Net operating cost		(7,781)	8,134	(49,332)	78,530
Depreciation, impairment and amortisation		64	246	24	256
Provision expense		91	(17,062)	3,466	(105,190)
Other operating expenditure		-	(5)	-	-
Finance income		(535)	(448)	(111)	(112)
Finance expense		31	1,456	(26)	(2,961)
Expense relating to contracts for difference derivatives		-	5,874	-	(12,433)
Share of post-tax profits of associates and joint ventures		-	(73)	-	(340)
Other non-cash items		(266)	(166)	742	1,308
(Increase)/decrease in inventories		-	(1)	-	-
(Increase)/decrease in trade and other receivables	14	2,289	2,415	(2,886)	(2,231)
Increase/(decrease) in trade payables and other liabilities	16	(2,395)	(1,260)	2,202	2,220
Less movements in payables relating to items not passing through the Consolidated Statement of Comprehensive Net Expenditure		(70)	(337)	846	243
Use of provisions	18	(3,571)	(7,839)	(191)	(3,397)
Financial guarantees called in		-	-	(346)	(346)
Payments to retirement benefit obligations		-	(125)	-	(180)
Net cash outflow from operating activities		(12,142)	(9,191)	(45,612)	(44,633)
Cash flows from investing activities
Purchase of property, plant and equipment		(2)	(1,421)	(2)	(925)
Purchase of intangible assets		(8)	(12)	-	(5)
Investment in public sector shares		(1,089)	-	(363)	-
Investment in public sector loans		(14)	(14)	(2,047)	(2,047)
Public sector loans redemptions		331	331	67	67
Investment in private sector loans		-	-	(7)	(8)
Venture capital fund investments		(43)	(43)	(3)	(3)
Private sector loans redemptions		124	125	-	-
Dividends from Joint ventures and associates	13	86	86	88	88
Payments to the contracts for difference generators		-	(1,865)	-	(170)
Net cash outflow from investing activities		(615)	(2,813)	(2,267)	(3,003)
Cash flows from financing activities
From Consolidated Fund (supply) – current year		12,831	12,831	46,897	46,897
Payment of lease liabilities		(18)	(26)	(13)	(25)
Grant-in-aid received from DESNZ		-	1	-	-
Net cash flow from financing activities		12,813	12,806	46,884	46,872
Net increase/(decrease) in cash and cash equivalents in the period before adjustment for receipts and payments to the Consolidated Fund		56	802	(995)	(764)
Receipts due to the Consolidated Fund which are outside the scope of the Department’s activities		702	702	(130)	(148)
Payments of amounts due to the Consolidated Fund		(702)	(702)	-	-
Payments of amounts due to the Consolidated Fund for prior year		(130)	(148)	-	-
Net increase/(decrease) in cash and cash equivalents in the period after adjustment for receipts and payments to the Consolidated Fund		(74)	654	(1,125)	(912)
Cash and cash equivalents at the beginning of the period	15	1,098	2,083	2,223	2,995
Cash and cash equivalents opening balance		1,098	2,083	2,223	2,995
Cash and cash equivalents at the end of the period	15	1,024	2,737	1,098	2,083

The notes on pages 153 to 231 form part of these accounts.

Statement of Changes in Taxpayers’ Equity (core department)

for the year ended 31 March 2024

	Note	General fund £m	Revaluation reserve £m	Taxpayers’ equity £m	Total reserves £m
Balance at 1 April 2022		(3,203)	428	(2,775)	(2,775)
Net parliamentary funding – drawn down		46,897	-	46,897	46,897
Net parliamentary funding – deemed	1,958	-	1,958	1,958
Supply (payable)/receivable adjustment	16	(970)	-	(970)	(970)
Income payable to the Consolidated Fund		(142)	-	(142)	(142)
Net expenditure for the year		(49,332)	-	(49,332)	(49,332)
Non-cash adjustments
Auditors’ remuneration	4.1	1	-	1	1
Movement in reserves
Other Comprehensive Net Expenditure/Income for the year		-	19	19	19
Other movements		(29)	-	(29)	(29)
Balance at 31 March 2023		(4,820)	447	(4,373)	(4,373)
Balance at 1 April 2023		(4,820)	447	(4,373)	(4,373)
Net parliamentary funding – drawn down		12,831	-	12,831	12,831
Net parliamentary funding – deemed		970	-	970	970
Supply (payable)/receivable adjustment	16	(1,025)	-	(1,025)	(1,025)
Income payable to the Consolidated Fund		(142)	-	(142)	(142)
Net expenditure for the year		(7,781)	-	(7,781)	(7,781)
Non-cash adjustments
Auditors’ remuneration	4.1	1	-	1	1
Movement in reserves
Other Comprehensive Net Expenditure/Income for the year		343	(358)	(15)	(15)
Other movements		38	-	38	38
Balance at 31 March 2024		415	89	504	504

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

for the year ended 31 March 2024

	Note	General fund £m	Revaluation reserve £m	Non controlling interest £m	Taxpayers’ equity £m	Total reserves £m
Balance at 1 April 2022		(341,825)	827	2	(340,996)	(340,996)
Net parliamentary funding – drawn down		46,897	-	-	46,897	46,897
Net parliamentary funding – deemed		1,958	-	-	1,958	1,958
Supply (payable)/receivable adjustment	16	(970)	-	-	(970)	(970)
Income payable to the Consolidated Fund		(715)	-	-	(715)	(715)
Net expenditure for the year		78,530	-	-	78,530	78,530
Amounts paid from distributable reserves		(88)	-	-	(88)	(88)
Non-cash adjustments
Auditors’ remuneration	4.1	1	-	-	1	1
Movements in reserves
Other Comprehensive net (expenditure)/ income for the year		17	56	-	73	73
Transfers between reserves		1	(1)	-	-	-
Minority interest		-	-	(1)	(1)	(1)
Other movements	10	21	(6)	539	554	554
Balance at 31 March 2023		(216,173)	876	540	(214,757)	(214,757)
Balance at 1 April 2023		(216,173)	876	540	(214,757)	(214,757)
Net parliamentary funding – drawn down		12,831	-	-	12,831	12,831
Net parliamentary funding – deemed		970	-	-	970	970
Grants from DESNZ (sponsoring department)		-	-	-	-	-
Supply (payable)/receivable adjustment	16	(1,025)	-	-	(1,025)	(1,025)
Income payable to the Consolidated Fund		(658)	-	-	(658)	(658)
Net expenditure for the year		8,134	-	-	8,134	8,134
Auditors’ remuneration	4.1	1	-	-	1	1
Other comprehensive net (expenditure)/income for the year		343	(265)	-	78	78
Transfers between reserves		(3)	-	3	-	-
Minority interest		-	-	-	-	-
Other movements	10	23	1	3	27	27
Balance at 31 March 2024		(195,557)	612	546	(194,399)	(194,399)

The notes on pages 153 to 231 form part of these accounts.

Notes to the accounts

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 2023-24 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 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.

The Consolidated Statement of Financial Position (SoFP) shows significant net liabilities, primarily relating to Nuclear Decommissioning provision and Contracts for Difference derivatives which will be settled over many years. Any liabilities exceeding departmental group funding are expected to be met by future funding voted for by Parliament under 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 financial statements have been prepared on an accruals basis under the historical cost convention, modified by the revaluation of property, plant and equipment (except specific waste management assets), intangible assets, investment properties and some financial instruments, such as Contracts for Difference, to fair value to the extent required or permitted under IFRS as set out in these accounting policies.

Shares in consolidated bodies held by the core department are carried at historical cost less any impairment in accordance with the FReM.

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.

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 26, 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, 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 Machinery of government changes

On 7 February 2023, the prime minister announced a major machinery of government change which redistributed the activities of several existing government departments and created 3 new departments including the Department for Energy Security and Net Zero (DESNZ)

The creation of DESNZ is accounted for as a transfer by merger. This means that the group accounts reflect the combined entity’s results as if DESNZ had always existed. The results and cash flows in these accounts relate to activities undertaken by the department from 1 April 2023 to 31 March 2024, adjusted to achieve uniformity of accounting policies. In accordance with the transfer by merger principles, prior year balances have been restated to aid comparability with 2022-23.

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 (Business, Energy, and Industrial Strategy) 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.

See note 25 for details of all the machinery of government changes and the impact of these on the prior year comparatives.

1.6 Changes in accounting policies

Accounting policies that relate to DESNZ are unchanged compared to those in the 2022-23 BEIS departmental group financial statements.

1.7 New accounting standards adopted in the year and FReM changes

During the year, the 2023-24 FReM was updated in relation to an IFRS 9 adaptation which is applicable to the Contacts for Difference in DESNZ group, specifically the CfDs held by the Low Carbon Contracts Company (LCCC). The FReM update explains that where an entity issues a financial instrument other than a financial guarantee, at an amount that is different to fair value, where recognising at fair value would not result in a gain or profit, and where no active market or observable equivalent exists, then the entity should instead measure the instrument at initial recognition at fair value.

This FReM update has resulted in the fair value of the CfDs being recognised within the departmental group accounts from day one. Prior to the IFRS 9 FReM adaptation, the department was permitted to exclude the deferred difference between the transaction value and fair value on the LCCC CfDs from the departmental consolidated statement of financial position, that is held the deferred difference off the consolidated statement of financial position. The FReM adaptation now brings this previously deferred value onto the departmental consolidated statement of financial position for 2023-24. As this is an accounting policy change, the department is required to apply this IFRS 9 adaptation retrospectively as per IAS 8 which has resulted in the full fair value liability being recognised within the departmental group financial statements.

Please see note 1.20 below for more information on financial instruments including CfDs and note 9 for more information on CfDs.

There have been no other significant amendments to the FReM for 2023-24 and no new additional accounting standards which have been adopted and applied in these financial statements.

1.8 Applicable accounting standards issued but not yet adopted

IFRS 17 ‘Insurance Contracts’

IFRS 17 ‘Insurance Contracts’ replaces IFRS 4 ‘Insurance Contracts’, and establishes the principles for the recognition, measurement, presentation, and disclosure of insurance contracts within the scope of the Standard. IFRS17 is scheduled to be included in the FReM for mandatory implementation from 2025-26. The departmental group is currently assessing the impact of the adoption of IFRS 17.

1.9 Operating income

Operating income relates directly to the operating activities of the departmental group and includes income from contracts with customers, levies and 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 is 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

Under statute or Treasury consent, an entity is permitted to retain the revenue collected from taxation, fines, and penalties. This revenue is treated as arising from a contract and accounted for under IFRS 15.

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 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 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 IFRS15 ‘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 can only be recognised by the department when there is reasonable assurance that there are no conditions attached, or that any such conditions have been complied with and there is reasonable assurance the grant will be received.

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.

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.

1.10 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.

1.11 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.

A promissory note is a legally binding undertaking by the government to provide to the named beneficiary any amount up to the specified limit that the beneficiary may demand, at any time. They have been classified as financial liabilities measured at amortised cost and have been shown as due within 1 year, as they are legally payable on demand, so the maturity profile in the Consolidated Statement of Financial Position, and in note 16, shows the earliest date at which they could be payable.

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. The only exception to this treatment is where promissory notes are used for investing in a fund. In this scenario, a financial asset is created at the point of a note being encashed.

1.12 Taxation

The core department is 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.

1.13 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.

1. Exceptions are:
   1. 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%
   2. 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 Economic Life in Years
Freehold buildings	10 – 60
Leasehold improvements	Shorter of remaining useful life or outstanding term of lease
Computer equipment	2 – 10
Office machinery (included in plant and machinery), furniture, fixtures, and fittings	2 – 11
Agricultural buildings	Up to 60
Dwellings	Up to 60
Transport equipment	2 – 14
Plant and machinery	3 – 50
Assets under construction	Not depreciated until available for use as intended by management

1.14 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.

1.15 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 most 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 assets	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

1.16 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.

1.17 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.

1.18 Leases

Assumptions

The definition of a contract is expanded to include intra-UK government agreements where non-performance 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 or significantly below market value 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 at 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:

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 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 2.15%. Most of the departmental group entities have applied the HM Treasury discount rate prevailing at the time of adoption as shown in the table below:

Period	HM Treasury discount rate
1 April 2019 to 31 December 2019	1.99%
1 January 2020 to 31 December 2020	1.27%
1 January 2021 to 31 December 2021	0.91%
1 January 2022 to 31 December 2022	0.95%
1 January 2023 to 31 December 2023	3.51%
1 January 2024 to December 2024	4.72%

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
• Amount 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
• Amount 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 a 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 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 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.

1.19 Subsidiaries, associates, and joint ventures (note 13)

Subsidiaries and public sector joint ventures are consolidated where designated within the departmental group boundary (note 26); 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.

1.20 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 purchase or sale of financial assets shall be recognised and derecognised, as applicable, using settlement date accounting.

Financial assets

Classification and measurement of financial assets:

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 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), depending 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 assets:

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 is 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 is recognised, and interest revenue is calculated on the net carrying amount net of credit allowance

For 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, is 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 21.

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 FVTPL, 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, and subsequently measured, 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 2 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.

Derivative financial instruments – 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.

The department measures CfDs at initial recognition at fair value. This is a change from the department’s policy in 2022-23 due to an update in the 2023-24 FReM. Please see note 9 for further explanation on the changes and the resulting impact on the department’s financial statements.

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 8 funded defined-benefit pension schemes, 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 market prices based on available market comparables) 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 considers 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 several 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 2024 Nominal discount rate	31 March 2024 Inflation rate	31 March 2024 Equivalent real discount rate	31 March 2023 Nominal discount rate	31 March 2023 Inflation rate	31 March 2023 Equivalent real discount rate
Cash outflows expected within 2 years	4.26%	3.60%	0.64%	3.27%	7.40%	(3.85%)
Cash outflows expected between 2 – 5 years	4.03%	1.80%	2.19%	3.27%	1.65%	1.59%
Cash outflows expected between 5 – 10 years	4.72%	1.80%	2.87%	3.20%	2.0%	1.18%
Cash outflows expected after 10 years	4.40%	2.00%	2.35%	3.08%	2.0%	1.06%

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 12). Provision charges in the SoCNE are shown net of changes in these recoverable amounts.

1.23 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.

1.24 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) (note 10.3)

The core department has provided funding to Bulb Energy Ltd (Bulb). Following ONS classification of Bulb to central UK government, the department recognises all identifiable assets and liabilities of Bulb in the core department’s financial statements in line with IFRS 3. One of the identified assets is a financial asset in relation to the Wholesale Adjustment Mechanism Agreement (WAMA) with Octopus Energy Operations Limited. This financial asset has been recognised as measured at FVTPL under IFRS 9. It 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 financial asset are set out in note 10.3.

Energy Price Guarantee (notes 4.4, 18.2, 22, 25)

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.

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, considering 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 (note 4.4)

Under the Energy Bill Relief Scheme, payments are made 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.

Energy Bill Discount Scheme (note 4.4)

Under the Energy Bill Discount Scheme, payments are made based on the amounts that are billed to customers for each claim period. As with the Energy Bill Relief Scheme 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 Discount Scheme.

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 9 Derivative financial instruments.

Income recognition (note 6)

Several 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. Details are included in the NDA’s financial statements.

Useful economic lives of non-current assets (notes 4.2, 7, 8)

There is uncertainty in relation to estimated useful economic 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 (notes 4.2, 7, 10, 11, 13, 14, and 23)

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.

CfD contracts (note 9)

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.

Provisions (note 18)

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 18, in relation to future decommissioning costs to be incurred by the NDA, UKAEA and Coal Authority, which are described in that note.

Non-Domestic Renewable Heat Incentives Scheme Accruals (note 14)

The best estimate of Non-Domestic Renewable Heat Incentives (NDRHI) accrual is based on a modelling framework. The framework uses a number of assumptions to estimate spend where actual data is not available. There is a risk that the reality diverges from modelled estimates due to the model not accurately reflecting reality. This risk is considered to be low as most of the known uncertainties have been identified and assessed using statistical or scenario analysis. However, there may be some unknown factors that mean our model systematically over or underestimates spend spend. Modelling specification uncertainty is mitigated by periodically reviewing performance of past estimates against actual outcomes.

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	Others £m	2023‑24 Total £m	2022‑23 Total £m
Wages and salaries	417	73	490	422
Social security costs	51	-	51	43
Other pension costs	96	-	96	80
Sub total	564	73	637	545
Less recoveries in respect of outward secondments	(2)	-	(2)	(2)
Total net costs	562	73	635	543
Of which
– Core department	309	15	324	242
– NDPBs and other designated bodies	253	58	311	301
Total net costs	562	73	635	543

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). SLC 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 18.

4. Operating expenditure

4.1 Purchase of goods and services

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Rentals under operating leases	(2)	(1)	-	1
Accommodation and office equipment costs	42	164	22	133
Legal, professional and consultancy costs	177	226	130	158
Finance, HR, IT and support costs	167	210	67	97
Training and other staff costs	6	15	3	10
Travel and subsistence costs	5	17	3	8
Advertising and publicity	11	13	18	22
Programme management and administration of grants and awards	73	318	64	784
Capacity Market payments	-	1,024	-	680
Professional and international subscriptions	30	32	29	31
Enforcement costs of employment related policies	(1)	(1)	-	1
Purchase of geographical and scientific equipment	-	26	-	41
Payment of taxes and levies	8	2	-	87
Energy intensive industries and other subsidies	(266)	(266)	(974)	(974)
Sponsorship costs	(1)	(1)	-	-
Other purchase of goods and services cost	6	286	100	360

Core department

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, a supply company which entered into administration during 2021-22. Bulb’s special administrators worked closely with the department and Ofgem to ensure that exit from special 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 manage the company until the special administration regime comes to an end.

The funding to Bulb is repayable (note 10.3), 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 2023-24 the department reassessed the likelihood of the repayment, and recognised a reversal of the previously reported expenditure totalling £266 million (2022-23: – £727 million).

Departmental group

Capacity market payments:

Capacity Market payments of £1,024 million were recognised in 2023-24 (2022‑23: £680 million).

Audit fees

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

	31‑Mar‑24 Core department £	31‑Mar‑24 Consolidated ALBs £	31‑Mar‑23 Core department £	31‑Mar‑23 Consolidated ALBs £
Core department	825,000	1,623,469	1,350,000	1,142,526
UKAEA Pension Scheme accounts	50,685	-	50,685	-
Trust Statement	20,000	-	20,000	-
Nuclear Decommissioning Funding accounts	5,000	-	5,000	-
Total NAO audit services	900,685	1,623,469	1,425,685	1,142,526
NAO non-audit services	-	-	-	-
Non-NAO audit services	-	548,250	-	586,432
Non-NAO non-audit services	-	750	-	-
Total audit services	900,685	2,172,469	1,425,685	1,728,958

4.2 Depreciation and impairment charges

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Amortisation of recoverable contract costs	-	116	-	139
Depreciation	52	97	21	70
Amortisation	5	7	3	5
Impairment of property, plant and equipment	-	19	-	40
Impairment of investments and remeasurement of expected credit losses	7	7	-	2
Total	64	246	24	256

4.3 Provisions and other liability expenses

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Increase/(decrease) in nuclear provisions due to changes in discount rate	(64)	(25,921)	(115)	(113,485)
Increase/(decrease) in other provisions due to changes in discount rate	(45)	(920)	(116)	(5,382)
Increase/(decrease) in nuclear provisions due to other movements	104	9,449	88	9,080
Increase/(decrease) in other provisions due to other movements	96	326	3,609	4,597
Total increase/(decrease) in provisions	91	(17,066)	3,466	(105,190)

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 1.70% at 31 Mar 2023 to 2.45% at 31 Mar 24. 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 18.1 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 18.2 for Other Provisions.

4.4 Grants expenditure

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Grant in Aid	4,306	-	4,179	-
Advanced Nuclear Fund	50	50	-	-
Boiler Upgrade Scheme	89	89	50	50
Energy Bills Discount Scheme	241	241	-	-
Energy Bills Relief Scheme AME	29	29	7,480	7,480
Energy Bills Support Scheme	(94)	(94)	11,532	11,532
Energy Bills Support Scheme – NI	(4)	(4)	332	332
Energy Price Guarantee	589	589	20,253	20,253
EPG – Alternative Fuel Payment GB	7	7	383	383
EPG – Alternative Fuel Payment NI	(2)	(2)	166	166
Green Homes Grant	(30)	(30)	(176)	(176)
Heat Infrastructure Team	103	103	49	49
Home Upgrade Grant scheme	(96)	(96)	48	48
Innovation programme	104	103	147	147
International Climate Fund	316	316	220	220
Offshore wind manufacturing investment support scheme	-	-	58	58
Renewable Heat Incentive	1,218	1,218	1,001	1,001
Science and research	37	43	18	24
Social Housing and Public Sector Decarbonisation Grant schemes	622	622	409	409
Other grants	143	153	147	171
Total	7,628	3,337	46,296	42,147

Core department

Energy Affordability Schemes:

During 2023-24, the core department continued to support energy users in light of significant increases to the cost of energy in the previous financial year.

Energy Bills Support Schemes:

For the Energy Bills Support Schemes (EBSS), a reduction in expenditure of £98 million was recognised in 2023-24. This is the net result of £129 million of cash returned on EBSS and expenditure of £31 million on EBSS Alternative Funding, referenced below.

Under EBSS, payments of £11,821 million were made in 2022-23 to support domestic energy customers in Great Britain and Northern Ireland with the costs of rising energy bills by providing £400 to each eligible household through discounts applied to customers’ bills or as vouchers. The eligibility period ended on 31 March 2023 and expenditure of – £129 million in 2023-24 related largely to cash returned through end-of-scheme reconciliations.

EBSS Alternative Funding was an application-based scheme for households that did not automatically receive the EBSS discount because they did not have a direct relationship with a domestic energy supplier. The application window closed on 31 May 2023. Expenditure during 2023-24 was £31 million.

Energy Bill Relief Scheme:

Under the Energy Bill Relief Scheme (EBRS), payments of £7,480 million were made in 2022‑23 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 supported the price of energy consumed up to 31 March 2023 but expenditure of £29 million resulting from ongoing reconciliation activity was recognised in 2023-24.

Energy Bill Discount Scheme:

At 1 April 2023, the Energy Bill Discount Scheme (EBDS) replaced EBRS. This scheme supported the price of energy consumed up to 31 March 2024. Expenditure of £241 million was recognised in 2023-24 to limit the price non-domestic customers pay for electricity and gas. This includes year-end accruals recognised in Note 16 and provisions relating to EBDS are shown in Note 18.

Energy Price Guarantee:

Under the Energy Price Guarantee (EPG) payments of £20,253 million were made in 2022‑23 to limit the price domestic customers pay for electricity and gas. This scheme’s eligibility period ran up to 31 March 2024 but in practice only supported the price of energy consumed up to 30 June 2023 because the energy price cap fell below the UK government supported price after the first quarter of the 2023-24 financial year. Due to falling energy prices, expenditure for 2023-24 was £589 million which was a significant reduction from 2022‑23. This amount includes year-end accruals recognised in Note 16 and is net of provision utilisation of £3,157m referenced in Note 18.

Green Homes Grant & Home Upgrade Grant Schemes:

The reductions of expenditure of £30 million & £96 million respectively under the Green Homes Grant & Home Upgrade Grant schemes relate to clawbacks that were recognised on earlier phases of the schemes (2022-23: £176 million & £nil, respectively).

Renewable Heat Incentive:

The Renewable Heat Incentive scheme (RHI) spend totalled £1,218 million in 2023-24. (2022‑23 £1,001 million). RHI is a UK government environmental programme designed to increase the uptake of renewable heat to help reduce carbon emissions and meet the UK’s renewable energy targets. The department closed the RHI scheme to new applicants. Accredited installations are eligible to receive payments over 20 years for the non-domestic and over 7 years for domestic based on the amount of eligible heat generated. The scheme operates within England, Scotland, and Wales.

5. Finance expense

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Change in fair value – financial assets	12	12	-	-
Net loss/(gain) on foreign exchange	-	-	-	1
Borrowing costs on provisions	14	1,438	(27)	(2,964)
Interest charges under finance leases	5	6	-	1
Unrealised foreign exchange rate losses/(gains)	-	-	1	1
Total	31	1,456	(26)	(2,961)

Included in the borrowing costs are unwinding of discount provisions for nuclear decommissioning for £1,361m in 2023-24 (£2,970m, 2022-23).

HM Treasury’s prescribed equivalent real discount rates moved from being negative in 2022‑23 to positive in 2023-24. Further detail of the movements in provisions can be found in notes 4 and 18.

6. Income

6.1 Operating income

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Fees, charges and recharges to/ from external customers and central government organisations	59	132	(1)	72
Levy income	-	2,945	-	744
Sales of goods and services	7	1,003	9	1,036
Miscellaneous income	1	10	-	12
Current grants and capital grants	5	6	8	9
Other operating income	13	39	6	7
Total	85	4,135	22	1,880

Core department

‘Fees, charges and recharges to/from external customers and central UK government organisations’ for the core department of £59 million (2022-23: – £1 million) includes Integrated Corporate Services (ICS) charges to other UK government departments of £48m.

The operating model for Corporate and Central services under the Department for Business, Energy and Industrial Strategy (BEIS) was reviewed following the machinery of government (MoG) announcements in February 2023 resulting in the creation of a new ‘Shared Corporate Function’ – Integrated Corporate Services (ICS).

ICS is hosted by the Department for Energy Security and Net Zero (DESNZ) but provides services equally to DESNZ and Department for Science, Innovation & Technology (DSIT) and some services to the Department for Business and Trade (DBT).

All costs incurred by ICS are charged at cost only to participating departments using a recharging methodology signed off by the Oversight Board co-chaired by the Second Permanent Secretary (DESNZ) and the Chief Operating Officer (DSIT).

Departmental group

Within levy income, Electric Settlements Company’s (ESC) income from Capacity Market suppliers was £1,031 million (2022-23: £686 million) and LCCC’s supplier obligation levy income was £1,864 million (2022-23: £16 million).

Within ‘sales of goods and services’, the NDA’s revenue was £955 million (2022-23: £1,021 million). The NDA has 2 contracts with EDF Energy for managing their spent fuel.

1. The ‘Historic’ contract which is a combination of spent fuel reprocessing and the subsequent treatment and management of the waste and products which arise from the reprocessing process.
2. The ‘Future’ contract which relates to post 2005 spent fuel, in which the commercial arrangement is for the NDA to take ownership of (and therefore the liability for) further arisings of spent fuel, recognising revenue upon the receipt of fuel from EDF, a process which will continue until c. 2032.

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

6.2 Finance income

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Effective Interest from amortised cost assets	21	21	21	21
Interest income from FVTPL assets	412	414	-	1
Interest income from amortised cost assets	8	30	2	2
Dividend income from investments in joint ventures, associates and public dividend capital	86	-	88	88
Total	527	465	111	112

Core department

In 2023-24 core department recognised finance income of £527 million (2022-23: £111 million). This included £412 million finance income relating to the financial asset held by Bulb (2022-23: £nil).

7.Property, plant and equipment

Departmental group 2023-24

	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	Infrastructure assets £m	Total £m
Cost or valuation
Balance at 1 April 2023	75	371	81	36	4,366	8	11	982	-	5,930
Additions	427	-	(1)	1	13	-	-	980	1	1,421
Disposals	-	-	(38)	-	-	(1)	(1)	-	-	(40)
Impairments	-	-	-	-	-	-	-	(1)	-	(1)
Reclassifications	-	34	-	10	7	1	-	(52)	-	-
Revaluations	5	(4)	1	-	2	-	-	-	-	4
At 31 March 2024	507	401	43	47	4,388	8	10	1,909	1	7,314
Depreciation
Balance at 1 April 2023	-	(238)	(45)	(23)	(4,177)	(6)	(6)	(1)	-	(4,496)
Charged in year	-	(5)	(32)	(7)	(28)	(1)	(2)	-	-	(75)
Disposals	-	-	38	-	-	1	1	-	-	40
Impairments	-	-	-	-	(14)	-	-	-	-	(14)
At 31 March 2024	-	(243)	(39)	(30)	(4,219)	(6)	(7)	-(1)	-	(4,545)
Carrying amount at 31 March 2024	507	158	4	17	169	2	3	1,908	1	2,769
Carrying amount at 1 April 2023	75	133	36	13	189	2	5	981	-	1,434
Asset financing
Owned	507	158	4	17	169	2	3	1,908	1	2,769
Carrying amount at 31 March 2024	507	158	4	17	169	2	3	1,908	1	2,769
Of the total
– Core department	-	-	1	5	-	-	-	5	-	11
– NDPBs and other designated bodies	507	158	3	12	169	2	3	1,903	1	2,758
Carrying amount at 31 March 2024	507	158	4	17	169	2	3	1,908	1	2,769

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	Infrastructure assets £m	Total £m
Cost or valuation
Balance at 1 April 2022	59	347	81	33	4,320	8	11	141	-	5,000
Additions	2	-	-	1	16	-	-	904	-	923
Disposals	-	(1)	-	(1)	(1)	-	(2)	-	-	(5)
Impairments	-	-	-	-	-	-	-	(18)	-	(18)
Transfers	(2)	-	-	-	1	-	-	-	-	(1)
Reclassifications	(7)	17	-	3	29	-	2	(45)	-	(1)
Revaluations	23	8	-	-	1	-	-	-	-	32
At 31 March 2023	75	371	81	36	4,366	8	11	982	-	5,930
Depreciation
Balance at 1 April 2022	-	(236)	(45)	(21)	(4,123)	(6)	(7)	-	-	(4,438)
Charged in year	-	(3)	-	(3)	(34)	-	(1)	(1)	-	(42)
Disposals	-	1	-	1	1	-	2	-	-	5
Impairments	-	-	-	-	(21)	-	-	-	-	(21)
At 31 March 2023	-	(238)	(45)	(23)	(4,177)	(6)	(6)	(1)	-	(4,496)
Carrying amount at 31 March 2023	75	133	36	13	189	2	5	981	-	1,434
Carrying amount at 1 April 2022	59	111	36	12	197	2	4	141	-	562
Asset financing
Owned	75	133	36	13	189	2	5	981	-	1,434
Carrying amount at 31 March 2023	75	133	36	13	189	2	5	981	-	1,434
Of the total
– Core department	-	-	34	5	-	-	-	5	-	44
– NDPBs and other designated bodies	75	133	2	8	189	2	5	976	-	1,390
Carrying amount at 31 March 2023	75	133	36	13	189	2	5	981	-	1,434

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 2024 were held by Nuclear Decommissioning Authority (NDA), UKAEA and Sizewell C.

Assets under construction additions as at 31 March 2024 include £918.5 million (31 March 2023: £839 million) 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 research facilities. 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, for example 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, such as 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 2023-24

	Land £m	Buildings £m	Plant and machinery £m	Transport equipment £m	Total £m
Cost or valuation
Balance at 1 April 2023	11	108	8	24	151
Additions	4	124	1	6	135
Disposals	1	(34)	-	(10)	(43)
Impairments	(1)	-	-	-	(1)
Remeasurements	1	-	-	-	1
At 31 March 2024	16	198	9	20	243
Depreciation
Balance at 1 April 2023	(1)	(37)	(7)	(12)	(57)
Charged in year	(1)	(21)	(1)	(6)	(29)
Disposals	-	33	-	9	42
Revaluations	-	2	-	-	2
At 31 March 2024	(2)	(23)	(8)	(9)	(42)
Carrying amount at 31 March 2024	14	175	1	11	201
Carrying amount at 31 March 2023	10	71	1	12	95
Of the total
– Core department	-	118	-	8	125
– NDPBs and other designated bodies	14	57	1	3	76
Carrying amount at 31 March 2024	14	175	1	11	201

Departmental group 2022-23

	Land £m	Buildings £m	Plant and machinery £m	Transport equipment £m	Total £m
Cost or valuation
At 31 March 2022	10	104	8	12	134
Balance at 1 April 2022	10	104	8	12	134
Additions	-	16	-	13	29
Disposals	-	(10)	-	(1)	(11)
Transfers	-	1	-	-	1
Revaluations	-	(1)	-	-	(1)
At 31 March 2023	10	110	8	24	152
Depreciation
At 31 March 2022	-	(18)	(6)	(7)	(31)
Balance at 1 April 2022	-	(18)	(6)	(7)	(31)
Charged in year	-	(22)	(1)	(6)	(29)
Disposals	-	3	-	1	4
At 31 March 2023	-	(37)	(7)	(12)	(56)
Carrying amount at 31 March 2023	10	73	1	12	95
Carrying amount at 31 March 2022	10	86	2	5	103
Of the total
– Core department	-	12	-	9	21
– NDPBs and other designated bodies	10	61	1	3	75
Carrying amount at 31 March 2023	10	73	1	12	95

Additions to right-of-use assets during the year were £135 million (2022-2023: £29 million). During the year, DESNZ assumed the lease for 3 Whitehall Place, London, the department’s headquarters location.

9. Derivative financial instruments

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

9.1 Contracts for Difference – accounting policies

Contracts for difference (CfDs) are a mechanism introduced to support 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 DESNZ 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’, which is equal to lifetime expected credit losses (ECL) in accordance with the requirements of IFRS 9. This means that the difference between fair value and the transaction price (nil) which was previously deferred is now included in the fair value. Any resultant gain or loss in fair value is recognised in the Consolidated Statement of Comprehensive Net Expenditure (SoCNE).

The fair value of any derivative is assessed by reference to IFRS 13 ‘Fair Value Measurement’, which provides 3 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, LCCC makes its best estimate of the payments which it will be committed to make, 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 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 participants would consider 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 (nil), is no longer deferred at departmental group level due to IFRS 9 FReM adaptation. See note 1.7 Accounting policies, judgments, and estimates.

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 Target Commissioning Window (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 TCW 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.

Subsequent changes in fair values 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.

9.2 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 or payments receivable from generators, 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 2.05% adjusted by the latest OBR CPI inflation forecasts for each modelled year.

The valuation requires management to make certain assumptions about the model inputs, including cash flows, the discount rate, credit risk and volatility.

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 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 but does not necessarily mean that an individual scenario is not reasonable. The departmental group has used an independent industry recognised price series for the CfD valuation at 31 March 2024. The independent industry recognised price series applied was not an outlier of other industry recognised price series.

9.3 Significant areas of judgement

Fair value measurement of Hinkley Point C CfD

LCCC entered into the Hinkley Point C CfD on 29 September 2016. This project has a maximum lifetime generation cap of 910,000,000MWh. 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 Hinkley Point C CfD duration is more than double (35 years) the length of other CfDs (15 years) entered into by LCCC. This has made it considerably more challenging for management to provide a reliable single point fair value estimate for Hinkley Point C CfD, however in recent years (since 2019/20), the availability of third-party price forecasts has improved to the extent that the departmental group has been able to recognise Hinkley Point C in a similar manner to other CfDs.

9.4 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 2024 LCCC was counterparty to 240 contracts, including Hinkley Point C.

In 2022-23, high market prices caused a number of CfDs to move to an asset position. This is reflected in the presentation on the primary statements and in the Fair Value of CfDs table below where the CfD portfolio is split between assets and liabilities.

Fair value measurement of CfDs

The fair values of CfDs represent LCCC’s best estimate of the payments which the departmental group 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.

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
Liabilities	-	-	87,740	87,740
Assets	-	-	(2,598)	(2,598)
As at 31 March 2023 (restated)	-	-	85,142	85,142
Liabilities	-	-	92,051	92,051
Assets	-	-	(2,900)	(2,900)
As at 31 March 2024	-	-	89,151	89,151

9.4.1 Key inputs and underlying assumptions for CfDs

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. 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; and
• 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, LCCC 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). On windy days, the price that wind generators receive is likely to be reduced.

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 TCW 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 and 7 years for HPC) 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 2 of the Hinkley Point C project are 1 June 2029 and 1 June 2030, 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.

Given the length of time until the estimated start date there remains a degree of uncertainty and significant change to the start date will change the timing of future cash flows and have a material impact on the discounted fair value.

The HPC start date utilised is the projects view and the basis of the schedule they are utilising. An EDF SA press release in January 2024 included further unfavourable scenarios seeing operations not start until 2030 or 2031 if certain risks materialise, it is currently not possible to reasonably estimate if these will occur. These scenarios are included in the sensitivity analysis note below.

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 Hinkley Point C 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 DESNZ 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 Hinkley Point C CfD the generator – Nuclear New Build Generation Company (HPC) Limited (NNB GenCo) 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 2024/25 strike price and reflects the CPI rate for January 2024, 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 has been incorporated into the strike price forecast as at the 31 March 2024.

If a Contract for Difference (or equivalent support) 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 RAB and government investment during the year and LCCC management recognise that the likelihood of Sizewell C entering into a Contract for Difference (or equivalent) is greater than the prior year. LCCC management have taken a view that the Sizewell C is more like to occur than not and have recognised 75% of the strike price adjustment, using £90.25/MWh (2022-23 – £91.00/MWh) in the valuation. The impact of the strike price adjustment crystalising either way is included in the sensitivity analysis in the sensitivity analysis below.

Equity gain share for Hinkley Point C:
The equity gain share mechanism consists of 2 separate components: (i) a mechanism to capture gains above specified levels where the Hinkley Point C 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 Hinkley Point C 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 and it is currently not possible to reasonably estimate if they will be met in the future.

Construction gain share for Hinkley Point C:
If the construction costs of Hinkley Point C 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.

Reducing the strike price will reduce the amounts paid out to NNB Generation Company under the CfD will reduce and hence the benefit of the lower construction costs is shared between NNB Generation Company and ultimately consumers. There is, however, no similar upward adjustment if the construction cost of Hinkley Point C is over budget.

No adjustment to the valuation has been made for construction gain share on the grounds that there has not been any construction gain share during the year, and none is forecasted to occur in the future.

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 2 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 that original assumptions are invalid.

9.4.2 Sensitivity analysis

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 we would describe as the ‘universe of reasonableness’.

LCCC 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 2022-23, LCCC has this year derived a real discount rate from the HM Treasury nominal discount rate of 2.05% 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:

	Real discount rate
2024/25	0.49%
2025/26	0.44%
2026/27	0.38%
2027/28 and thereafter	0.05%

For future year-on-year comparability an undiscounted valuation of the CfDs has been included:

	CfDs exc.HPC £m	HPC CfD £m	Total £m
As at 31 March 2021	38,865	61,221	100,086
As at 31 March 2022	34,844	58,381	93,225
As at 31 March 2023	25,627	60,424	86,051
As at 31 March 2024	33,003	57,716	90,719

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

	Favourable/ (unfavourable) HPC CfD £m	Favourable/ (unfavourable) Other CfDs £m	Favourable/ (unfavourable) Total impact £m
Change in fair value of CfDs if:
Highest price third party series	29,525	46,608	76,133
Lowest price third party series	(18,373)	(27,727)	(46,100)
Discount rate of 3.5%	29,099	5,818	34,917
2022-23 Discount rate	(199)	598	399
Undiscounted	(1,191)	(377)	(1,568)
Specific to Other CfDs:
2% more load factor	-	(652)	(652)
4% more load factor	-	(1,305)	(1,305)
2% less load factor	-	652	652
4% less load factor	-	1,305	1,305
Estimated Commissioning Date moves backward by one year	-	(831)	(831)
Generation starts at the earliest possible date	-	496	496
Specific to HPC CfD:
10% less load factor	5,653	-	5,653
Generation cap	(528)	-	(528)
Generation brought forward 1 year	255	-	255
Generation start date delayed 1 year from estimated start date	1,521	-	1,521
Generation start date delayed 2 years from estimated start date	3,077	-	3,077
Sizewell C strike price adjustment (100%, £3)	914	-	914
Sizewell C strike price adjustment (0%, £nil)	(2,741)	-	(2,741)

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	Range min-max	Units
2021	88,930	DCF	Electricity prices	24.62-77.77	£/MWh
2022	97,951	DCF	Electricity prices	37.84-244.00	£/MWh
2023 (restated)	85,142	DCF	Electricity prices	39.07-141.35	£/MWh
2024	89,151	DCF	Electricity prices	25.54 – 78.94	£/MWh

The table below represents the movement in CfDs valuation at 31 March 2024.

	LCCC CfDs assets £m	LCCC CfDs liabilities £m	Departmental group total £m
CfD liability as at 31 March 2022 recognised on the Consolidated Statement of Financial Position	-	(97,591)	(97,591)
Gain / Loss reclassification	(2,144)	2,144	-
Change in fair value during the year	4,741	7,707	12,448
Payments to the CfD generators	-	16	16
CfDs terminated in prior year	-	(15)	(15)
CfD liability as at 31 March 2023 recognised on the Consolidated Statement of Financial Position	2,598	(87,740)	(85,142)
Gain / Loss reclassification	(115)	115	-
Change in fair value during the year	172	(6,367)	(6,195)
Payments to the CfD generators	-	1,865	1,865
CfDs terminated during the year	245	76	321
CfD liability as at 31 March 2024 recognised on the Consolidated Statement of Financial Position	2,900	(92,051)	(89,151)
CfDs movement recognised in SoCNE, comprising of:	-	-	4,009
CfDs levy income recognised under other income	-	(1,865)	(1,865)
Remeasurement of contracts for difference derivatives	302	(6,176)	(5,874)

The movement in CfDs is comprised of revaluation, terminated CfDs and payments made to generators in year.

The table below represents the split of all CfDs assets and liabilities between current and non-current. The entire Hinkley Point C liability is included in non-current liabilities.

LCCC CfD assets	CfDs as at 31 March 2024 £m	CfDs as at 31 March 2023 £m
Current	17	2
Non-current	2,883	2,596
Total LCCC CfD assets	2,900	2,598

LCCC CfD liabilities	CfDs as at 31 March 2024 £m	CfDs as at 31 March 2023 £m
Current	(3,055)	(630)
Non-current	(88,996)	(87,110)
Total LCCC CfD liabilities	(92,051)	(87,740)

10. Investments and loans in other public sector bodies

	Ordinary shares £m	Other investments and loans £m	Core department £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 2022	440	282	722	(6)	611	1,327
Additions	363	2,047	2,410	(363)	-	2,047
Disposals	(5)	-	(5)	5	-	-
Redemptions	-	(67)	(67)	-	-	(67)
(Impairments) / Impairment reversal	-	(247)	(247)	1	-	(247)
Revaluations	10	629	639	-	-	639
Unwinding of discount	-	1	1	-	-	1
Balance at 31 March 2023	808	2,645	3,453	(363)	611	3,700
Transfers from Non-Current	-	-	-	(343)	-	(343)
Additions	1,089	14	1,103	(1,089)	-	14
Redemptions	-	(331)	(331)	-	-	(331)
Revaluations	(5)	695	690	-	85	775
Unwinding of discount	-	5	5	-	-	5
Balance at 31 March 2024	1,892	3,028	4,920	(1,796)	696	3,820

10.1 Ordinary shares in other public sector bodies

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Balance at 1 April	808	1,055	440	1,046
Transfers In/(Out)	-	(343)	-	-
Additions	1,089	-	363	-
Disposals	-	-	(5)	-
Revaluations	(5)	81	10	9
Balance at 31 March	1,892	793	808	1,055
Comprising
– Ordinary shares held within the departmental boundary – held at cost	1,795	-	363	-
– Ordinary shares held outside the departmental boundary – held at fair value	97	793	445	1,055
Balance at 31 Mar	1,892	793	808	1,055

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 37,289,810 ordinary shares (31 March 2023: 11,468,409), each with a nominal value of £1. The core department invested in additional share capital during the year of £1,089 million (31 March 2023: £363 million). The core department’s holding had a cost of £1,452 million at 31 March 2024 (31 March 2023: £363 million)
• The principal objective of the company is the development of the Sizewell C nuclear power station in Suffolk
• The material asset held by the subsidiary company, NNB Generation Company (SZC) Ltd, is the asset under construction of £2,016 million (31 March 2023: £839 million) included in note 7 Plant, Property and Equipment. Non-controlling interest of £542 million (31 March 2023: £539 million) is recognised in relation to the investment and is included in Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

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 2023: 900), each with a nominal value of £1
• The core department’s holding had a cost less provision for impairment of £Nil at 31 March 2024 (31 March 2023: £Nil)
• UKGIP was established to enable the UK government to retain an interest in 5 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 the UK government’s interests in the unsold assets from the Green Investment Bank

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 ESC 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 2 shares of £1 each in EHL 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 UK government’s one-third share in Urenco Limited, an entity operating in the civil uranium enrichment sector

Great British Nuclear (GBN), previously British Nuclear Fuels Limited (BNFL)

• The core department holds 50,000 ordinary shares in GBN at a nominal value of £1 each. 49,999 of these shares are held through the Secretary of State (SoS) and the Treasury Solicitor holds one ordinary share. The core department’s holding had a cost of £343 million at 31 March 2024 (31 March 2023: £343 million)
• Shares in GBN were previously held outside of the departmental boundary and were brought within the departmental boundary on 1 April 2023

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.

NNL Holdings Limited (NNLH)

• The core department through the SoS holds 2 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 2024 was £97 million (31 March 2023: £102 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 £684 million as at 31 March 2024 (31 March 2023: £610 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[Note (ii)]	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%

1. Notes:
   1. (i) Ownership through International Nuclear Services Limited.
   2. (ii) Included in the departmental boundary but excluded from consolidation on materiality grounds.

10.2 Loans in public sector bodies

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Balance at 1 April	2,645	2,645	282	281
Additions	14	14	2,047	2,047
Repayments	(331)	(331)	(66)	(66)
Unwinding of Discount	5	5	1	1
Impairments	-	-	(248)	(248)
Revaluations	694	694	629	629
Balance at 31 March	3,027	3,027	2,645	2,645
Out of which:
– Due within 12 months	2,961	2,961	67	66
– Due after 12 months	66	66	2,578	2,579

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 2024 was £188 million (31 March 2023: £238 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.

Bulb Energy Ltd (in special administration) WAMA agreement with Octopus Energy Operations Limited:
Following ONS classification of Bulb to central government, the department recognises the financial asset held by Bulb in relation to WAMA agreement in the core department’s financial statements in line with IFRS 3. The initial funding to Bulb to enable it to enter into WAMA agreement with Octopus was provided by the core department during 2022-23. The objective was to ensure that special administration regime and exit from administration achieves the best outcome practicable for energy customers, taxpayers, and the industry. The financial asset is measured at fair value through profit or loss under IFRS 9. The fair value at 31 March 2024 was £2,838 million (31 March 2023: £2,406 million).

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 close proximity of the due date for repayment under the terms of the WAMA we have considered the value of contractual cashflows less financial income to be the most appropriate methodology.

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

10.3 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.

EDF Energy Nuclear Generation Group Limited (formerly British Energy Group plc) – £1 Special Share

• British Energy Group plc Special Share created on 13 January 2005 and held jointly by the Secretary of State for Energy, Security and Net Zero 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

EDF Energy Nuclear Generation Limited (formerly British Energy Generation Ltd) – £1 Special Share

• British Energy Generation Ltd Special Share created in 1996 is held solely by the Secretary of State for Energy, Security and Net Zero
• 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

Nuclear Liabilities Fund Ltd – £1 Special Rights Redeemable Preference Share

• Created in 1996
• The Secretary of State for Energy, Security and Net Zero 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

11. Other financial assets

	Note	31 March 2024 Core department £m	31 March 2024 <brDepartmental group £m	31 March 2023 <brCore department £m	31 March 2023 <brDepartmental group £m
Balance at 1 April	-	341	341	320	320
Additions	-	43	43	10	10
Repayments	-	(125)	(125)	-	-
Unwinding of Discount	-	2	2	2	2
Revaluations	-	5	5	9	9
Impairments	-	(8)	(8)	-	-
Balance at 31 March	-	258	258	341	341

Core department

The most significant balances are detailed below.

Private sector loans: Sizewell C (Holding) Ltd (SZC)

The core department had a £106 million loan balance with SZC brought forward from previous financial years. The whole amount, which after charging effective interest for the year, stood at £119 million, was converted to equity in the year so the carrying value at 31 March 2024 was £Nil (31 March 2023: £106 million). This balance is now therefore reflected in note 10.1 Ordinary Shares.

Private sector loans: Heat Networks Investment Project (HNIP)

HNIP is a government funding programme that aims to increase the number of heat networks being built, deliver carbon savings and help create the conditions necessary for a sustainable heat network market to develop. The core department issued loans under the project in the 2020-21 & 2021-22 financial years, which at 31 March 2024 had a carrying value of £68 million (31 March 2023: £79 million). In accordance with IFRS 9, the loans are reported at amortised cost.

Investment funds: Mobilising Finance for Forests (MFF)

MFF was established in 2021 as a blended finance investment programme to combat deforestation and other environmentally unsustainable land use practices contributing to global climate change. The core department invested a further £25 million in the year and inclusive of previous investments and revaluations, the carrying value of the asset at 31 March 2024 was £115 million (31 March 2023: £95 million). In accordance with IFRS 9, the investment is measured at ‘fair value through profit and loss’ with fair value movements going directly to the SoCNE.

11.1 Other loans and investments

	Term deposits £m	Private sector loans £m	Private sector shares £m	Investment funds £m	Total £m
Balance at 1 April 2022	-	178	40	102	320
Additions	1	7	-	2	10
Revaluations	-	-	9	-	9
Unwinding of Discount	-	2	-	-	2
Balance at 1 April 2023	1	187	49	104	341
Additions	-	14	-	29	43
Redemptions	(1)	(124)	-	-	(125)
Revaluations	-	-	(10)	15	5
Unwinding of Discount	-	2	-	-	2
Impairments	-	(8)	-	-	(8)
Balance at 31 March 2024	-	71	39	148	258
Of the total
– Core department	-	71	39	148	258
– NDPBs and other designated bodies	-	-	-	-	-
Balance at 31 March 2024	-	71	39	148	258

12. 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 2024 were £582 million (31 March 2023: £992 million). Further details can be found in the NDA’s annual report and accounts.

Recoverable contract costs relating to nuclear provisions

	Departmental group 31 March 2024 £m	Departmental group 31 March 2023 £m
Gross recoverable contract costs	3,911	4,461
Less applicable payments received on account	(3,315)	(3,452)
Less associated contract loss provisions	(14)	(17)
Balance at 31 March	582	992

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 2024 £m	Departmental group 31 March 2023 £m
Gross recoverable contract costs at 1 April	4,461	6,781
Increase/(decrease) in year	(33)	(1,855)
Unwinding of discount	29	(72)
Release in year – continuing operations	(430)	(254)
Amortisation of recoverable contract costs	(116)	(139)
Balance at 31 March	3,911	4,461

The gross balance of recoverable contract costs of £3,911 million (31 March 2023: £4,461 million) comprises £1,048 million (31 March 2023: £1,164 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 £2,863 million (31 March 2023: £3,297 million) of probable future costs which form part of the nuclear decommissioning provision (note 18.1) and will be released as they are incurred.

The movements 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 2024 Historic costs £m	Departmental group 31 March 2024 Future costs £m	Departmental group 31 March 2024 Total costs £m	Departmental group 31 March 2023 Historic costs £m	Departmental group 31 March 2023 Future costs £m	Departmental group 31 March 2023 Total costs £m
Balance at 1 April	1,164	3,297	4,461	1,303	5,478	6,781
Increase/(decrease) in the year	-	(33)	(33)	-	(1,855)	(1,855)
Unwinding of discount	-	29	29	-	(72)	(72)
Amortisation	(116)	-	(116)	(139)	-	(139)
Release in year	-	(430)	(430)	-	(254)	(254)
Balance at 31 March	1,048	2,863	3,911	1,164	3,297	4,461

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 2024 Spent fuel reprocessing and associated waste management £m	Departmental group 31 March 2024 Spent fuel receipt and management £m	Departmental group 31 March 2024 Total £m	Departmental group 31 March 2024 Spent fuel reprocessing and associated waste management £m	Departmental group 31 March 2024 Spent fuel receipt and management £m	Departmental group 31 March 2024 Total £m
Balance at 1 April	726	438	1,164	808	495	1,303
Amortisation	(54)	(62)	(116)	(82)	(57)	(139)
Balance at 31 March	672	376	1,048	726	438	1,164

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.

13. Investments in joint ventures and associates

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Balance at 1 April	-	938	-	628
Dividends	-	(86)	-	(86)
Profit/(loss)	-	73	-	340
Revaluations	-	(4)	-	56
Balance at 31 March	-	921	-	938

Urenco

Urenco is an international supplier of enrichment services. The department holds 33% (31 March 2023: 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 2024, the departmental group’s holding was valued at £819 million (31 March 2023: £839 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	2023‑24 £m	2022‑23 £m
Non-current assets	5,126	5,332
Current assets	2,466	2,038
Current liabilities	(934)	(396)
Non-current liabilities	(4,073)	(4,326)
Revenue	(1,672)	(1,463)
Income tax expense	69	104
(Profit)/loss from continuing activities	(235)	(1,000)

Other financial information	2023‑24 £m	2022‑23 £m
Cash and cash equivalents	767	654
Current financial liabilities (excluding trade and other payables and provisions)	(511)	(148)
Non-current financial liabilities (excluding trade and other payables and provisions)	(778)	(1,252)
Depreciation and amortisation	(404)	(315)
Interest income	(108)	(188)
Interest expense	189	247

Other

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

14. Trade and other receivables

	2023‑24 Core department £m	2023‑24 Departmental group £m	2022‑23 Core department £m	2022‑23 Departmental group £m
Amounts falling due within 1 year
Trade receivables	134	215	1,843	1,894
Other receivables
– VAT and other taxation	33	310	19	210
– Staff receivables	1	1	-	1
– Other	208	341	760	1,002
Contract assets	-	33	-	30
Prepayments and accrued income	100	204	37	83
	476	1,104	2,659	3,220
Amounts falling due after more than 1 year
Trade receivables	-	52	-	51
Other receivables	219	225	312	351
Prepayments and accrued income	6	36	4	34
	225	313	316	436
Total receivables at 31 March	701	1,417	2,975	3,656

Core department

Other receivables due within one year held by the core department include £104 million (2022-23: £140m) in relation to Mineworkers’ Pension Scheme.

Other receivables due after more than one year held by the core department of £220m (2022-23: £312m) relate to the Mineworkers’ Pension Scheme.

The Mineworkers’ Pension Scheme was 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 2020. 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 2024 is £346m (2022-23: £488 million) as annual receipts to FY2027-28.

Contingent assets are also recognised in relation to the Mineworkers’ Pension Scheme Investment Reserve and British Coal Staff Superannuation Scheme Guarantor Fund, disclosed in note 23.

15. Cash and cash equivalents

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Balance at 1 April	1,098	2,083	2,232	2,995
Net change in cash and cash equivalent balances	(73)	654	(1,134)	(912)
Balance at 31 March	1,025	2,737	1,098	2,083
The following balances were held at
– The Government Banking Service (GBS)	884	1,835	683	1,394
– Commercial banks and cash in hand	142	902	415	689
Balance at 31 March	1,025	2,737	1,098	2,083

16. Trade payables and other liabilities

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Amounts falling due within 1 year
VAT, social security and other taxation	22	118	100	197
Trade payables	122	399	45	268
Other payables	470	1,131	324	1,016
Contract liabilities (see note 16.1)	-	758	-	736
Other accruals and deferred income	3,048	4,355	5,525	6,296
Amounts issued from the Consolidated Fund for supply but not spent at year end	1,025	1,025	970	970
Consolidated Fund extra receipts due to be paid to the Consolidated Fund: Received	-	136	130	148
	4,687	7,922	7,094	9,631
Amounts falling due after more than 1 year
Trade payables	-	22	-	4
Contract liabilities (see note 16.1)	-	1,261	-	1,437
Other payables, accruals and deferred income	-	57	-	52
	-	1,340	-	1,493
Total payables at 31 March	4,687	9,262	7,094	11,124

16.1 Contract liabilities

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Balance at 1 April	-	2,173	-	2,262
Additions	-	254	-	277
Change in measurement	-	317	-	306
Release to SoCNE	-	(725)	-	(672)
Balance at 31 March	-	2,019	-	2,173
Of the total
Due within 1 year	-	758	-	736
Due in over 1 year	-	1,261	-	1,437
Balance at 31 March	-	2,019	-	2,173

Promissory note liabilities of £1,940 million (31 March 2023: £1,893 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 £519 million (31 March 2023: £348 million) for Renewable Heat Incentive schemes.

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 £758 million (31 March 2023: £736 million) and after one year of £1,261 million (31 March 2023: £1,437 million).

These are payments received on account which relate to amounts which customers have paid the NDA for the provision of services under long-term contracts. These payments will be recognised as income when the services are provided. Payments received on account are shown net after deduction of any applicable recoverable contract costs. Payments on account not yet recognised as revenue are adjusted for inflation each year (known as revalorisation).

17. Lease liabilities

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Land
Not later than one year	-	1	-	1
Later than one year and not later than 5 years	-	4	-	3
Later than 5 years	-	16	-	12
	-	21	-	16
Less interest element	-	(3)	-	(3)
Present value of obligations	-	18	-	13
Buildings
Not later than one year	5	9	11	19
Later than one year and not later than 5 years	31	45	2	20
Later than 5 years	143	190	-	47
	179	244	13	86
Less interest element	(56)	(60)	-	(9)
Present value of obligations	123	184	13	77
Other
Not later than one year	4	6	4	6
Later than one year and not later than 5 years	4	6	5	6
Later than 5 years	-	-	-	-
	8	12	9	12
Less interest element	-	-	-	-
Present value of obligations	8	12	9	12
Total present value of obligations	131	214	22	102
Current	9	18	15	25
Non-current	122	196	7	77

Lease liability – additional analysis

	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Interest on lease liabilities	4	7	-	1
Expenses relating to short-term liabilities	-	4	-	1
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	-	1	-	4
Gains or losses arising from sale and leaseback transactions	-	-	-	-

18. Provisions for liabilities and charges

	Note	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Current liabilities
Not later than 1 year		342	4,427	3,660	7,654
Total current liabilities		342	4,427	3,660	7,654
Non-current liabilities
Later than 1 year and not later than 5 years		734	16,662	746	16,209
Later than 5 years		671	88,168	807	108,795
Total non-current liabilities		1,405	104,830	1,553	125,004
Total at 31 March		1,747	109,257	5,213	132,658
Total provisions
Nuclear		18.1	1,104	106,866	1,183	126,348
Other		18.2	643	2,391	4,031	6,310
Total at 31 March		1,747	109,257	5,213	132,658

The provision liabilities have been discounted to present value using discount rates as provided by HM Treasury.

Discounting as at 31 March 2024 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 2024 Nominal discount rate	31 March 2024 Inflation rate	31 March 2024 Equivalent real discount rate	31 March 2023 Nominal discount rate	31 March 2023 Inflation rate	31 March 2023 Equivalent real discount rate
Cash outflows expected within 2 years	4.26%	3.60%	0.64%	3.27%	7.40%	(3.85%)
Cash outflows expected between 2-5 years	4.26%	1.80%	2.19%	3.27%	1.65%	1.59%
Cash outflows expected between 5-10 years	4.03%	2.00%	2.87%	3.20%	2.00%	1.18%
Cash outflows expected after 10 years	4.72%	2.00%	2.35%	3.08%	2.00%	1.06%

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.

18.1 Nuclear provisions

	British Energy £m	UK Atomic Energy Authority Decommissioning £m	Core department Total £m	NDA Decommissioning £m	Contract loss £m	Departmental group £m	Total £m
Balance at 1 April 2022	570	490	1,060	236,766	432	238,258
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)	292	219	(115,953)	113	(115,621)
Provided in the year	88	-	88	10,536	-	10,624
Provisions not required written back	(26)	(12)	(38)	-	(919)	(957)
Provisions utilised in the year	(123)	-	(123)	(3,142)	(10)	(3,275)
Balance at 31 March 2023	420	763	1,183	125,165	-	126,348
Net amount deducted from recoverable contract costs	-	-	-	-	4	4
Unwinding of discount	7	3	10	1,390	(7)	1,393
Change in discount rate	6	(70)	(64)	(26,318)	1	(26,381)
Provided in the year	22	80	102	9,163	-	9,265
Provisions not required written back	-	-	-	-	8	8
Provisions utilised in the year	(99)	(28)	(127)	(3,638)	(6)	(3,771)
Balance at 31 March 2024	356	748	1,104	105,762	-	106,866

Core department

British Energy:
As a result of the restructuring of British Energy (BE) in January 2005, the UK 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 2024 is £357 million (31 March 2023: £420 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 2024, at prices as at the reporting date so excluding the impact of future inflation, is £356 million (31 March 2023: £420 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. The facility closed at the end of 2023, and the decommissioning phase is expected to last for c. 17 years. The discounted liability at 31 March 2024 was £749 million (31 March 2023: £763 million); the undiscounted liability at 31 March 2024, at prices as at the reporting date so excluding the impact of future inflation, was £864 million (31 March 2023: £434 million).

Departmental group

NDA Decommissioning:

The NDA’s nuclear decommissioning liability represents the 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 NDA has focused in particular on the first 20 years.

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, UK 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 £105 billion at 31 March 2024 (31 March 2023: £124 billion). The undiscounted equivalent of this reported liability is £199 billion at 31 March 2023 (31 March 2023: £173 billion).

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 further change in the estimate of the cost of decommissioning Magnox sites by NRS, reflecting current assumptions on the timing and duration of each site’s decommissioning activity. The impact of this was an increase of £5 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 was an increase of £7 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 12).

Sensitivity analysis:
Analysis of expected timing of discounted cash flows for the NDA Nuclear Provision is as follows:

	Sellafield £m	Nuclear Restoration Services £m	Nuclear Waste Services £m	Nuclear Transport Services £m	2023‑24 Total £m	2022‑23 Total £m
Up to 1 year	3,018	830	171	-	4,019	3,933
2 to 5 years	11,684	3,142	816	3	15,645	15,255
6 to 20 years	31,601	8,723	3,222	63	43,609	43,180
21 to 50 years	20,740	8,589	2,388	-	31,717	40,775
50 years +	6,480	2,813	973	-	10,266	21,252
	73,523	24,097	7,570	66	105,256	124,395

Sensitivity	Sellafield £m	NRS £m	NWS £m	NTS £m
Increase	40,832	2,409	9,109	3
Reduction	(6,805)	(2,409)	(1,688)	(6)

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:

• 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 £6,805 million reduction against the current estimate, to a £40,832 million increase
• The programme of work carried out by Nuclear Restoration Services 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 £2,409 million
• 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 £1,503 million to an increase of £9,016 million dependent on the location and construction requirements of the facility. The current planned date for the facility to receive waste is 2050. The NDA has identified a risk that the construction and opening of the facility may be delayed beyond 2050 (see the Governance Statement on page 57). 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 £186 million to an increase of £93 million

Further details are reported in the NDA’s annual report and accounts.

18.2 Other provisions

	Concessionary fuel £m	Energy Schemes £m	Legacy ailments £m	Other £m	Core department total £m	Coal Authority £m	Early departure costs and restructuring £m	Other £m	Departmental Group total £m
Balance at 31 March 2022	283	-	144	35	462	5,619	66	14	6,161
Change in discount rate	(59)	-	(30)	(6)	(95)	(4,467)	6	-	(4,556)
Provided in the year	176	3,301	68	193	3,738	1,062	-	3	4,803
Provisions not required written back	-	-	-	-	-	-	(8)	(1)	(9)
Provisions utilised in the year	(35)	-	(12)	(21)	(68)	(43)	(7)	(4)	(122)
Unwinding of discount	(4)	-	(2)	-	(6)	40	(1)	-	33
Balance at 31 March 2023	361	3,301	168	201	4,031	2,211	56	12	6,310
Balance at 1 April 2023	361	3,301	168	201	4,031	2,211	56	12	6,310
Change in discount rate	(26)	-	(18)	(1)	(45)	(875)	3	-	(917)
Provided in the year	2	83	26	17	128	246	-	78	452
Provisions not required written back	-	-	-	(31)	(31)	-	(2)	-	(33)
Provisions utilised in the year	(40)	(3,277)	(13)	(114)	(3,444)	(45)	(6)	(2)	(3,497)
Other movements	3	-	1	1	4	71	1	-	76
Balance at 31 March 2024	300	107	164	73	643	1,608	52	88	2,391

Core department

1. Energy schemes:
2. 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 which came into force on the 26 April 2023. The scheme was designed to support businesses with high energy costs and it ran until 31 March 2024. Claims windows will remain open into the 2024/25 financial year, creating a future obligation for the department and hence the recognition of a provision.
   2. The value of the provision is based on the difference between total forecasted scheme spend and expenditure recognised to date. The total liability as at 31 March 2024 was £107 million (31 March 2023: £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, with the scheme running until 31 March 2024.
   4. Although the scheme ran until 31 March 2024, the Ofgem price cap was below the Energy Price Guarantee for the remainder of the scheme after 30 June 2023, meaning no new claims were made after this date.
   5. The value of the provision in 2022-23 was 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 (the Ofgem price cap) and the Energy Price Guarantee price. The total liability as at 31 March 2024 was therefore nil (31 March 2023: £3,157 million).

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 2024, 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 2024 was £300 million (31 March 2023: £361 million); the undiscounted liability as at 31 March 2024, at prices as at the reporting date so excluding the impact of future inflation, was £342 million (31 March 2023: £379 million).

Legacy ailments:
The provision is an estimate of the cost to the core department of future personal injury compensation claims relating to:

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 2024 is £164 million (31 March 2023: £168 million). The undiscounted liability, at prices as at the reporting date so excluding the impact of future inflation, is £197 million (31 March 2023: £178 million). The estimate is based on forecasts of settlement of claims, taking account of discussion with the department’s legal advisers 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 2024 was £1,608 million (31 March 2023: £2,211 million). The forecasted cash flows before inflation and discounting at 31 March 2024 is £3,729 million (31 March 2023: £3,350 million). This increase is mainly driven by mine water scheme costs. Further details are reported in the Coal Authority annual report and accounts.

NDA:
Restructuring provisions have been recognised in the NDA to cover continuing annual payments to be made under early retirement arrangements to individuals working for subsidiaries who retired early, or had accepted early retirement, before 31 March 2024. 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.

Contract loss provisions have been recognised in the NDA to cover the anticipated shortfall 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.

Provisions for insurance claims and maintenance requirements have also been made.

19. Retirement benefit obligations

The departmental group consolidates 8 defined benefit pension arrangements from its designated bodies including:

• 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.

Nuclear Decommissioning Authority (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 2024.

As at 31 March 2024, the weighted average duration of the combined schemes is 13.5 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 the NDA.

Nuclear site licence companies (SLCs)

1. There are 6 defined benefit final salary pension schemes relating to the 4 SLCs comprising:
   1. a. the LLWR section of the CNPP (for LLW Repository Limited)
   2. 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)
   3. c. the Group Pension Scheme SLC section of the CNPP and the Sellafield section of the CNPP (for Sellafield Limited)
   4. d. the Dounreay Section of the CNPP (for Dounreay Site Restoration Limited).

All are closed to new entrants. The underlying accounting valuations were carried out on 31 March 2022 for all SLC schemes. The actuaries rolled forward the results to determine approximate positions as at 31 March 2024.

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, and in the Electricity Supply Pension Scheme’s Annual Reports.

	31 March 2024 Funded pension schemes £m	31 March 2023 Funded pension schemes £m
Present value of defined benefit obligation at 1 April	4,463	6,842
Interest cost	206	179
Current service cost	110	197
Benefits paid, transfers in and expenses	(201)	(236)
Actuarial (gains)/losses in financial assumption	(79)	-
Actuarial (gains)/losses on defined benefit obligation due to demographic assumptions	(68)	(2,543)
Actuarial (gains)/losses arising from experience adjustments	250	7
Employee contributions	17	17
Present value of defined benefit obligation at 31 March	4,698	4,463
Fair value of assets at 1 April	5,383	6,646
Expected return on plan assets	249	174
Employer contributions	125	180
Benefits paid, transfers in and expenses	(201)	(236)
Actuarial gains/(losses)	(212)	(1,398)
Employee contributions	17	17
Fair value of assets at 31 March	5,361	5,383
Net (asset)/liability at 31 March	(663)	(920)

The combined net asset value has decreased to £663 million as 31 March 2024 (£920 million at 31 March 2023). This is primarily due to significant movements in actuarial gains/losses and changes in the discount rate applied to all defined benefit obligations between 31 March 2023 and 31 March 2024.

Net (asset)/liability by scheme

	31 March 2024 Present value of defined benefit obligation £m	31 March 2024 Fair value of assets £m	31 March 2024 Net liability/ (asset) £m	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
LLW Repository Ltd – LLWR section of CNPP[Note (a)]	35	39	(4)	28	34	(6)
Magnox Ltd – SLC section of Magnox Electric Group of ESPS[Note (b)]	2,132	2,306	(174)	2,203	2,519	(316)
Magnox Ltd – Magnox section of CNPP[Note (a)]	132	151	(19)	109	140	(31)
Sellafield Ltd – Group Pension Scheme SLC section of CNPP	463	595	(132)	417	592	(175)
Sellafield Ltd – Sellafield section of CNPP[Note (a)]	1,698	1,997	(299)	1,492	1,832	(340)
Dounreay Site Restoration Ltd – Dounreay section of CNPP	145	156	(11)	125	145	(20)
Nuclear Decommissioning Authority[Note (a)]	93	117	(24)	89	121	(32)
Total net (asset)/liability at 31 March	4,698	5,361	(663)	4,463	5,383	(920)

1. 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:
   1. (a) 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 right to a refund of surplus.
   2. (b) 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 2024 £m	31 March 2023 £m
Equities	1,369	1,238
Property	676	711
Government bonds	667	595
Corporate bonds	338	344
Other growth assets	804	768
Other	1,507	1,727
Balance at reporting date	5,361	5,383

As at 31 March 2024, the Magnox schemes had a total asset balance of £2,457 million (31 March 2023: £2,656 million), of which £30 million (31 March 2023: £25 million) are government bond assets, £349 million (31 March 2023: £382 million) are other growth assets which are not quoted in an active market, £362 million (31 March 2023: £378 million) are property assets and £171 million (31 March 2023: £175 million) are corporate bonds.

The Sellafield schemes had £2,592 million at 31 March 2024 (31 March 2023: £2,424 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.

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 amounts, changes to scheme benefits or settlement/curtailment events that are currently unknown.

	31 March 2024 £m	31 March 2023 £m
LLW Repository Ltd – LLWR section of CNPP	2	2
Magnox Ltd – SLC section of Magnox Electric Group of ESPS	20	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	83	90
Dounreay Site Restoration Ltd – DSRL section of CNPP	7	10
Nuclear Decommissioning Authority	0	0
Total	122	133

Major actuarial assumptions for SLC schemes

	Dounreay Site Restoration Limited 2023‑24	Dounreay Site Restoration Limited 2022‑23	LLW Repository Limited 2023‑24	LLW Repository Limited 2022‑23	Magnox Limited (ESPS) 2023‑24	Magnox Limited (ESPS) 2022‑23	Magnox Limited (CNPP) 2023‑24	Magnox Limited (CNPP) 2022‑23	Sellafield Limited (CNPP) 2023‑24	Sellafield Limited (CNPP) 2022‑23	Sellafield Limited (GPS) 2023‑24	Sellafield Limited (GPS) 2022‑23
Discount rate	4.8%	4.7%	4.8%	4.7%	4.7%	4.7%	4.8%	4.7%	4.8%	4.7%	4.8%	4.7%
Inflation (Retail Price Index)	3.1%	3.1%	3.1%	3.1%	3.3%	3.3%	3.1%	3.1%	3.1%	3.1%	3.2%	3.2%
Life expectancy in years at 65, currently aged 65 (male)	20.7	21.3	20.7	21.3	21.8	22.3	20.7	21.3	20.7	21.3	20.7	21.3
Life expectancy in years at 65, currently aged 45 (male)	22	22.6	22	22.6	22.4	22.9	22.0	22.6	22.0	22.6	22.0	22.6
Life expectancy in years at 65, currently aged 65 (female)	23.3	23.7	23.3	23.7	23.7	24.1	23.3	23.7	23.3	23.7	23.3	23.7
Life expectancy in years at 65, currently aged 45 (female)	24.7	25.1	24.7	25.1	24.5	24.9	24.7	25.1	24.7	25.1	24.7	25.1
Life expectancy in years at 60, currently aged 60 (male)	25.3	25.9	25.3	25.9	26.3	26.9	25.3	25.9	25.3	25.9	25.3	25.9
Life expectancy in years at 60, currently aged 40 (male)	26.8	27.4	26.8	27.4	27.2	27.7	26.8	27.4	26.8	27.4	26.8	27.4
Life expectancy in years at 60, currently aged 60 (female)	28.1	28.6	28.1	28.6	28.5	28.9	28.1	28.6	28.1	28.6	28.1	28.6
Life expectancy in years at 60, currently aged 40 (female)	29.6	30.1	29.6	30.1	29.3	29.8	29.6	30.1	29.6	30.1	29.6	30.1

Major actuarial assumptions for NDA

	Nuclear Decommissioning Authority (Closed) 2023‑24	Nuclear Decommissioning Authority (Closed) 2022‑23	Nuclear Decommissioning Authority (Nirex) 2023‑24	Nuclear Decommissioning Authority (Nirex) 2022‑23
Discount rate	4.8%	4.7%	4.8%	4.7%
Inflation (Retail Price Index)	3.2%	3.2%	3.2%	3.2%
Life expectancy in years at 65, currently aged 65 (male)	20.7	21.3	20.7	21.3
Life expectancy in years at 65, currently aged 45 (male)	22	22.6	22	22.6
Life expectancy in years at 65, currently aged 65 (female)	23.3	23.7	23.3	23.7
Life expectancy in years at 65, currently aged 45 (female)	24.7	25.1	24.7	25.1

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
0.5 percentage point decrease in annual discount rate	14	4	152	205	7
0.5 percentage point increase in inflation assumption	13	4	150	203	7
1 year increase in life expectancy	3	1	99	47	2

20. Capital and other commitments

Total minimum payments for capital and other commitments.

	Note	Core department 2023‑24 £m	Departmental group 2023‑24 £m	Core department 2022‑23 £m	Departmental group 2022‑23 £m
Contracted capital commitments	20.1	3	301	2	161
Other financial commitments	20.2	556	655	357	357
Total		559	956	359	518

20.1 Capital commitments

Contracted capital commitments not otherwise included in these financial statements	31 March 2024 Departmental group £m	31 March 2023 Departmental group £m
Property, plant and equipment	299	158
Intangible assets	2	3
Total	301	161

Departmental group

Capital commitments as at 31 March 2024 include purchase commitments of £254 million and land commitments of £2 million in respect of construction activities related to the development of the Sizewell C nuclear plant.

20.2 Other financial commitments

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

Organisation	Note	Within one year £m	Later than 1 year and not later than 5 years £m	Later than 5 years £m	Total 31 March 2024 £m	Total 31 March 2023 £m
Various suppliers		131	-	-	131	54
Other		58	39	13	110	69
International subscription – IAEA		16	73	114	203	165
International subscription - Other		10	42	60	112	69
Total core department		215	154	187	556	357
East Suffolk and Suffolk County Councils		-	-	99	99	-
Total departmental group		215	154	286	655	357

Core department

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.

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.

Departmental group

The departmental group has entered into non-cancellable contracts (which are not leases, PFI contracts or other service concession arrangements) arising from Sizewell C Limited’s commitments of £99 million under the Deed of Obligation.

On the 8 October 2021, East Suffolk Council, Suffolk County Council and NNB Generation Company Limited (now Sizewell C Limited) entered into a Deed of Obligation (DOO) pursuant to section 1 of the Localism Act 2011 and section 111 of the Local Government Act 1972. The DOO related to all aspects of the Sizewell C project and outlines a number of payments that SZC is required, or could be required, to make to the councils and funding for Suffolk communities throughout the construction phase of the project, to mitigate the impacts of construction.

21. Financial instruments

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

	Note	31 March 2024 Core department £m	31 March 2024 Departmental group £m	31 March 2023 Core department £m	31 March 2023 Departmental group £m
Financial assets At amortised cost
Cash and cash equivalents	15	1,025	2,737	1,098	2,083
Receivables (i)	14	562	835	2,916	3,298
Loans to public sector bodies (ii) & (iii)	10.2	188	188	238	238
Other financial assets and private sector loans	11.1	70	70	187	187
Total financial assets at amortised cost		1,845	3,830	4,439	5,806
Elected at fair value through other comprehensive income (FVTOCI)
Ordinary shares in public sector companies (iv)	10.1	97	793	445	1,055
Other financial assets	11.1	40	40	49	49
Total financial assets elected at FVTOCI		137	833	494	1,104
Mandatory at fair value through profit or loss (FVTPL)
Derivatives – Contracts for Difference (CfD)	9	-	2,900	-	2,598
Loans to public sector bodies (ii) & (iii)	10.2	2,837	2,837	2,406	2,406
Other financial assets and private sector loans (vii)	11.1	148	148	104	104
Total financial assets mandatory at FVTPL		2,985	5,885	2,510	5,108
Financial liabilities At amortised cost
Payables (ii)	16	(591)	(1,553)	(369)	(1,290)
Total financial liabilities at amortised cost		(591)	(1,553)	(369)	(1,290)
Mandatory at fair value through profit or loss (FVTPL)
Derivatives – Contracts for Difference (CfD)	9	-	(92,051)	-	(87,740)
Total financial liabilities mandatory at FVTPL		-	(92,051)	-	(87,740)
Designated at fair value through profit or loss (FVTPL)

1. 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 10.2.
   3. (iii) Ordinary shares in public sector companies excludes bodies that are consolidated in the departmental group, as these are held at cost, see note 10.1.
   4. (iv) Specific valuation techniques used to value financial instruments include:
      1. – the fair value of public sector shares are based upon net assets and classified as level 2
      2. – 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
      3. – 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
      4. The different levels are defined as:
         1. – Level 1 – uses quoted prices (unadjusted) in active markets for identical assets or liabilities;
         2. – Level 2 – uses inputs for the assets or liabilities other than quoted prices, that are observable either directly or indirectly;
         3. – 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.
   5. (v) 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.

Financial risk management

IFRS 7 ‘Financial Instruments: Disclosures’ 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.

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.

Investment funds and loan portfolios

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 loan portfolios to secure value for the core department as an investor. This includes a full evaluation of each business case submitted prior to committing funds.

Cash and cash equivalents

The departmental group held cash and cash equivalents of £7,888 million as at 31 March 2023 (31 March 2022: £2,083 million). The cash and cash equivalents are held with banks and financial institutions. The departmental group considers that cash and cash equivalents have a low credit risk based on the external credit ratings of the holding parties.

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

The credit risk and loss allowances have been insignificant for loans, bonds, 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. There are no material expected credit losses in the reporting period.

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.

The departmental group undertakes very few foreign currency transactions and is not exposed to significant foreign currency 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 SoFP valuation. However, the departmental group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

The departmental group 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.

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 an 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.

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 is minimal.

The departmental group’s potential exposure to liquidity risk in relation to CfDs is mitigated by the funding arrangements under the legislation, meaning LCCC has no obligation to pay the generators until it receives adequate funds from suppliers to perform its obligations.

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.

22. Contingent liabilities

Core department – unquantifiable contingent liabilities

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 Energy Security and Net Zero. 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 14.

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 were granted the 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 cases which currently cannot be reliably estimated.

Energy Price Guarantee

The core department may face future cash flows in relation to The Energy Price Guarantee (EPG) until end of scheme reconciliations are completed, which is expected to be done by the end of the 2024/25 financial year. EPG supported the price of domestic energy consumed up to 30 June 2023 and the scheme’s grant expenditure will be finalised around 18 months after this date, in line with the sector’s reconciliation timelines for household energy consumption.

Departmental group – unquantifiable contingent liabilities

The departmental group has the following unquantifiable contingent liabilities. Other liabilities are disclosed in our arm’s length bodies’ 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. a 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.

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 – Uranic Material

At 31 March 2024, the NDA held inventories of reprocessed uranic material. These are potentially saleable materials, although there is currently no commercial demand and are held at £nil value. Due to uncertainty over their future use, it is possible that the material will be declared as waste by the government, requiring treatment and disposal, which may result in as yet unquantified liabilities for the NDA.

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 arm’s length bodies’ accounts.

NDA – AGR Transfer (£17,780 million)

On 23 June 2021 the NDA, government and EDF Energy entered into new decommissioning arrangements for 7 Advanced Gas-cooled Reactor (AGR) stations in which government has directed the 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 the 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 £17,780 million (undiscounted) in its most recently published financial statements.

23. 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 2024, the core department considers a receipt from the scheme to be possible.

Mineworkers’ Pension Scheme Investment Reserve

The Mineworkers’ Pension Scheme Investment Reserve contains the unused element of the surplus from the scheme valuation as at 30 September 1993 that was allocated to British Coal. In accordance with the provisions set out in the pension scheme and rules, if it is not required to make good any shortfall, it will be released to the Guarantor over a period of time. Government Actuary’s Department estimates the Investment Reserve as £1.5bn at 31 March 2024. The payments are expected to be made in the FY2029-30.

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.

24. Related party transactions

The core department is the parent of the bodies listed in note 26 ‘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 NNL Holdings Limited.

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 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.

The Second Permanent Secretary of the core department, Clive Maxwell, is a director of Sizewell C Holding Company. The core department’s shareholding in Sizewell C Holding Company increased by £1,089 million in the year.

25. Restatement of Statement of Financial Position and Statement of Comprehensive Net Expenditure as a result of machinery of government (MoG) changes, changes to the Designation Order and other restatements

1. Machinery of government (MoG) changes (accounted for as transfer by merger)

MoG changes result in functions or responsibilities being merged or transferred within government. A function is an identifiable business operation with an integrated set of activities, staff and recognised assets and liabilities, and changes are accounted for using merger accounting in accordance with the FReM. This requires the restatement of the primary statements and the associated notes to the accounts.

In February 2023, the Prime Minister announced a MoG change which led to split of the Department for Business, Energy and Industrial Strategy (BEIS) to create 3 new government departments: The Department for Energy Security and Net Zero (DESNZ); The Department for Science, Innovation and Technology (DSIT); and The Department for Business and Trade (DBT) – to replace the Department for Business, Energy, and Industrial Strategy (BEIS) and the Department for International Trade (DIT). The restructuring also involved the Investment Security Unit (ISU), the unit responsible for operating the UK’s investment screening regime under the UK National Security and Investment Act 2021 (NSIA), being moved to sit within the Cabinet Office.

The departmental changes affecting its estimate and accounts became effective from 1 April 2023. DESNZ is focused on the energy portfolio from the former BEIS.

In addition to the split of BEIS and as a result of Spending Review 2021, the transfer of several International Climate Finance (ICF) programmes from BEIS to Foreign, Commonwealth and Development Office (FCDO) was implemented in 2023-24.

Each of the 3 new departments were required to produce an annual report with consolidated accounts for the period ending 31 March 2024. To facilitate this, the opening SoFP balances at 1 April 2023 had to be offboarded from the BEIS core ledger, split between the new departments and onboarded to the new departmental ledgers.

The 3 new departments were also required to restate prior year financial statements on the basis that 3 departments had always existed, with restatement of the SoFP covering both 31 March 22 and 31 March 23.

Allocation of balances at 1 April 2023

Allocation of former BEIS balances at 1 April 2023 to the 3 new departments was undertaken via 2 separate stages:

• Cost centre allocation – Balances at 31 March 2023 were first allocated based on cost centre. Cost centres directly attributable to the 3 new departments were identified, isolated, and transferred accordingly
• Detailed analysis – The remaining balances at 31 March 2023 underwent detailed analysis with input from other teams within the department where necessary, allocating all remaining account lines within the SoFP to the relevant the new departments. For example, items on the receivables ledger without a cost centre or programme code required invoice analysis to ascertain which department the receivable belonged to

31 March 2023 general bank account cash in the former BEIS core department has been allocated to DESNZ, DSIT and DBT on the basis of 2023-24 Vote on Account (VOA) splits of supply drawn down between the 3 departments; these splits have been submitted to HM Treasury. This resulted in 53% of cash in the general bank account of the former BEIS department being allocated to DESNZ. The department considered alternative ways of splitting the former BEIS general bank account balance, such as using the split of working capital between DESNZ, DSIT and DBT as a basis for the split. This analysis did not produce a materially different allocation of cash between the 3 departments as at 31 March 2023.

Development of the 31 March 2022 SoFP

Development of the Allocation of balances at 1 April 2023 for the 3 new departments from the former BEIS core department was undertaken via 3 separate stages:

• Cost centre allocation – Approached in the same manner as 1 April 2023 allocation
• Allocation based on understanding of business – The remaining balances at 31 March 2022 were reviewed to determine whether further direct allocations to departments could be made based on the understanding of the business of each of the 3 new departments. In addition, trade receivables, trade payables (including goods received not invoiced), PPE and intangible assets were analysed in detail to split between the 3 new departments
• Split using 31 March 2023 allocations – Following the first 2 stages a residual balance remained where the cost centre approach and understanding of business approach proved unsuccessful. For this residual balance, the split of remaining balances between the 3 departments was actioned based on the percentage splits calculated for the 31 March 2023 SoFP. The largest balances allocated based on 31 March 2023 percentage splits were cash (and therefore supply payable) and general fund reserves. If a different assumption had been made, for example splitting cash on the basis of expenditure, then the cash and general fund reserves figures would both be lower by approximately £280 million

Allocation of 2022-23 and 2023-24 SoCNE transactions

Similar to allocation of balances at 31 March 2023, allocation of former BEIS transactions for 2022-23 and 2023-24 to the 3 new departments was undertaken via 2 separate stages (the former BEIS ledger remained open until accounting period 8 in 2023-24, with some immaterial balances continuing to impact the ledger until accounting period 12):

• Cost centre allocation – 2022-23 and 2023-24 transactions were first allocated based on cost centre. Cost centres directly attributable to the 3 new departments were identified, isolated, and transferred accordingly
• Detailed analysis – The remaining transactions underwent detailed analysis with input from other teams within the department where necessary, allocating all remaining transactions from the general ledger to the relevant the new departments. This included shared costs for areas such as Corporate Services, with costs split on a transactional basis

2. Accounting Policies changes

Accounting policies are disclosed in note 1 to the accounts. On the creation of DESNZ there were no changes to the accounting policies from BEIS for the activities that transferred into the new department. Certain BEIS accounting policies not applicable to DESNZ, meaning those activities that transferred to DSIT and DBT, have been removed accordingly from the DESNZ accounting policies note.

The 23-24 Financial Reporting Manual (FReM) has been updated to include an adaptation of IFRS 9 ‘Financial Instruments’ for the public-sector context. The original IFRS 9 adaptation was published in 21-22 FReM and focussed on financial guarantee contracts. The latest adaptation encompasses a wider range of financial instruments in the scope of IFRS 9.

The Contracts for Differences (CfD) scheme is a government mechanism for supporting low-carbon electricity generation. It is designed to incentivise investment in renewable energy by providing protection from volatile wholesale prices, guaranteeing electricity producers a flat (indexed) rate for the electricity they produce by paying or receiving the difference between an agreed strike price and a reference price. These contracts give rise to a material difference between the transaction price (£nil consideration) and fair value of the financial instrument, with the difference deferred and not recognised as an asset (or liability) on former BEIS, now DESNZ (or LCCC’s) SoFP (however, there are extensive disclosures).

The FReM adaptation will now bring the previously deferred and held off SoFP value onto the SoFP. As proposed by HM Treasury and supported by the FRAB, the IFRS 9 adaptation is to be applied retrospectively and adopted from 23-24. This required a restatement of the 22-23 SoFP and supporting notes in the 23-24 DESNZ annual report and accounts, accounted for via a prior period adjustment.

3. Changes to the departmental boundary

As a result of an ONS classification decision, Bulb Energy Ltd was designated as a central government body. Bulb Energy Ltd was added to the Designation and Amendment Order in 2023-24, with a retrospective classification, that affects the prior year figures. The prior year figures have therefore been restated to reflect the change in the departmental boundary.

4. Prior period restatements

Several prior period errors and omissions were identified and resulted in the restatement of prior period comparatives. Those include:

1. The estimated fair value of CfD liabilities has been understated by £636 million as a result of management using a real discount rate to discount near term projected future difference payments that are expressed in nominal terms. The department has restated the position as at 31 March 2023 by increasing the derivatives liability and expense relating to contracts for difference derivatives by £636 million.

2. The valuation of the core department’s provision in relation to the decommissioning of the JET facility and the provision in relation to the contractual historic fuel liabilities of British Energy were performed based on the information that did not take into account the latest forecast payment schedules. As a result, the reported provisions in 2022-23 accounts were understated by £313 million. The department has restated the position as at 31 March 2023 by increasing the provisions liability and provisions expense by £313 million.

3. The calculation of the Energy Price Guarantee spend for 2022-23 was overstated by £170m and the related provision was understated by the same amount due to a repayment for £170 million being incorrectly allocated to the 2023-24 period. The department has restated the position as at 31 March 2023 by reducing the spend classified as Grants and increasing the provisions liability and provisions expense by £170 million.

4. A restatement was required to correctly eliminate the intra-group revenue that arises from services provided to the Site Licence Companies (SLCs). In prior years the elimination of the revenue was incorrectly applied to the Minority Interest Reserve which resulted in its overstatement by £140 million. All costs of SLCs represent the cost in relation to the Nuclear Decommissioning Provision and should not impact the net expenditure for the reporting periods. The appropriate elimination of the intra‑group revenue that arises from services provided to the SLCs is to eliminate it against the costs incurred when providing these services. The department has restated the position as at 31 March 2023 by reducing the Minority Interest Reserve and cost on staff and goods and services by £140 million.

5. As part of the BEIS MoG change, legacy consolidation adjustments were allocated to DESNZ although the evidence confirming their nature and purpose could not be identified. In line with FReM requirements the department can only recognise in their accounts the balances that can be supported by evidence. To ensure that the department’s accounts provide true and fair representation of its activities and transactions, legacy consolidation adjustments were cleared down. As a result the General Fund balance as at 31 March 2023 was reduced by £51 million.

6. During 2022-23 UK Green Infrastructure Platform Limited (UKGIP) paid out the remaining dividends resulted from the disposal of the investments it held on behalf of its shareholders. DESNZ (previously BEIS) holds 90% of UKGIP shares. The Minority Interest Reserve was recognised in BEIS accounts to present the share of UKGIP net assets belonging to the minority shareholder. Following the dividend payments in 2022-23, the value of UKGIP net assets was reduced to £nil million. As a result, the Minority Interest Reserve should have been eliminated, but was omitted in 2022-23 accounts. The department has restated the position as at 31 March 2023 by reducing the Minority Interest Reserve and increasing the General Fund Reserve by £16 million.

7. The department changed the classification of promissory notes from non-current liabilities to current liabilities. This is due to the fact they are legally payable on demand, so the maturity profile in the Consolidated SOFP shows the earliest date at which they could be payable. This resulted in an adjustment of £1,875 million between non-current liabilities and current liabilities.

Impact of restatements on opening balances for core department at 31 March 2023

Consolidated Statement of Comprehensive Net Expenditure:

	Balance at 31 March 2023 per 2022-23 published accounts £m	Machinery of government changes £m	Accounting policy changes £m	Departmental Boundary changes £m	Prior period adjustments £m	Restated balance at 31 March 2023 £m
Net expenditure for the period	62,548	(13,371)	-	(158)	313	49,332
Other comprehensive net income and expenditure	(16)	(3)	-	-	-	(19)
Total comprehensive expenditure	62,532	(13,374)	-	(158)	313	49,313

Consolidated Statement of Financial Position:

	Balance at 31 March 2023 per 2022-23 published accounts £m	Machinery of government changes £m	Accounting policy changes £m	Departmental Boundary changes £m	Prior period adjustments £m	Restated balance at 31 March 2023 £m
Non-current assets	10,694	(6,562)	-	-	-	4,132
Current assets	5,890	(2,574)	-	338	170	3,824
Current liabilities	(21,599)	13,748	-	(560)	(2,358)	(10,769)
Non-current liabilities	(3,586)	214	-	(63)	1,875	(1,560)
General fund	8,992	(4,770)	-	285	313	4,820
Revaluation reserve	(391)	(56)	-	-	-	(447)

Impact of restatements on opening balances for the departmental group at 31 March 2023

Consolidated Statement of Comprehensive Net Expenditure:

	Balance at 31 March 2023 per 2022-23 published accounts £m	Machinery of government changes £m	Accounting policy changes £m	Departmental Boundary changes £m	Prior period adjustments £m	Restated balance at 31 March 2023 £m
Net expenditure for the period	(65,843)	(14,394)	1,058	(158)	807	(78,530)
Other comprehensive net income and expenditure	(697)	624	-	-	-	(73)
Total comprehensive expenditure	(66,540)	(13,770)	1,058	(158)	807	(78,603)

Consolidated Statement of Financial Position:

	Balance at 31 March 2017 per 2016-17 published accounts £m	Machinery of government changes £m	Accounting policy changes £m	Departmental Boundary changes £m	Prior period adjustments £m	Restated balance at 31 March 2023 £m
Non-current assets	27,953	(12,945)	(3,533)	-	7	11,482
Current assets	8,726	(3,821)	-	338	142	5,385
Current liabilities	(29,718)	15,356	-	(560)	(2,384)	(17,310)
Non-current liabilities	(148,980)	1,655	(68,168)	(63)	1,242	(214,314)
General fund	(145,496)	2,145	71,701	285	836	216,173
Revaluation reserve	(2,289)	1,416	-	-	(3)	(876)
Charitable funds	(426)	426	-	-	-	-
Minority interest	(762)	62	-	-	160	(540)

26. List of bodies within the departmental group

The table below shows the list of DESNZ organisations included in the Government Resources and Accounts Act 2000 (Estimates and Accounts) Order 2023 – known as the Designation Order. And amendments from the Government Resources and Accounts Act 2000 (Estimate and Accounts) (Amendment) Order 2023 – known as the Amendment Order.

As a result of changes made in the 2023-24 Designation Order and Amendment Order some additional bodies are now included in the departmental group accounts boundary. Where boundary changes have an impact on previous reported financial results, these are shown in note 25.

(a) Bodies consolidated in departmental group accounts for 2023-24

NDPBs and other designated bodies:

Designated body	Status	Notes
Bulb Energy Ltd	Other public body	Assets and liabilities are included in the core department’s figures
British Nuclear Fuels 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
Enrichment Holdings Ltd	Other public body	-
Enrichment Investments Limited	-	Consolidated by Enrichment Holdings Limited.
Electricity Settlements Company Ltd	Other public body	-
Great British Nuclear Limited	Other public body	-
Low Carbon Contracts Company Ltd	Other public body	-
Nuclear Decommissioning Authority[Note 1]	NDPB	-
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.
Oil and Gas Authority operating as North Sea Transition Authority	NDPB	-
Salix Finance Ltd	NDPB	-
Sizewell C Limited	Other public body	-
Sizewell C (Holding) Limited	Other public body	-
UK Green Infrastructure Platform Limited	Other public body	Investment vehicle managed by UK Green Investment Bank Limited on behalf of DESNZ.
United Kingdom Atomic Energy Authority[Note 1]	NDPB	gov.uk/government/organisations/uk-atomic-energy-authority (corporate) ccfe.ukaea.uk (fusion research)
AEA Insurance Limited	-	Consolidated by United Kingdom Atomic Energy Authority
UK Industrial Fusion Solutions Ltd	-	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 2023-24

NDPBs and other designated bodies:

Designated body	Status	Notes
Climate Change Committee (formerly the Committee on Climate Change)[Note 1]	NDPB	Turnover and net assets are not material to departmental group accounts.
NDA Archives Limited	Other public body	Subsidiary of the NDA. 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 2023-24 as the activities transferred to Magnox in 2016-17.

Notes:

1. 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.

27. Events after the reporting period

Non-adjusting events

National Energy System Operator (NESO)

On 13 September 2024, the launch of NESO was announced. This will be a publicly owned body that will support the UK’s energy security, help to keep bills down in the long term and accelerate the government’s clean power mission. On the same day, the government announced that an agreement had been reached with National Grid PLC to acquire the Electricity System Operator.

The enterprise value of £630 million that the government has agreed with National Grid to acquire the Electricity System Operator will be subject to customary closing adjustments.

Great British Energy

On 25 July 2024, a Bill was introduced to Parliament and a founding statement published for Great British Energy, a publicly owned company to invest in clean, home-grown energy. As set out in the founding statement, Great British Energy will be backed by a capitalisation of £8.3 billion of new money over this Parliament.

Mineworkers’ Pension Scheme (MPS)

The department has disclosed a contingent asset in respect of the MPS Investment Reserve, estimated at £1.5bn as at 31 March 2024. The value of the investment reserve was due to be returned to the department in 2029-30. At her Budget on 30 October 2024, the Chancellor of the Exchequer confirmed that the c.£1.5bn surplus in the MPS would be transferred out of the Investment Reserve Fund to the Bonus Augmentation Fund. This will be used to pay bonus pensions directly to members, benefitting thousands of families across the country. Payments will start from the end of November 2024.

The department reports a total receivable of £324m as at 31 March 2024 in relation to the MPS surplus sharing arrangements. A press release on 31 October 2024 announced a government review of the surplus sharing arrangements. While the review is ongoing the reported £104m current receivable in the 2023-24 financial statements will not now be received in 2024-25. Until the review nears completion an estimate of the overall effect on reported receivables cannot be made.

27.1 Date accounts authorised for issue

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

---

Next:
Trust statement

---

Previous:
Accountability report