Corporate report

DLUHC annual report and accounts 2021 to 2022: 3. Accountability report

Updated 8 August 2022

This was published under the 2019 to 2022 Johnson Conservative government

Annual report and accounts 2021 to 2022 - links to all sections

1. Foreword and overview
2. Performance analysis
3. Accountability report
4. Financial statements

The Accountability Report is included to meet key accountability requirements to Parliament.

Corporate Governance Report

The Directors’ Report

Our Departmental Board

During 2021-22 the department consisted of the core department and fourteen other arm’s length bodies (ALBs). Note 24 of the accounts provides a full list of public bodies sponsored by the department and identifies those that are consolidated into the accounts of the Departmental Group (‘the Group’).

The Departmental Board, comprising of Ministers, Non-Executive Directors, the Permanent Secretary, Second Permanent Secretary, and the Chief Financial Officer, met two times in the year rather than quarterly, owing to the pandemic and ministerial changes following the Machinery of Government (MoG) change. Each member’s attendance at Departmental Board meetings is noted below. The Board’s role is to provide collective strategic and operational leadership for the department’s business. It supervises five key areas: strategic clarity; commercial sense; talented people; results focus; and management information. The department also has a Non-Ministerial Board which met three times in 2021-22. The Non-Ministerial Board is chaired by the Lead Non-Executive Director. It is attended by the Executive Team and Non-Executive Directors. Its role is to review the department’s capability to deliver its priorities and to scrutinise and advise on key performance measures to drive delivery and improvements.

Further details of Ministers’ areas of responsibility, the department’s Non-Executive Directors and the Executive Team can all be found at: https://www.gov.uk/government/organisations/department-for-levelling-up-housing-and-communities.

Our Ministers as at 31 March 2022^{[footnote 1]}

The Rt Hon Michael Gove MP*

Secretary of State for Levelling Up, Housing, and Communities and Minister for Intergovernmental Relations. Chair of the Departmental Board

From 15 September 2021

Attended 2 of 2 board meetings

The Rt Hon Stuart Andrew MP*

Minister of State for Housing

From 08 February 2022

Attended 1 of 1 board meetings^{[footnote 2]}

Kemi Badenoch MP*

Minister of State for Levelling Up Communities and Minister for Equalities

From 16 September 2021

Attended 2 of 2 board meetings

Eddie Hughes MP

Parliamentary Under Secretary of State for Rough Sleeping and Housing

From 13 February 2021^{[footnote 3]}

Attended 2 of 2 board meetings

Lord Stephen Greenhalgh*

Minister of State for Building Safety and Fire

From 18 March 2020^{[footnote 4]}

Attended 1 of 2 board meetings

Neil O’Brien MP*

Parliamentary Under Secretary of State for Levelling Up, The Union and Constitution

From 19 September 2021

Attended 2 of 2 board meetings

Lord Richard Harrington^{[footnote 5]}

Minister of State for Refugees

From 8 March 2022

Attended 0 of 2 board meetings

*Rt Hon Greg Clark MP was appointed as the new Secretary of State in July 2022, replacing Rt Hon Michael Gove MP. Additionally, Rt Hon Stuart Andrew MP, Kemi Badenoch MP, Neil O’Brien MP and Lord Stephen Greenhalgh resigned from their ministerial positions in July 2022. Marcus Jones MP and Paul Scully MP were appointed as Ministers of State, and Lia Nici was appointed as Parliamentary Under Secretary of State in July 2022.

Our Non-Executive Directors

Pam Chesters CBE

Non-Executive Director

Attended 2 of 2 board meetings

Jeffrey Dodds

Non-Executive Director

From 12 April 2021

Attended 2 of 2 board meetings

Dame Mary Ney DBE

Non-Executive Director

Attended 2 of 2 board meetings

Dame Alison Nimmo DBE

Interim Lead Non-Executive Director

From 12 April 2021

Attended 2 of 2 board meetings

Lord Gary Porter CBE

Non-Executive Director

From 7 June 2021

Attended 2 of 2 board meetings

Our Executive Directors

Jeremy Pocklington

Permanent Secretary

Attended 2 of 2 board meetings

Sue Gray

Second Permanent Secretary, Union and Constitution

From 8 December 2021

Attended 2 of 2 board meetings

Matt Thurstan

Director General, Chief Financial Officer and Corporate

Attended 2 of 2 board meetings

Emran Mian

Director General, Cities & Local Growth Unit

Catherine Frances

Director General, Local Government, Resilience and Communities

Richard Goodman

Director General, Safer & Greener Buildings

Will Garton

Director General, Levelling Up

From 28 March 2022

Simon Claydon

Director, People, Capability and Change

From 7 June 2021

Kay Withers

Director of Strategy

From 31 January 2022

Other Ministers who served in the department during 2021-22 were:

• MP Robert Jenrick, Secretary of State for Housing, Communities, and Local Government, from 24 July 2019 to 15 September 2021. Attended no board meetings.
• MP Luke Hall, Minister of State for Regional Growth and Local Government at the Ministry of Housing, Communities and Local Government from 27 July 2019 to 15 September 2021. Attended no board meetings.
• MP Christopher Pincher, Minister of State for Housing, at the Department for Levelling Up, Housing and Communities (formally the Ministry of Housing, Communities and Local Government), from 13 February 2020 to 8 February 2022. Attended one board meeting.

Other Non-Executive Directors who served in the department during 2021-22 were:

• Michael Jary, Lead Non-Executive Director from 1 February 2019 to 31 March 2022. Attended two board meetings.

Other Executive Directors who served in the department during 2021-22 were:

• Ruth Bailey, Director of People, Capability and Change from 4 March 2019 to 21 June 2021. Attended no board meetings.
• Lise-Anne Boissiere, Director of Strategy from 20 April 2017 to 31 January 2022. Attended one board meeting.
• Tracey Waltho, Director General for Housing and Planning to 4 March 2022

Directorships and Significant Interests

Details of directorships and other significant interests held by Ministers are set out in the List of Ministers’ Interests and the Register of Members’ Financial Interests held on the UK Parliament website. Details of directorships and other significant interests held by members of the DLUHC Board can be found here. The Department provides information to individuals who hold appointments in outside organisations where a conflict of interest might arise or might be perceived.

Related Party Transactions & Conflicts of Interest

The names and titles of all Ministers and Related Parties who had responsibilities for the department during the year, are provided above. All potential conflicts of interest for Non-Executive board members are considered on a case-by-case basis. Where necessary, measures are put in place to manage or resolve potential conflicts. The board has agreed and documented an appropriate system to record and manage conflicts and potential conflicts of interest of board members. Where applicable, the board will publish in this Governance Statement, all relevant interests of individual board members and how any identified conflicts, and potential conflicts, of interest of board members have been managed. Any significant Related Party Transactions associated with the interests of Ministers or Board members, are shown in Note 22 – Related Party Transactions. No Minister, board member, key manager or other related party has undertaken any material transactions with the Department of Levelling Up, Housing and Communities during the year.

Auditor

The core, agency, arm’s length bodies and group accounts have all been audited by the Comptroller and Auditor General (C&AG) with the exception of the Leasehold Advisory Service which is audited by Beever & Struthers. Further details are given in the accounts of the bodies concerned. The total cost of the audit across the Departmental Group is £1,100,000 of which £640,000 is a cash charge and £460,000 is a notional charge (2020-21: £1,023,000 of which £598,000 was a cash charge and £425,000 was a notional charge).

The audit fee for the core department is £330,000 (2020-21: £295,000), broken down as £305,000 for the departmental audit, £10,000 for the cost of consolidation work and £15,000 for the departmental audit of the Whole of Government Accounts submission made by the department to HM Treasury. The increase reflects the additional complexity of the Department’s audit following the Machinery of Government transfer of functions.

In addition, the department meets the costs for audit of the Business Rates-related accounts. The fees are all notional charges and are included in the group accounts. The fees on these audits are as follows:

• Main Rating Account: £41,000 (2020-21: £41,000)
• Levy Account: £8,500 (2020-21: £8,500)
• Trust Statement: £20,500 (2020-21: £20,500)

The National Audit Office performed other statutory audit work, including value for money studies, and other reports to management at no cost to the department.

Personal Data Related Incidents

The department, its executive agency and arm’s length bodies manage a range of data which relates to staff and citizens, most of which is used to support policy analysis and review and does not allow the identification of individuals. Procedures and processes are in place to protect information and data and to ensure it is only used for the purposes for which it was collected. For further information on the department’s response to data related incidents, refer to Information Security.

Statement of Accounting Officer’s Responsibilities

Under the Government Resources and Accounts Act 2000 (the GRAA), HM Treasury has directed the Department for Levelling Up, Housing and Communities to prepare, for each financial year, consolidated resource accounts detailing the resources acquired, held or disposed of and the use of resources during the year by the department (inclusive of its executive agency) and its sponsored non-departmental and other arm’s length public bodies designated by order made under the GRAA by Statutory Instrument 2021 number 1441 (together known as the ‘Departmental Group’, consisting of the department and bodies listed in Note 24 to the accounts). The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the department and the Departmental Group and of the income and expenditure, Statement of Financial Position and cash flows of the Departmental Group for the financial year.

In preparing the accounts the Accounting Officer of the department is required to comply with the requirements of the Government Financial Reporting Manual (FReM) and in particular to:

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

On 2 April 2020, HM Treasury appointed Jeremy Pocklington, the Permanent Head of the department, as Accounting Officer of the Ministry of Housing, Communities and Local Government now the Department for Levelling Up, Housing and Communities.

The Accounting Officer of the department has also appointed the chief executives or equivalents of its sponsored non-departmental and other arm’s length public bodies as Accounting Officers of those bodies. The Accounting Officer of the department is responsible for ensuring that appropriate systems and controls are in place to ensure that any grants that the department makes to its sponsored bodies are applied for the purposes intended and that such expenditure and the other income and expenditure of the sponsored bodies are properly accounted for, for the purposes of consolidation within the resource accounts. Under their terms of appointment, the Accounting Officers of the sponsored bodies are accountable for the use, including the regularity and propriety, of the grants received and the other income and expenditure of the sponsored bodies.

The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the assets of the department or other arm’s length sponsored public bodies for which the Accounting Officer is responsible, are set out in Managing Public Money^{[footnote 6]} published by HM Treasury.

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

The annual report and accounts as a whole is fair, balanced and understandable and the Accounting Officer takes personal responsibility for the annual report and accounts and the judgments required for determining that it is fair, balanced and understandable.

Governance Statement

Introduction

The Accounting Officer is responsible to Parliament for the stewardship of the resources given to DLUHC, including those allotted to the department’s arm’s length bodies (ALBs) and for funding which is devolved to local bodies such as Local Authorities (LAs) and Local Enterprise Partnerships (LEPs). This Governance Statement sets out the range of measures we implement to achieve effective control across the department and the sources of assurance available to the Accounting Officer to support the conclusions drawn.

More detail on the control system is given in the Accounting Officer System Statement (AOSS) and the National Local Growth Assurance Framework which gives details of arrangements for LEPs.

Details for individual ALBs are contained in the Governance Statements of their individual Annual Report and Accounts. This Governance Statement sets out:

• the role of the Board and the Audit and Risk Assurance Committee (ARAC) of the Board and in particular the work of the non-executive directors in supporting and challenging the work of the department, culminating in the annual Governance Assurance Panel (GAP) exercise;

• the role of the Executive Team (ET) and its sub-committees;

• the role of the Senior Sponsors and the Boards of the ALBs;

• the mechanisms in place to assure the Accounting Officer that locally devolved budgets are spent with regularity, propriety, and value for money; and

• the risk management framework and the risk environment in which we operate.

The Departmental Board and Non-Ministerial Board

The Departmental Board is chaired by the Secretary of State and comprises Ministers, the Executive Team and Non-Executive Directors, which totalled 23 people by 31st March 2021. The Ministerial Board met two times during the financial year as DLUHC was established in September 2021. Between April 2021 and September 2021 MHCLG’s Board did not meet. Full attendance records are provided in the Directors’ Report.

The Non-Ministerial Board is chaired by the Lead Non-Executive Director, who at the time of publishing is Dame Alison Nimmo filling the post on an interim basis. Throughout 2021-22, Michael Jary was DLUHC’s Lead Non-Executive Director and chaired the Non-Ministerial Board meetings. The Non-Ministerial Board comprises the Non-Executive Directors and the Executive Team and met three times during the financial year. The Non-Executive Directors also met with members of the Executive Team on an ad-hoc basis throughout the year to provide challenge and support on a range of departmental priorities.

The Departmental Board and Non-Ministerial Board consider the department’s overall performance against its strategic objectives, metrics, and indicators, supported by a verbal report from the Permanent Secretary and, where appropriate, the Departmental Performance Reports produced for the Executive Team.

The Departmental Board receives a briefing and report from the ARAC chair on the latest ARAC meetings as a standing item. During 2021-22 the Departmental Board reviewed the missions set out in the Levelling Up White Paper, including the local leadership mission, housing, and regeneration.

Measures to ensure compliance with the corporate governance code of good practice include: undertaking periodic evaluations of Board effectiveness; managing conflicts of interest and effective management and reporting of risks, including undertaking deep dives at ARAC of individual risk areas. All Board Members are required to declare conflicts of interest so they can be understood, considered, and handled appropriately. The Ministerial Code requires all Ministers to disclose their interests in detail, which are published by the Government. A register of interests is maintained which covers all Executive and Non-Executive members. It is updated annually and when relevant changes occur. I am satisfied that any potential or material conflicts of interest that have been identified are sufficiently and appropriately managed. The 2021-22 Board Effectiveness Evaluation was undertaken by Michael Jary as the department’s previous Lead Non-Executive Director. The evaluation included several recommendations to improve the Board’s effectiveness such as meeting on a more consistent basis, having ministerial priorities made clearer to the Board, and identifying more areas where the NEDs can support Ministers and officials.

Audit and Risk Assurance Committee

The Audit and Risk Assurance Committee (ARAC) is chaired by Non-Executive Director, Pam Chesters, and usually meets five times throughout the year. Other members during 2021-22 included Non-Executive Directors Michael Jary and Alison Nimmo (from October 2021), and two independent members, Mark Sheridan (until November 2021) and Susan Barratt. The ARAC is also regularly attended by various additional personnel including the Permanent Secretary, Chief Financial Officer, Financial Director, Chief Risk Officer, and representatives from National Audit Office (NAO), Government Internal Audit Agency (GIAA) and Homes England. The ARAC met five times during 2021-22, reviewing several key focus areas across the department. This included a review into the department’s evolving risk management model, reviewing internal and external audit programmes, assessing departmental and local government cyber security, and providing feedback on the development of the Building Together programme with Homes England. In 2021-22 ARAC also reviewed the work on the Grants Centre of Excellence, assessed in detail the department’s climate action strategy, and supported the signing off of the Annual Report and Accounts 2020-21.

Governance Assurance Exercise

At the end of each financial year, the Governance Assurance Panels (GAP) exercise takes place to allow the department to draw assurances on the effectiveness of the governance arrangements, internal controls, and risk management arrangements implemented by the Director Generals and Directors in the discharge of their delegated authority and responsibilities towards the delivery of the department’s strategic objectives. The GAPs exercise was structured around the department’s six Director General-led Groups, including:

• CFO and Corporate
• Housing and Planning
• Local Government Analysis and Strategy
• Safer and Greener Buildings
• Stronger Places
• Union and the Constitution*

*Union and Constitution included in the GAP exercise following the transfer of responsibilities on elections, UK governance, devolution, the union and the Boycotts Divestment and Sanctions Bill (BDS) from the Cabinet Office to DLUHC in December 2021.

The GAP exercise also explores how directors have safeguarded the department’s assets by ensuring regularity and propriety of expenditure, and promoting the best value for money of that expenditure. The GAP exercise is not designed to scrutinise the department’s policies. The GAP exercise is instead a series of challenge panels and are led by the Non-Executive Directors, and supported by the department’s internal auditors, the Chief Risk Officer, and observers from the NAO.

The Second Permanent Secretary and the five Directors General and their directors presented evidence to their respective panels and summarised challenges they faced during the financial year. The six panels were held between 28th February and 15th March 2022.

Overall, the 2021-22 GAP exercise concluded that good progress had been made across the DLUHC’s Director General-led Groups in strengthening the department’s overarching internal control environment. This progress was particularly demonstrable in relation to risk management and board governance, as well as recognising greater oversight and grip over delivery and operational activity. This progress was especially important given the challenges around the Covid-19 pandemic and amidst changes to the department in response to emerging crises, including in Afghanistan and Ukraine.

However, over the course of the next financial year the GAP exercise identified that given the major shift on policy direction following the creation of DLUHC and the appointment of the new Secretary of State, the department will be required to shift approaches, priorities, and delivery mechanisms, with a review of capacity and skills across the department. The GAP exercise also noted an increased risk appetite in pursuing stretching goals.

In addition, the panels identified that a more consistent approach should be introduced within DLUHC in relation to crisis management, building on the response to Brexit, the Covid-19 pandemic, Afghanistan, and Ukraine. The NEDs agreed that the department’s crisis response has impacted longer-term targets due to personnel across the Director General-led Groups being reallocated to these priorities.

The GAP exercise demonstrated that DLUHC must place a greater strategic emphasis on emerging policy priorities in the next financial year, particularly around net zero, building safety and homelessness, to demonstrate a real commitment to the widening priorities of the new department. Specifically in relation to net zero, a clear and more coherent approach is required that conveys confidence that the department will meet the government’s targets as set out in the Net Zero Strategy.

The GAP exercise concluded that more work was required in the future in fully integrating the Union and Constitution Group into the wider governance arrangements of the department.

Ministerial Directions

There was one ministerial direction in 2021-22.

On 10 January 2022, the Secretary of State gave a ministerial direction to provide a further £27m for the installation of a common alarm system in all buildings with a Waking Watch, extending the scope of the Waking Watch Relief Fund

The Executive Team and its sub-committees

Executive Team

The Executive Team is chaired by the Permanent Secretary and comprises the Second Permanent Secretary, Directors General, the Director of Strategy, Director of Communications and the Director of People, Capability and Change. The Executive Team meets one to two times per week, including one week in each month when all Directors and Deputy Directors from ethnic minority backgrounds join the Executive Team as the Departmental Leadership Team. The Executive Team also meets monthly as the Senior Talent and Pay Committee (STPC) to consider senior civil service resourcing, talent and pay.

The Executive Team considers corporate and policy issues, focusing on the performance, management, and coordination of the department and on strategic planning. Discussions in 2021-22 included the Covid-19 response, Machinery of Government (MOG) changes, Ukraine response, building safety, Levelling Up and the People Plan. The Executive Team usually reviews a Departmental Performance Report monthly, considering progress against the business plan milestones, finance, workforce, and risk. The Executive also meets annually to review progress on the internal audit programme and recommend to ARAC to approve the audit programme for the year ahead.

People Committee

The People Committee is chaired by the Director for People, Capabilities & Change, which this year was the Director General for Housing and Planning. The committee comprises representatives from across the department, who are rotated on a regular basis and meets monthly to oversee the development and delivery of the DLUHC People Plan. The committee also oversees and contributes to the people elements of other corporate programmes to ensure a coordinated approach.

Investment Sub-Committee (ISC)

The Investment Sub-Committee (ISC) is chaired by the Chief Financial Officer and comprises a fixed membership of directors from across the professions. This sub-committee meets every two weeks or as required to scrutinise and approve investment proposals for the department to ensure they achieve value for money and meet the requirements of Managing Public Money. ISC achieves this by reviewing the associated business cases, considering the strategic, economic, financial, commercial and management case for the proposal, and compliance with Managing Public Money.

Risk Sub-Committee

The Risk Sub-Committee is chaired by the Chief Financial Officer and comprises of directors from across the department (including finance and legal directors), the Chief Risk Officer, and the Head of Internal Audit. The committee has delegated authority to review risk and to oversee the implementation of the new risk framework. It receives a report on the department’s risk profile and key risks, updates on the progress in developing the department’s risk maturity, and ‘deep-dive’ papers on specific areas of significant or emerging risk.

Locally Devolved Budgets

This department is responsible for the Local Government Accountability Framework for local authorities and for the award of the Local Growth Fund to LEPs. This section sets out the controls that provide the assurance that devolved budgets meet the requirements of Managing Public Money.

Local Government Accountability Framework

Assurance advice is provided to me as Accounting Officer on whether the core accountability framework for local authorities has remained robust. This takes account of the published reports on local audit and accounts, governance, which covers a range of issues including regularity propriety, and achieving value for money locally. It also includes research from the sector; work the department has produced; and specific advice on whether the framework may need amending.

The department continues to hold Framework Panels with our key stakeholders to continually assess the framework to ensure it is fit for purpose and take action where needed. In 2020-21, we part funded the Centre for Governance and Scrutiny working with Localis Research Limited to develop a Toolkit (the Governance, Risk and Resilience Framework) for local authorities to understand how to diagnose and reduce the risk of failure in corporate governance, with the toolkit published as the Governance, Risk and Resilience Framework in March 2021.

We are strengthening the capital finance system in response to changes in patterns in local authority behaviour where a minority of authorities are taking excessive risk through excessive debt, over-reliance on commercial income or the pursuit of novel and risky investments. Details of the actions the government is taking are set out in the policy document Local authority capital finance framework: planned improvements (July 2021). Additionally, in March 2022, the department published the Government’s response to the recommendations of the Committee on Standards in Public Life report on Local Government Ethical Standards of January 2019 committing to engaging with the sector to take forward several recommendations, and suggesting that other recommendations would be most appropriately, effectively, and swiftly taken forward by local authorities as best practice.

The department has continued its activity to understand any short-term pressures on local authorities following on from the Covid-19 pandemic and linked our ongoing work on stewardship with wider work within the department and across Whitehall on the pandemic and on other concurrent pressures. We have maintained our regular engagement with the Local Government Association and other government departments, as well as local authorities. This informs, and is informed by, the extensive work carried out by the department’s Local Government Finance Directorate to understand the specific financial pressures on the sector during the pandemic, and the special grant funding and exceptional financial support arrangements that have been put in place to support the sector.

In December 2021 the department published a package of measures to improve the timeliness of audited accounts, which continue to be a challenge across the sector, and stabilise the market. This was a result of concerted work with all parts of the local audit system, including through the recently established Liaison Committee, to agree a package of measures to get local audit back on track. These measures included:

• providing councils with £45m additional funding over the course of the next Spending Review period to support with the costs of strengthening their financial reporting and increased auditing requirements;
• strengthening training and qualifications options for local auditors and audit committee members;
• reviewing whether certain accounting and audit requirements could be reduced on a temporary basis, where these are of lesser risk to councils; and
• extending the 21-22 audit deadline to 30 November 2022, and then 30 September until 2027/28.

The department’s statutory intervention at Liverpool City Council began in June 2021, when the then Secretary of State appointed four Commissioners to the Council. The directions provided the Commissioners with powers over the highways, regeneration and property management functions of the Authority and their associated governance. The Commissioners submitted their first report to the Secretary of State on 5 October 2021, setting out that the Council is at the beginning of a long improvement journey and expressing concerns about the Council’s finance and wider service delivery. The Commissioners are working with the Council to assist them in taking a whole council approach to improvement. They have requested realistic improvement plans that take account of the urgency and the capacity to deliver; with a view to setting a sustainable long-term financial plan, improving corporate governance, delivering basic services well and meeting the requirements of the statutory directions.

The Secretary of State has also appointed Commissioners in two further councils, in Slough Borough Council in December 2021 and Sandwell Metropolitan Borough Council in March 2022. In Slough, the Secretary of State directed the Council to deliver financial sustainability and to close the long-term budget gap, while achieving improvements in its services and agreeing an officer structure and scheme of delegation to enable the Council to deliver its functions effectively. In Sandwell, the Secretary of State directed the Council to continue to rebuild the governance capacity of the Authority, addressing the deep-seated culture of poor governance and leadership and to restore public trust and confidence in the Authority. The Secretary of State has also directed that the Council put an end to any of the Authority’s activities, practices, and omissions which are, or risk being, not compatible with the Best Value duty. The department continues to support Commissioner teams in any way needed to secure compliance with the best value duties in these authorities and ensure the provision of the public services their residents deserve.

Slough Borough Council is one of three councils to have issued a Section 114 notice since March 2020. Other such notices were issued by London Borough of Croydon and Nottingham City Council, where an Independent Improvement and Assurance Panel/Board are in place, following the non-statutory reviews undertaken in November 2020 to ensure poor financial management and governance failings are addressed.

The department made necessary adjustments to the accountability framework during the Covid-19 pandemic to help local authorities redeploy resources to deal with the pandemic and ensure that essential business continues whilst protecting the health and safety of their members, officers, and the public. This included giving local authorities the flexibility to conduct meetings remotely and allowing access to members of the public; and work within the department to assess and respond to the scale of financial risk that Covid-19 poses to local authorities both at the sector level and at individual local authority level. In addition to the grant paid in 2019-20, the department has provided local authorities with a total of £4.6 billion in un-ringfenced Covid-19 funding across four tranches in 2020-21, with a further £1.55 billion provided in 2021-22. We also encouraged individual local authorities to contact the department at the earliest possible stage where their finances are such that a section 114 notice could potentially be issued due to costs resulting from the Covid-19 pandemic.

There have also been regular and significant engagement between Ministers, regional mayors, and council leaders throughout the Covid-19 pandemic. This included calls between the Secretary of State and Ministers, and regional mayors; as well as weekly teleconferences hosted by the Secretary of State for all local government leaders and chief executives, with other Ministers present to answer questions.

Hudson Review

The Hudson Review was commissioned in April 2018 to review local government finance governance processes and the overarching business rates system. In February 2021, the department considered proposals to transition the work in response to the Hudson Review to business as usual following the significant progress made over the last three years against the Review’s recommendations. In May 2021, the department commissioned the GIAA to provide independent assurance that sufficient progress had been made, with the department providing 53 individual pieces of evidence demonstrating progress against the Hudson recommendations. This was supported by four separate meetings with the GIAA to discuss the evidence provided and to supply additional detail and context.

In October 2021, the GIAA finalised their report of the department’s progress against the recommendations of the Hudson Review, with the report acknowledging that significant progress had been made, with 25 out of the 28 recommendations being completed. Of the remaining three recommendations the GIAA acknowledged that progress had been made, but additional work was required, or formal acceptance of the residual risk was needed before officially closing the work.

The three recommendations were:

1. Senior management to assess the residual risk existing due to the complexity of the elements that make up the settlement process and working in a political environment and whether this sits within the risk appetite of the Directorate or whether further mitigating action should be taken.

2. Senior management to assess the residual risk existing due to the use of spreadsheets used as the repository for the key data and whether this sits within the risk appetite of the Directorate or whether further mitigating action should be taken.

3. Management to determine the skills required by policy leads in the role of an intelligent customer and identify and address training needs.

Given the progress already made by the department, the GIAA viewed each of the three recommendations as a low risk. The department has subsequently reassessed all three of the remaining recommendations and have confirmed that the current mitigations in place in response to the recommendations are within risk appetite. As a result, the department agreed in November 2021 to officially transition the three remaining recommendations in response to the Hudson Review to business as usual.

Sanctions in response to Russian invasion of Ukraine

Following the Russian invasion of Ukraine, the NAO have recommended that the department should seek assurances that it understands and accurately accounts for the implications of financial sanctions implemented to encourage Russia to cease its actions. Considering the financial sanctions in place, the department has undertaken a review of its existing contracts to identify Russian and Belarussian owned or controlled organisations. There has been no adverse impact on the department, and checks are in place for all new procurements to further mitigate the risk.

The department has also considered the impact of government’s foreign policy of financial sanctions against Russia and Ukraine on the local government sector. The department has regularly engaged with local authorities in England, as well as the Local Government Association (LGA), the National Association of Local Councils (NALC) and the Devolved Administrations. This engagement has included surveying the exposure of English local authorities to Russian and Belarusian prime contractors, and targeted follow-up engagement with those councils with significant exposure.

The department has supported the development of the Cabinet Office’s Procurement Policy Note for central Government departments, executive agencies and non-departmental public bodies Contracts with Suppliers from Russia and Belarus (PPN 01/2022). The department has also brought forward the Local Government (Exclusion of Non-commercial considerations) (England) Order 2022 to enable local authorities and parish councils in England, if they so wish, to terminate proposed or subsisting public supply or works contracts either where the country or territory of origin of supplies to the contractor is the Russian Federation or the Republic of Belarus or where the location of the business activities or interests of a contractor is the Russian Federation or the Republic of Belarus. This Order accommodates the request of many council leaders for a flexible approach for councils that wish to terminate contracts with Russian or Belarusian state-owned companies.

Affordable Homes Programme

The Affordable Homes Programme provides grant funding to support the capital costs of developing affordable housing for rent or sale. DLUHC delegates delivery to the department’s largest arms-length body, Homes England, and the Greater London Authority (GLA). The Government have committed approximately £9 billion for the 2016-23 Affordable Homes Programme, and a further £11.5 billion to a successor Affordable Homes Programme that will run from 2021–26. Combined, they will build up to 180,000 affordable homes across the country, should economic conditions allow.

In October 2021 the department uncovered a control failing which allowed the GLA to accumulate £1.7 billion of funding from the 2016-23 Affordable Homes Programme that they had not spent on delivery since programme payments began in 2015-16. The surplus funding had been correctly set aside for investment in affordable housing. DLUHC officials took immediate action to stop further payments to the GLA and to recover payments made in 2021-22. This control failing did not affect the overall delivery of the Affordable Homes Programme but revealed weaknesses in the department’s scrutiny of financial forecasting and reporting within the programme.

In the latter half of 2021-22, the department introduced measures to improve governance and internal control over the delivery of the Affordable Housing Programme. The department established more rigorous scrutiny over delivery targets, financial forecasting and expenditure, and risk management. The department further formalised information channels between the department and the delivery agencies and embedded more regular assurance mechanisms with the participation of independent experts. In 2022-23 the Affordable Homes Programme will move onto the Government Major Projects Portfolio (GMPP), which will provide further external scrutiny of the programme’s governance and processes by the Infrastructure and Projects Authority.

Local Enterprise Partnerships (LEPs), the Local Growth Fund and Getting Building Fund

Growth deals provide funds to LEPs for projects that benefit the local area and economy. The National Local Growth Assurance Framework (NLGAF) guides local decision-making to support accountability, transparency, and value for money. This incorporates recommendations from the non-executive director review of LEP governance and transparency (October 2017) conducted by Dame Mary Ney, one of the department’s NEDs. It also addresses several of the recommendations included in the Ministerial Review into LEPs, Strengthened Local Enterprise Partnerships (July 2018) and in NAO and PAC reports. The purpose of this assurance system is to ensure funds are spent locally with regularity, propriety, and value for money, with oversight of what is being delivered, and is based on:

• an annual assurance provided by the Section 151 Officer of the LEP’s Accountable Body to the Accounting Officer;
• an annual assurance statement from the LEP Chair and Chief Executive which is published on the LEP website;
• regular reporting against agreed output metrics;
• an evaluation framework;
• a delivery plan, published on LEP websites;
• mid-year and annual performance reviews with each LEP;
• compliance spot checks on LEP websites; and
• deep dives to review LEP governance, accountability, and transparency.

For Mayoral Combined Authorities and LEPs who have agreed to combine funding into a ‘Single Pot’, the NLGAF supersedes the guidance given in the Single Pot Assurance Framework (2016).

The 2021-22 LEP annual assurance process (as set out above) retained the strengthened assurance cycle introduced in 2019-20, while considering the impact of the Covid-19 pandemic on programme delivery and governance (e.g., virtual meetings, postponed AGMs etc). All annual assurance statements were provided, and the Annual Performance Review (APR) process concluded in March 2022. Following the 2021-22 APR process, two LEPs were stated as having ‘concerns identified’ outcomes in relation to their governance arrangements, while all LEPs were identified as compliant in terms of the ‘strategic impact’ outcomes. Specifically in relation to the ‘delivery focussed’ outcomes for the Getting Building Fund (GBF), 10 LEPs were identified as a concern, with over a third of the overall funding for the programme remaining unspent by March 2022.

All concerns following the APR will be addressed with LEPs via the department’s Area Teams, where relevant. LEPs with a ’concerns identified‘ outcome or with outstanding GBF spend in 2022-23 are required to submit quarterly monitoring returns until all concerns have been addressed.

Response to Climate Change and Net Zero

The department has continued to develop its response to the climate crisis and the achievement of net zero in 2021-22 by working closely with the Department for Business, Energy, and Industrial Strategy (BEIS) on decarbonisation and driving forward green objectives across the DLUHC’s wider programmes. The department is developing a strategy and delivery plan focused particularly on planning and housing policies and ensuring net zero delivers for levelling up.

DLUHC has also worked closely with BEIS, the Department for Health and Social Care (DHSC) and the Department for Environment, Food and Rural Affairs (Defra) on the cross-government adaptation plan to climate change, where the Department co-owns risks relating to buildings overheating, flood risks, coastal erosion, and other key climate change risks. The Department is also working closely with the NAO to understand how to manage the longer-term risk of climate change, and the implementation of mitigations that may be required in the future.

Our Risk Management Framework

The department’s Risk Management Framework is designed to support effective decision making with the intention of enabling the department to achieve its strategic and operational objectives. It is overseen by the below governance structure:

A revised approach to risk management has been endorsed by the department’s Executive Team, in line with the methodology set out by ‘The Orange Book’, to ensure the department’s approach to risk is consistent with the rest of Government. The Framework seeks to set the tone for our approach to risk, reinforcing the importance of managing risk proactively, empowering our business teams and people to take responsibility for risk and fostering a culture where consideration of risk is integral to delivery of the department’s activities.

This revised approach:

• Formalised the use of the ‘three lines of defence’ approach to risk management.
• Revised the principal risk categories and principal risks register, aligning the register into 13 principal risks together with associated risk appetite statements.
• Set out a more structured approach to risk ownership and risk awareness across the department.

The principles underlying the Risk Management Framework are:

• Governance and Leadership: risk management shall be an essential part of the department’s governance approach.
• Integration: risk management shall be an integral part of the department’s activities and decision-making.
• Collaboration: risk management shall be collaborative across all three ‘lines of defence’ and across the department.
• Structured risk management processes: the department shall have in place clear processes for the identification, reporting, assessment, and treatment of risks.
• Continual improvement: the department shall seek to continually improve its approach to risk management through learning and experience.
• Culture: the department shall foster a risks-aware culture, which shall encompass both a ‘no-blame’ and a ‘willingness to challenge’ ethos.

The Department operates the ’three lines of defence‘ model, intended to manage risks holistically in an integrated and mutually supportive manner, with each of the lines of defence contributing to the overall assurance. The ‘three lines of defence’ making up the model are:

• First line of defence: Each business team has primary ownership, responsibility, and accountability for identifying, assessing and managing the risks relevant to their business activities.
• Second line of defence: consists of a ‘second opinion’/layer to monitor, challenge and facilitate the implementation of effective risk management and co-ordinate the reporting of risk information. The Group Risk team is a core part of the second line of defence.
• Third line of defence: consists of audit activity, which for the Department is undertaken by the GIAA.
• In addition, sitting outside of the Department’s own risk management framework and the ‘three lines of defence’ model, are a range of other sources of external assurance. This includes the Government Functional Standards and the National Audit Office (NAO).

Principal risks

DLUHC continues to operate within a complex and dynamic environment, often influenced by geo-political events and other external factors. We have moved the department to a better way of working, with improved Executive Team and Audit and Risk Assurance Committee (ARAC) risk reporting and oversight of risks as well as further embedding internal audit into the risk management process. At a corporate level, there are currently a total of twelve principal risks. The principal risks have been significantly revised during 2021-22 to better align them to the cross-government ‘Orange Book’ suggested risk categories, and ongoing review and moderation will ensure they are reflective of the risks the department faces in delivering its strategic objectives. A programme of deep dives into each principal risk is in place for 2022-23. The principal risks, as of July 2022, are listed in the table below based on their overall risk rating (highest to lowest).

These risks are each owned by members of the department’s Executive Team who are responsible for putting in place and managing appropriate controls/mitigating actions in line with our risk appetite. Project and programme risks are assigned to the principal risks to help each portfolio understand the makeup of its risk profile. All principal risks and associated controls/mitigations have been reviewed and signed off by the Risk Sub-Committee, the Executive Team, and ARAC. The risks and challenges detailed in the performance report also draw on these risks.

Principle Risk	Sub-Categories
Local Government Delivery Risk	Local tier capacity Local tier funding System of Stewardship Lack of institutional reform
Project Delivery Risk	Capacity & capability Inadequate project planning & controls Weak and/or accelerated project initiation
People Risk	Capabilities Capacity/unsustainability
Financial Risk	Control total breach Value for money Investment risk Credit risk
Resilience Risk	Insufficient surge resource Threats, hazards, risks & capabilities management Inability to discharge Operation London Bridge responsibilities
Systems and Infrastructure Risk	Investment & maintenance Capability & capacity Governance ALBs User Experience
Governance Risk	Insufficient/inadequate Accounting Officer System Statement Lack of adherence to procedures Inadequate programme level controls Inadequate oversight of local authority finance
Security Risk	Inadequate physical security Security culture Inadequate personnel security Capacity & capability Incident management
Legal Risk	Risk of successful legal challenge Insufficient legal resource Exposure to risk via ALBs
Commercial Risk	Non-compliant procurements Short-notice procurements Poor contract management Conflicts of interest
Strategy Risk	Significant legislative agenda Levelling up Place-based working
ALB Risk	Internal system failure within ALB Inadequate oversight of ALBs

Counter Fraud, Error and Whistleblowing

In September 2021 a self-assessment into the suitability and capability of the Counter Fraud Function identified several areas which required improvement. The self-assessment was concluded in October 2021, with the findings published through an internal audit report issued by the GIAA. This report identified several areas of limitations and/or vulnerabilities in the Counter Fraud Function within DLUHC. It was agreed that these issues should be addressed to ensure that DLUHC sufficiently met the obligation to adhere to the centrally issued Government Counter Fraud Functional Standards.

The department was judged to not meet the standard in the following areas: Counter Fraud Metrics, Pro-active Detection Activity, Fraud, Bribery and Awareness Training and Policy, and Registers for Gifts and Hospitality and Conflicts of Interest. To address these areas a Counter Fraud Action Plan was developed and agreed between the department, GIAA and the Counter Fraud Centre of Expertise (Cabinet Office). This approach and prioritisation of actions was subsequently approved by the Risk Sub Committee in February 2022.

To meet these requirements the Counter Fraud Team has undertaken a review of current documentation, including the Counter Fraud and Bribery Strategies, Whistleblowing and Conflicts of Interest guidance, with revised versions due in summer 2022. It has been agreed that initial drafts will be presented to the Risk Sub Committee to be held in July 2022, with a deadline for publication and circulation to staff to take place in summer 2022. Alterations made to the documentation will reflect the challenges and changes posed by the Covid-19 pandemic and reflect the new priorities of the department following the full adoption of the Levelling Up agenda. During the financial year 2021-2022 the external whistleblower policy was implemented eight times with regard to allegations reported for projects directly administered by the department.

The design and implementation of DLUHC Covid-19 support schemes were agreed based on the delivery mechanisms of local authorities. Consequently, this has led to difficulties in producing any accurate estimate of the level of fraud experienced on support schemes by DLUHC teams. Potential fraud risks on these schemes were identified through discussion with internal policy and delivery teams and local authority staff. Fraud risks were further developed through Initial Fraud Impact Assessments and more detailed Fraud Risk Assessments, which programme teams reviewed at regular intervals as a live document, with outcomes built into the guidance provided to local authorities. Key risks were highlighted, with the Fraud Risk Assessments made available and local authorities encouraged to develop their own assessments. More complex and novel grant schemes were required to attend the Complex Grants Advisory Panel (CGAP), which provided wider challenge and recommendations on any potential risks (including fraud). The CGAP panel is formed from expertise drawn from across government with schemes required to implement any recommendations or provide justification for alternate action. Covid-19 schemes were required to provide post-payment assurance through successive Cabinet Office led Post-Event Assurance commissions. This included provision and discussion of the Fraud Risk Assessment, specific review of any particularly high-risk areas, and the assurance measures that the department had introduced.

DLUHC has continued to increase collaboration with teams situated in Cabinet Office, the Centre of Expertise (for Counter Fraud) and the Government Grants Management Function. This has resulted in further adoption of detailed fraud risk assessments more widely on programmes across the department which are properly reviewed and assessed in line with Cabinet Office requirements. The Counter Fraud Function presented its approach to Post-Event Assurance and Testing on Covid-19 schemes to Cabinet Office, with the feedback used to inform measures around fast-paced deliveries including the Council Tax Rebate and Homes for Ukraine Schemes.

The Grants Centre of Excellence has been established within the Cities and Local Growth Unit, in response to the addition of the Levelling Up agenda. This is inclusive of roles in Counter Fraud, with the expectation that this will provide more first line support to grant schemes within the department. This addition will allow the department to retain knowledge, encourage best practice and improve fraud awareness and consideration in DLUHC programmes.

Through DLUHC reporting routes, staff are enabled to report concerns about wrongdoings either to their line manager or via a DLUHC nominated officer. DLUHC nominated officers have been specifically trained to respond to concerns raised under the Civil Service Code with a central point of contact published on the DLUHC Intranet. All reports are treated confidentially. Alternatively, a fully independent whistleblowing line is available to staff through the DLUHC Employee Assistance Partner, Health Assured. Should staff wish to raise a concern specific to Counter Fraud they are able to do so by contacting the Counter Fraud Team via the Counter Fraud Mailbox, with all communications treated as confidential. In the year 2021-2022, the Counter Fraud Team received seven concerns raised by internal staff.

For external whistleblowers there are a variety of routes. Concerns relating to Covid-19 expenditure can be directed to the Crimestoppers helpline, with reports directed anonymously to the Cabinet Office Intelligence Unit. Delegated local authorities also maintain their own fraud hotlines. For schemes managed by the department, programmes are responsible for ensuring that whistleblower concerns are escalated to the relevant authority, either within the programme’s formalised escalation routes or through the Risk Management Counter Fraud Team.

Information Security

Procedures and processes are in place to protect information and data and ensure it is only used for the purposes for which it was collected. The department, including executive agencies and ALBs, manages a range of data relating to staff and citizens, most of which is used to support policy analysis and review, and does not allow the identification of individuals.

In 2021-22 there were no data breaches for DLUHC and its ALBs that met the threshold for reporting to the Information Commissioner’s Office (ICO).

The Digital Directorate continue to raise awareness of cyber security and provide advice and guidance to staff about how to stay secure online and in both a personal and professional context. Risk Management in respect of cyber security has improved significantly and is maturing. The majority of the GIAA’s cyber security review recommendations have been implemented including, but not limited to Security Operations Centre, ransomware protection, advanced malware analysis tools, advanced web traffic filtering and inspection, advanced malware protection, and improved email protection. The remaining few are still in progress.

Business Appointment Rules

The Business Appointment Rules (BAR) is part of the Civil Service Management Code and regulates the movement of civil servants and ministers into other business sectors. Civil servants must consider if the BAR requires them to seek departmental permission before applying for or accepting a job outside of the service. Most moves do not require an application, but some will and in some cases, approval is subject to conditions.

The aim of the BAR is to avoid any reasonable concerns that:

• a civil servant might be influenced in carrying out his or her official duties by the hope or expectation of future employment with a particular firm or organisation, or in a specific sector, or
• on leaving the civil service, a former civil servant might improperly exploit privileged access to contacts in government or sensitive information, or
• a particular firm or organisation might gain an improper advantage by employing someone who, in the course of their official duties, has had access to information relating to unannounced or proposed developments in government policy, knowledge of which may affect the prospective employer or any competitors, or commercially valuable or sensitive information about any competitors.

In the 2021-22 year, DLUHC received BAR applications from 13 individuals, and all were approved. Details of any applications and the outcome are published on the DLUHC website for staff at SCS Pay Band 1 and 2 level and Special Advisers of equivalent level, and on the ACOBA website for SCS Pay Band 3 or above and Ministers. BAR applications and outcomes are reported to the Audit and Risk Assurance Committee on a quarterly basis.

Internal Audit Opinion

A key source of independent assurance for DLUHC is the internal audit function provided by the GIAA, which complies with the Public Sector Internal Audit Standards. The annual internal audit programme is closely linked to the key risks of the department, its executive agency and other ALBs. Arrangements are in place to ensure that the Accounting Officer is made aware of any significant issues which indicate that key risks are not being effectively managed.

The Group Chief Internal Auditor’s (GCIA) opinion on governance, risk management and control for the year was assessed as Moderate. The opinion takes into consideration the context in which the department had to operate over the year, with its continued focus on the response to the pandemic, the exit planning of which the GCIA recognised to be strong. He also acknowledged the department’s strengths in policy development & delivery, and programme delivery.

The GCIA recognised that the Department has taken action to address developments highlighted in the 2020-21 opinion. The GCIA acknowledged the steps taken in the DDAT environment to ensure governance and controls are consummate to the risk environment which, because of the MOG changes and strategies that come with it, will need to be a continued focus. The GCIA recognised that the Levelling Up Agenda, and the creation of new accountabilities in DLUHC, will require changes in governance, risk management, and internal control, and will be a new focus for GIAA going forward. The GCIA highlighted that the Department also needs to focus on:

• continued development and implementing of progress made for embedding an enterprise risk management framework and culture, so that the benefits of commonality and transparency of risk identification and management from projects and programmes, through portfolios, and onto the strategic risk register, can be realised and,

• continued development of a grant management framework, with proportionate counter fraud controls, that will meet the Department’s responsibilities of governance for Levelling Up and new domestic grants, that will arise following EU Exit.

External Scrutiny

The department’s work was the subject of five NAO reports and six Public Accounts Committee (PAC) evidence sessions in 2021-22, all of which are summarised below from the published reports.

NAO Reports

Supporting local economic growth: Between 2011 and 2020, government committed some £18 billion of domestic funding to policies designed to stimulate local economic growth in England. This includes £12 billion through the Local Growth Fund, and £3.2 billion through the Regional Growth Fund. A further £10.3 billion was directed to the UK through EU structural funding committed between 2014 and 2020. However, the UK remains less productive than its main competitors and it shows regional disparities in economic performance that are among the largest in the Organisation for Economic Co-operation and Development. The Department, working with other government departments, is responsible for “raising productivity and empowering places so that everyone across the country can benefit from levelling up.”

The report concluded that the Department has not consistently undertaken formal evaluations of the impacts of its past interventions. As a result, although it has now committed both effort and money to evaluate new interventions from the start, its evidence base for effective interventions is limited. The Department therefore lacks evidence on whether the billions of pounds of public funding it has awarded to local bodies in the past for supporting local growth have had the impact intended. And it has wasted opportunities to learn which initiatives and interventions are most effective. Also, NAO had not seen the evidence expected on the options that had been considered for achieving ministerial aims when government is spending such a large amount of money. This reduces confidence that the interventions will have the best possible chance of delivering value for money. In view of this, it is even more important that the Department should follow through rapidly on its recent commitments to improve measurement and evaluation in local growth.

Regulation of private renting: There are an estimated 4.4 million privately rented households in England. While most tenants have a good experience of renting, those who do not may find it contributes to serious illness, financial issues, or homelessness. The Department aims to ensure the rented sector is fair for tenants, and to protect them from such harms. It legislates and creates policies used to regulate the sector. While the Department sets the overall policy and regulatory framework, local authorities are responsible for regulating the sector and ensuring landlords comply with legal obligations. The proportion of households in England living in privately rented accommodation has approximately doubled in the past 20 years. The Department recognises that challenges within the sector affect how it should be regulated, and it is planning large-scale reforms to help address these issues. It has committed to publishing a white paper in 2022, which will provide further details on the proposed reforms.

The report concluded that there is evidence that a concerning proportion of private renters live in unsafe or insecure conditions with limited ability to exercise their rights. In recent years, the Department has made various regulatory changes aimed at improving experiences for renters, including banning letting fees and introducing temporary protections during the Covid-19 pandemic. However, the way that private renting is regulated means that these changes are not effective in ensuring the sector is consistently fair for renters. There are differences in the extent to which landlords comply with the law in different regions, and tenants from certain demographic groups experience worse property conditions or treatment. The Department is not proactive in supporting local authorities to regulate effectively. Furthermore, it does not yet have a plan to improve the significant gaps in data that prevent it from identifying where problems are occurring, which regulatory approaches work well at a local level, or the impact of regulation on the vulnerable. The Department is developing potential reforms to the sector and plans to publish a white paper. As part of this work, it will need a clear vision for what it is trying to achieve and an overarching strategy for how to address the challenges raised in this report, working across central and local government where necessary, if it is to meet its overall aim to provide a better deal for renters.

The local government finance system in England: overview and challenges: Local authorities in England provide a broad range of universal services, with targeted services for the most vulnerable in society. They have also been pivotal in the local response to the Covid-19 pandemic. Local authorities are funded through multiple funding streams, including government grants, taxes, and charges for services. The Department is responsible for a framework that provides assurance on the financial health of local government and allows for intervention in individual cases and in response to system-wide risks.

Departmental Overview 2020-21: Department for Levelling Up, Housing and Communities: A summary of the Department for Levelling Up, Housing and Communities’ spending in 2020-21, its major areas of activity and performance, and the challenges it is likely to face in the coming year, based on the insights from NAO’s financial audit and value for money work.

Local government and net zero in England: In June 2019, the UK government passed legislation committing it to achieving ‘net zero’ greenhouse gas emissions by 2050. This is significantly more challenging than government’s previous target to reduce net emissions by 80% compared with 1990 levels by 2050. Achieving net zero will require changes that are unprecedented in their scale and scope, including changes to the way electricity is generated, how people travel, how land is used and how buildings are heated. In its December 2020 report, achieving net zero, the NAO highlighted that local authorities would have a critical part to play. There are 333 principal local authorities and 10 combined authorities (as well as the Greater London Authority) in England, between them providing a range of services to people in their areas which impact on net zero, such as transport planning, social housing and recycling and waste services. The services provided by individual local authorities vary with their powers and functions.

The report concluded that while the exact scale and nature of local authorities’ roles and responsibilities in reaching the UK’s national net zero target are to be decided, it is already clear that they have an important part to play, as a result of the sector’s powers and responsibilities for waste, local transport and social housing, and through their influence in local communities. Government departments have supported local authority work related to net zero through targeted support and funding. However, there are serious weaknesses in central government’s approach to working with local authorities on decarbonisation, stemming from a lack of clarity over local authorities’ overall roles, piecemeal funding, and diffuse accountabilities. This hampers local authorities’ ability to plan effectively for the long-term, build skills and capacity, and prioritise effort. It creates significant risks to value for money as spending is likely to increase quickly. DLUHC, BEIS and other departments recognise these challenges and are taking steps to improve their approach. Their progress has understandably been slowed by the Covid-19 pandemic, but there is now great urgency to the development of a more coherent approach.

The studies can be viewed on the NAO website.

PAC evidence sessions

The Public Accounts Committee held evidence sessions on the following subjects:

1. Adult social care market (19/04/21) 2. Timeliness of local auditor reporting on local government in England (20/05/21) 3. DLUHC recall: Homelessness and housing (01/11/21) 4. Local government finance system: overview and challenges (29/11/21) 5. Regulation of private renting (31/01/22) 6. Supporting local economic growth (02/03/22)

Details of the PAC reports are on the PAC website. The PAC makes recommendations which the department responds to in Treasury Minutes.

LUHC Select Committee

The LUHC Select Committee have nine current inquiries, as follows:

• Supporting our high streets after Covid-19, opened 08/07/2020, report published 10/12/21, government response published 29/03/21
• The future of planning system in England, opened 08/10/2020, report published 10/06/21
• Cladding remediation, opened 25/02/21, report published 29/04/21
• Long term funding of adult social care, opened 04/03/21
• Permitted development rights, opened 23/03/21, report published 22/07/21
• The regulation of social housing, opened 10/11/21
• Council tax collection, opened 15/11/21
• Exempt accommodation, opened 07/12/21
• Building safety: remediation and funding, opened 19/01/22, report published 11/03/22

The Role of the Senior Sponsors and Boards of the ALB’s

The department currently has one executive agency and thirteen other arm’s length bodies (ALBs). Each maintains its own governance structures and processes, appropriate to their business and scale, and each body has its own Accounting Officer with delegated authority from the Principal Accounting Officer to oversee the operation and delivery of the ALB’s objectives.

The ALB control and assurance framework strikes a balance between the level of delegation and autonomy afforded to the bodies, and the need for a robust system of internal controls that provides sufficient assurance to the Principal Accounting Officer in fulfilling their duties. We have embedded the Cabinet Office’s ‘Senior Sponsor’ partnership model with senior officials within the department providing oversight of the performance and the direction of the ALBs. Additional specialists provide central support on matters relating to governance and the appointment of non-executive members of ALB Boards is provided by the Finance and People, Capability and Change directorates.

For each ALB, a framework agreement or equivalent is in place, which sets out the parameters within which ALBs are expected to operate, the relationship between the department and the ALB, and the way it is expected that the department (in its capacity as sponsor for the ALBs) and the ALBs themselves interact with each other.

ALB boards are responsible for ensuring that effective arrangements are in place to provide assurance to the Board and department on risk management, governance, and internal control. In particular, the Homes England board are responsible for producing and overseeing a risk register, risk appetite statement and risk management framework in respect of risks relevant to the activities and exposures of Homes England. This includes risks associated with making and divesting investments, the assessment and mitigation of those risks and Homes England’s associated structures, controls, processes, and procedures. The risk management framework includes agreed escalation processes and sets out ways of working with the department including the provision for open communication between the Chief Risk Officers of Homes England and the department to discuss and share information on risk matters. The department is currently working with all ALBs, including Homes England, to review their risks every six months, with the intention to move towards a quarterly review cycle.

Further assurance is provided through:

• An annual risk-based Relationship and Assurance Assessment to ensure the level of sponsorship and Accounting Officer engagement is proportionate to each organisation and aligned with departmental priorities.
• A bi-annual meeting for Audit and Risk Assurance Committee chairs, where concerns affecting the department are considered.
• Key performance indicators for each ALB to enable effective performance assessments, and
• A consistent approach to ALB Board effectiveness which was developed and undertaken for Homes England, with annual appraisal reviews, including for chairs. A similar approach is to be developed and considered for other ALBs, during the new Review Programme to be introduced by the Cabinet Office in 2022.

Entities within the Departmental Boundary

The department has one Executive Agency and 13 designated bodies. All bodies apart from the Architects Registration Board, Ebbsfleet Development Corporation and Queen Elizabeth II Conference Centre are consolidated into the departmental accounts.

Executive Agency	Planning Inspectorate
Advisory Non-Departmental Public Body (NDPB)	Building Regulations Advisory Committee Boundary Commission for England Boundary Commission for Wales
Tribunal (NDPB)	Valuation Tribunal for England
Executive Non-Departmental Public Bodies (NDPBs)	Homes England Leasehold Advisory Service Regulator Of Social Housing The Housing Ombudsman Valuation Tribunal Service
Other Body (not classified as NDPB)	Ebbsfleet Development Corporation Local Government and Social Care Ombudsman
Public Non-Financial Corporation	Architects Registration Board Queen Elizabeth II Conference Centre

In 2020-21, the Office for National Statistics’ Public Sector Classification Guide reclassified Ebbsfleet Development Corporation to the local government sector, effective from 20 April 2015. Consequently, from an administrative perspective, this body no longer falls within the departmental accounting boundary as an ALB that is technically covered by Cabinet Office ALB controls. However, from a governance perspective, we are continuing to oversee the policy and operation of the Ebbsfleet Development Corporation and it continues to be accountable to DLUHC.

Homes England

The largest of our ALBs is Homes England, which is governed by a Board that provides strategic leadership to ensure that the objectives agreed with the department under the Agency’s Strategic Plan (and Framework Document) are met. Homes England is chaired by Peter Freeman, who was appointed in October 2020. Its members are appointed by the Secretary of State. To ensure a strong and effective corporate governance system, with effective arrangements in place to provide assurance to the department on risk management, governance and internal control, the Board is constituted to ensure a majority of non-executive members.

The Board normally meets monthly and gains assurance through the monitoring of performance against Key Performance Indicators (KPIs), reports on performance by the Executive Directors and trend analysis of reports such as the Market Overview report and Early Warning Indicator report. The Board also receives reports from the Chairs of the Board’s sub-committees.

The Board recently conducted a review of its skills and structures with an external consultant. In November 2021, the Board approved new sub-committee structures to meet the new strategic objectives proposed by the department and agreed relevant terms of reference for the new sub-committees. The Board agreed to appoint external technical advisers to support sub-committees with specialist skills and experience where appropriate to support its decision making about the strategic plan objectives. The department and the Board have agreed to clarify accountabilities between Board and Policy Sponsorship to enable effective joint working and regular reporting on programme delivery.

The sub-committees of the Board are:

• the Audit, Assurance, and Enterprise Risk Committee (AAERC), which advises the Board on risk control, governance, financial control, the annual report and accounts and statutory reporting.
• the Investment Committee, which scrutinises new project and programme business cases, considers financial guarantees on behalf of DLUHC and monitors material changes in project and programme performance.
• the Nominations and Remuneration Committee, which advises on overall pay and rewards including Executive Directors.
• the Change Committee, which receives assurance reports from the executive on overall change programmes deliverables and makes decisions on acceleration or reprioritisation of the Agency’s transformational change programme.
• the Cross-cutting Committee, which advises the Board in relation to the implementation of Homes England’s cross-cutting ‘quality’ objectives, as defined by the Agency’s Strategic Plan.
• the Homes Ownership Committee, which scrutinises the performance and assurance of home ownership programmes delivered by the Agency.

In 2021-22, Pat Ritchie CBE, Lesley-Ann Nash, Mark Henderson, and Lord Ian Austin of Dudley were appointed to the Homes England Board as non-executive directors. Olivia Scanlon left the Board in March 2022 and Simon Dudley left the Board in October 2021.

At an executive level, Peter Denton was appointed in August 2021 as the Chief Executive and Accounting Officer of Homes England. There were also other Executive appointments during the year; Harry Swales as the Chief Investment Officer, Mike Palin – interim Executive Director for Market, Partners and Places, and Barry Cummins as the Interim Chief Land and Development Officer.

In line with the department’s ALB Sponsorship model, a Senior Sponsor has been appointed who is responsible for chairing Shareholder meetings, providing effective scrutiny and challenge to hold the Agency to account. The Senior Sponsor is also responsible for formally delegating budgets to the Agency’s Accounting Officer, and approving any revisions to the Framework Document, which documents the governance arrangements between the Agency and the department. The Senior Sponsor will also undertake the Chair’s annual appraisal, approving the Agency’s annual Business Plan and Corporate Plan, ensuring these reflect ministerial priorities.

The Senior Sponsor will chair assessment panels for new Board appointments and proactively generate candidate fields to ensure as far as practicable that the Board has a diverse membership and the right mix of skills. The Senior Sponsor will be responsible for contributing to the annual Impact Analysis exercise and subsequently approve the appropriate level of sponsorship for the Agency. Where applicable, they will agree performance objectives for the Chief Executive, as set by the Chair, and approve the SCS-equivalent pay proposals, including any performance related pay proposals for the Chief Executive. The Director General for Housing and Planning, Tracey Waltho, served as the Senior Sponsor for Homes England in 2021-2022. Following the departmental reorganisation in March 2022, the Director General for Regeneration, Emran Mian, became the Senior Sponsor for Homes England.

To support the Senior Sponsor, the department has appointed a Policy Sponsor and has a Shareholder member on the Homes England Board. The role of the Policy Sponsor is to ensure that the right policy outcomes are being delivered and providing assurance to the Senior Sponsor and Ministers. Emma Fraser and Melanie Montanari, DLUHC’s Directors for Housing Markets and Strategy, serve as Policy Sponsor. The role of Shareholder Member is to help inform discussion at the Board and thereby strengthen communication and relations at a senior level. It also allows DLUHC to benefit from an increased level of scrutiny of Homes England’s executive and a more timely and nuanced understanding of the developments within Homes England. The role of Shareholder member has been filled by DLUHC’s Commercial Director, Andy Hobart, since April 2020. To support the overall sponsorship of Homes England, the department has a dedicated sponsorship team within the Housing Performance Division to provide support to the Senior Sponsor, Policy Sponsor and Shareholder member in fulfilling their roles effectively, and oversight of delivery and financial performance and corporate health of the agency.

Performance against corporate and delivery objectives is overseen by two governance panels:

• Corporate and governance performance is discussed at a quarterly Shareholder Meeting, which is chaired by the Senior Sponsor and is attended by the Shareholder member, and Policy Sponsor from the department together with the Chair, Chief Executive and other representatives from Homes England and HMT.

• Policy and performance issues are discussed at a monthly Policy Sponsor meeting comprising the Policy Sponsor and other relevant officials from the department together with the executive directors and senior responsible officers from Homes England and representatives of HMT.

My Conclusion

I have reviewed the evidence provided through the Governance Assurance Panel exercise, the Internal Audit opinion, NAO, and PAC reports. While internal checks during the year detected a serious control failing in relation to the payment of funds in advance of need to the GLA for the Affordable Homes Programme, as detailed above, I am satisfied that overall the department continues to embed a sound system of governance, assurance, and internal control across the department. The department has also continued to develop and strengthen its approach to risk and financial management during the year, as well as enhancing the effectiveness of the Investment Sub-Committee.

Remuneration and Staff Report: Remuneration Report

The Remuneration Report provides detail on the remuneration and pension interests of the department’s board members. The Remuneration Report refers to the core department only. Similar Remuneration Reports are available in the Annual Reports and Accounts of the individual ALBs.

All tables and the pay multiples section of the Remuneration Report have been subject to audit.

Remuneration Policy

The remuneration of senior civil servants is set by the Prime Minister following independent advice from the Review Body on Senior Salaries. The Review Body also advises the Prime Minister from time to time on the pay and pensions of Members of Parliament and their allowances, on Peers’ allowances, and on the pay, pensions and allowances of Ministers and others whose pay is determined by the Ministerial and Other Salaries Act 1975.

The Review Body takes account of the evidence it receives about wider economic considerations and the affordability of its recommendations.

Civil Service Contracts

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

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

Remuneration (Including Salary) and Pension Entitlements

The following sections provide details of the remuneration and pension interests of the Ministers and most senior management (i.e. Board Members) of the department who have been in post at some point in the current or prior year.

No benefits in kind were received by any minister or official named in the tables below in 2020-21 or 2021-22.

Remuneration (salary, benefits in kind and pensions) (subject to audit)

Ministers	Salary £		Full year Equivalent Salary if different £		Pension benefits(1) £ (to nearest £1,000)		Total remuneration £ (to nearest £1,000)
	2021-22	2020-21	2021-22	2020-21	2021-22	2020-21	2021-22	2020-21
The Rt Hon Michael Gove MP Appointed 15 September 2021	36,753	0	67,505	0	11,000	0	48,000	0
The Rt Hon Christopher Pincher MP Appointed 1 March 2020	27,154	31,680	31,680	0	7,000	8,000	34,000	40,000
Lord Stephen Greenhalgh Appointed 18 March 2020	0	0	0	0	0	0	0	0
Kemi Badenoch MP Appointed 16 September 2021	17,610	0	31,680	0	5,000	0	22,000	0
Eddie Hughes MP Appointed 18 January 2021	22,375	3,729	0	22,375	6,000	1,000	28,000	5,000
Victoria Atkins MP(2) Appointed 16 September 2021	0	0	0	0	0	0	0	0
Neil O’Brien MP Appointed 16 September 2021	12,120	0	22,375	0	3,000	0	15,000	0
Stuart Andrew MP Appointed 9 February 2022	4,620	0	31,680	0	1,000	0	6,000	0
Lord Richard Harrington Appointed 8 March 2022	0	0	0	0	0	0	0	0
The Rt Hon Robert Jenrick MP Appointed 01 March 2020	30,752	67,505	67,505	0	7,000	17,000	37,000	85,000
Luke Hall MP Appointed 01 August 2019	14,432	27,622	31,680	31,680	3,000	7,000	18,000	35,000

(1) The value of Parliamentary Contributory Pension Fund (PCPF) pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights. This is a different basis to the way CETV (Cash Equivalent Transfer Value) is calculated in the Ministerial Pension Benefits table.

(2) Salary paid by Ministry of Justice

Single total of remuneration (subject to audit)

Officials	Salary £’000		Full year Equivalent Salary if different £’000		Bonus Payments £’000		Other Benefits £ (to nearest £1,000)		Pension benefits (1) £ (to nearest £1,000)		Total remuneration £’000
	2021-22	2020-21	2021-22	2020-21	2021-22	2020-21	2021-22	2020-21	2021-22	2020-21	2021-22	2020-21
Jeremy Pocklington Permanent Secretary	160-165	160-165	0	0	0	15-20	0	0	34,000	198,000	195-200	375-380
Sue Gray Second Permanent Secretary, Union and Constitution	80-85	0	150-155	0	0	0	0	0	107,000	0	185-190	0
Matt Thurstan Director General, Chief Financial Officer and Corporate	160-165	100-105	0	160-165	0-5	0-5	0	0	124,000	122,000	285-290	220-225
Emran Mian Director General, Regeneration	125-130	125-130	0	0	15-20	0-5	0	0	42,000	84,000	185-190	215-220
Catherine Frances Director General, Local Government, Resilience and Communities	125-130	125-130	0	0	15-20	0-5	0	0	38,000	56,000	180-185	185-190
Richard Goodman Director General Safer & Greener Buildings	120-125	40-45	0	120-125	0-5	0-5	0	0	47,000	17,000	165-170	56-60
Will Garton Director General, Levelling Up Appointed 28 March 2022	0-5	0	120-125	0	0	0	0	0	0	0	0-5	0
Simon Claydon Director People, Capability and Change Appointed 2 June 2021)	80-85	0	100-105	0	0	0	0	0	15,000	0	95-100	0-
Kay Withers Director for Strategy From 31 January 2022	15-20	0	95-100	0	0	0	0	0	12,000	0	25-30	0
Ruth Bailey Director People, Capability and Change Left 21 June 2021	25-30	100-105	100-105	0	5-10	5-10	0	0	6,000	46,000	35-40	160-165
Lise-Anne Boissiere Director for Strategy (Board member until 31 January 2022)	95-100	95-100	0	0	10-15	15-20	0	0	33,000	52,000	140-145	160-165
Tracey Waltho Director General Housing and Planning	125-130	125-130	0	0	0	0-5	0	0	29,000	97,000	155-160	225-230

Note: bandings above are in the format: £ 0-£5,000, £ 5,000-£10,000, £10,000-£15,000, £15,000-£20,000

(1) This column only shows pension benefits for the Principal Civil Service Pension Scheme (‘PCSPS’) and Civil Servants and Other Pension Scheme (‘CSOPS’). The value of PCSPS and CSOPS pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights. This is a different basis to the way CETV in the Officials’ Pension Benefits table is calculated.

Simon Ridley is a Second Permanent Secretary but was not paid by DLUHC for this role in 21-22

The non-executive directors (NEDs) did not receive a salary in their capacity as Board Members and details of fees paid to them during 2021-22 are shown below (subject to audit):

Non-executive fees (subject to audit)

Non-Executive Directors	Fees (£)
	2021-22	2020-21
Michael Jary (Lead)	20,000	20,000
Mary Ney	15,000	24,600(1)
Pam Chesters	17,500	17,500
Alison Nimmo	14,497	0
Jeffrey Dodds	14,497	0
Gary Porter	12,195	0

(1) In 2020-21 Mary Ney carried out a review in Leicestershire following the local lockdown in 2020 for which an additional fee was paid of £9,600. The full year entitlement was £15,000.

Michael Jary was the lead NED until 31 March 2022 when he was replaced by Alison Nimmo.

Salary

‘Salary’ includes gross salary, overtime, reserved rights to London weighting or London allowances, recruitment and retention allowances, private office allowances and any other allowance to the extent that it is subject to UK taxation.

This report is based on accrued payments made by the department and thus recorded in these accounts. In respect of Ministers in the House of Commons, departments bear only the cost of the additional Ministerial remuneration; the salary for their services as an MP £81,932 (from 1 April 2020) and various allowances to which they are entitled are borne centrally.

However, the arrangement for Ministers in the House of Lords is different in that they do not receive a salary but rather an additional remuneration which cannot be quantified separately from their Ministerial salaries.

Benefits in Kind

The monetary value of benefits in kind covers any benefits provided by the department and treated by HM Revenue and Customs as a taxable emolument. No Ministers or officials named in these tables received benefits in kind in 2020-21 or 2021-22.

Bonuses

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

Fair Pay Disclosures (subject to audit)

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

The banded remuneration of the highest paid board member in the department, the department’s Chief Financial Officer, in the financial year 2021-22 was £160,000 - £165,000 (2020-21: Interim Chief Financial Officer, £180,000-£185,000). This was 4.0 times (2020-21: 4.3 times; restated 4.4 times) the median remuneration of the workforce, which was £41,098 (2020-21: £42,130; restated £40,983). It was 4.9 times the pay and benefits figure relating to the employee whose pay and benefits were on the 25th percentile of pay, which was £33,210 and 3.0 times the pay and benefits figure relating to the employee whose pay and benefits were on the 75th percentile which was £54,674.

	2021-22	2020-21	2020-21 Restated
Band of highest paid board member’s total remuneration (£000)	160-165	180-185	180-185
Median Remuneration (£)	41,098	42,130	40.983
Ratio	4.0	4.3	4.4
25th percentile remuneration (£)	33,210	-	-
Ratio	4.9	-	-
75th percentile remuneration (£)	54,674	-	-
Ratio	3.0	-	-

The movement in the median pay ratio is in line with the broader pay, reward and progression policies of the department, as explained in the following paragraphs.

The salary of the highest paid director fell between 2020-21 and 2021-22 by 10.6%. The bonus of the highest paid board member in 2021-22 increased by £3,000 - the highest paid board member in 2020-21 did not receive a bonus. By comparison, the average change in salary for employees as a whole was a decrease of 0.6%, with the average bonus paid falling by 12.6%.

The banded remuneration of the highest paid board member in the department decreased because the Interim Chief Financial Officer (the 2020-21 highest paid board member) was paid on Government Commercial Organisation terms where pension benefits are significantly reduced which offsets headline base pay.

In 2021-22, one (2020-21, nil) employees received remuneration in excess of the highest-paid board member.

Remuneration of employees ranged from £15,000 - £20,000 to £190,000 to £195,000 (2020-21: £20,000 - £25,000 to £175,000 - £180,000). Total remuneration includes salary, non-consolidated performance-related pay and benefits-in-kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.

The median salary for 2021-22 has increased by £115 compared to the 2020-21 restated median salary. The median salary for those staff excluding Cabinet Office staff who were transferred in as a result of the Machinery of Government change fell by £1,142. This was a result of the expansion of headcount with the majority of employees appointed at the minimum of the pay range; more appointments in regional offices than London and finally a pay freeze.

Compensation for loss of office (subject to audit)

No ministers or officials received compensation for loss of office in 2021-22.

Ministerial Pension Benefits (subject to audit)

The table below shows the Parliamentary Contributory Pension Fund (‘PCPF’) pension benefits accrued by ministers who have served as board members of the department during the 2021-22 reporting year:

	Accrued pension at age 65 as at 31/03/22	Real increase in pension at age 65	CETV(1) at 31/03/22	CETV(1) at 31/03/21	Real increase in CETV
	£’000	£’000	£’000	£’000	£’000
The Rt Hon Michael Gove MP	15-20	0-2.5	256	241	6
The Rt Hon Christopher Pincher MP	0-5	0-2.5	39	31	3
Lord Stephen Greenhalgh	0	0	0	0	0
Kemi Badenoch MP	0-5	0-2.5	12	9	2
Eddie Hughes MP	0-5	0-2.5	11	5	3
Victoria Atkins MP	-	-	-	-	-
Neil O’Brien MP	0-5	0-2.5	2	0	1
Stuart Andrew MP	0-5	0-2.5	25	24	1
Lord Richard Harrington MP	0	0	0	0	0
The Rt Hon Robert Jenrick MP	0-5	0-2.5	31	26	1
Luke Hall MP	0-5	0-2.5	9	7	1

(1) CETV stands for Cash Equivalent Transfer Value.

Pension benefits for ministers are provided by the PCPF. The scheme is made under statute and the rules are set out in the Ministers’ etc. Pension Scheme 2015^{[footnote 7]}.

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

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

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

The Cash Equivalent Transfer Value (CETV)

This is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the pension benefits they have accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total ministerial service, not just their current appointment as a Minister. CETVs are calculated in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance tax which may be due when pension benefits are taken.

The real increase in the value of the CETV

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

Officials’ Pension Benefits (subject to audit)

The table below shows the PCSPS and CSOPS pension benefits accrued by officials who have served as board members of the department during the 2021-22 reporting year.

Pensions Benefits (subject to audit)

Officials	Accrued pension at pension age as at 31/03/22 and related lump sum	Real increase in pension and related lump sum at pension age	CETV at 31/03/22	CETV at 31/03/21	Real increase in CETV £000’s
	£’000	£’000	£’000	£’000	£’000
Jeremy Pocklington	65-70 plus a lump sum of 30-35	0-2.5 plus a lump sum of 0	999	934	8
Sue Gray	80-85 plus a lump sum of 250-255	2.5-5 plus a lump sum of 12.5-15	1802	1668	101
Matt Thurstan	45-50	22.5-25	592	318	69
Emran Mian	25-30	2.5-5	340	300	15
Catherine Frances	35-40	0-2.5	484	440	15
Richard Goodman	10-15	2.5-5	128	101	15
Will Garton	25-30	0-2.5	331	331	0
Simon Claydon	45-50 plus a lump sum of 90-95	0-2.5 plus a lump sum of 0	784	740	2
Kay Withers	15-20	0-2.5	171	164	5
Ruth Bailey	25-30 plus a lump sum of 55-60	0-2.5 plus a lump sum of 0	435	431	2
Lise-Anne Boissiere	30-35	0-2.5	392	358	10
Tracey Waltho	45-50 plus a lump sum of 90-95	0-2.5 plus a lump sum of 0	769	719	7

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

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 were switched into alpha (CSOPS) sometime between 1 June 2015 and 1 April 2022. All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money purchase’ stakeholder pension with an employer contribution (partnership pension account).

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

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

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

Further details about the Civil Service pension arrangements can be found at the website http://www.civilservicepensionscheme.org.uk.

Staff Report

The Staff Report relates to the core department. Information on ALBs can be found in their published Annual Reports.

Creating a new Department

During 2021-22 our people responded flexibly and positively to our new role as the Department for Levelling Up, Housing and Communities (DLUHC). Our people supported Ministers to refine and progress their vision and ambitions for Levelling Up and our other new responsibilities. The principal people challenges were to manage an immediate short-term growth in the size of our workforce. This included a Second Permanent Secretary and additional staff transferred into the Department as a result of a Machinery of Government process to deliver new responsibilities. We began work on a departmental change programme to drive the thinking on DLUHC’s future operating model, which will continue in 2022-23.

Resourcing

During the year the department’s remit expanded to include the delivery phase of new funding programmes such as the UK Shared Prosperity Fund and the Community Outcome Fund. We also took on new responsibilities for Housing and Building Safety. Overall we had to grow the department by about 500 roles and fill another 500 roles to cover turnover in the year. We made excellent progress in managing this resourcing challenge and achieved our departmental targets in Q3. Overall, we recruited over 1,000 people. In the final quarter of the year we grew further, taking on additional responsibilities, and the related movement of around 250 colleagues from elsewhere in Government, for the Union and Devolution, Elections and the Boundary Commission and our new lead role across Government for Levelling Up.

Later in the year to achieve planned efficiencies in the SR21 period up to 2025 we introduced controls to manage our recruitment. We continued to flexibly use our resources across the department and during the year completed the reintegration of remaining Covid resource into other on-going activity such as our Safer, Greener Buildings teams and teams delivering our new programme funding work whilst flexing to resource the Ukraine response. Looking forward, the recent announcement of planned reduction in the size of the Civil Service (the programme will be called Civil Service 2025), will be challenging but our new controls for planned SR21 efficiencies will form the to manage and contribute to the requirements of Civil Service 2025.

Capabilities

In 2021-22 we made the long-term strategic decision to invest in the skills, capabilities, and resilience of our people and build the capability of DLUHC. This investment was positively reflected in our 2021 People Survey result which increased by 5% in respect of Learning and Development, amongst the highest scoring departments on this issue. Our approach was informed by a detailed assessment of the capabilities we need to deliver on our commitments. In May 2021 we launched our new Capabilities Plan with the aim of being an inclusive learning organisation where we achieve great results through people and offer progressive careers. Our plan will enable us to increase in-house expertise whilst also reducing use of consultants. The first year of the work focused on:

• developing professional skills including programme and project management.
• building a greater understanding of local government and the places and people we deliver for.
• improving key corporate skills e.g. managing risk; and
• continuing to develop leadership and line management expertise.

We developed an agreed set of qualitative and quantitative metrics to assess progress and impact against the plan and worked closely with the Government Skills and Curriculum Unit (GSCU) to ensure that our plan was aligned with the Declaration of Government Reform to grow and increase skills in the Civil Service.

In 2021 we launched a new online Learning Hub, increased our investment in external accreditation, including and especially for our Senior Reporting Officers and Senior Civil Servants, offered a range of project delivery and project management training for all colleagues, re-invested in our early talent pipeline via a successful apprenticeship recruitment campaign. We also worked with Local Government partners to develop learning to improve understanding of that sector and prepared for greater use of both inward and outward secondments. Our Capability Plan was recognised by Alex Chisholm as a brilliant initiative in his 2021 Civil Service People Survey launch message.

Places for Growth

We progressed well against our plans to have more roles, including senior roles, based across the UK, outside London, closer to more of the communities we serve. By March 2022, we had increased the number of people outside London by over 500, up 100% from the baseline point of March 2020. Colleagues based outside London increased to a third of all departmental employees. In the same period the number of Senior Civil Servants outside London more than tripled from 7 to 26. Considering this, we increased our ambition during the year and committed to have a minimum of 917 more DLUHC Group roles (including our Arms’ Length Bodies) outside London by 2025. We remained committed to have 50% of Senior Civil Servant roles outside London by 2030, with three quarters of that target achieved by 2025.

In moving roles out of London, we made a deliberate choice to support and contribute substantively to Levelling Up, exemplified by our permanent new second HQ in Wolverhampton which we opened on time and under budget. Working with partners like the University of Wolverhampton we made excellent progress in recruiting great people into high quality roles in our new second HQ in the city, including middle and senior leaders in the department. By the end of the year, we had over 230 people working in Wolverhampton.

Our growth outside London also supported the Union. We opened new offices in Edinburgh and Cardiff (an office in Northern Ireland will open in 2022-23). We also continued to be a leading department in the Darlington Economic Campus, working collaboratively with other departments in the Campus and local stakeholders in the region, leading on engaging the local authority sector.

Enabling a return to offices and supporting smarter working

During the year we worked to ensure our plans for returning to the office were robust and met business needs. By March 2022, all DLUHC offices were open at full capacity. In doing so, safety for our people remained our priority through suitable and proportionate safety mitigations such as enhanced ventilation in some offices and the provision of sanitary wipes and hand gels, informed by regular consultation with our recognised Trades Unions. Attendance at offices increased steadily in the final quarter of 2021-22.

Smarter working was established as a new concept for the whole Civil Service in 2021-22. The core of our approach to Smarter Working was the Government ‘four Cs’ principles: Connection and community, Collaboration, Creativity, and Caring. We considered what our people told us about how they work best and placed a strong emphasis on supporting colleagues through change. We continued to explore and share best practice with other departments and embedding this way of working will remain a firm priority for 2022-23.

Diversity & Inclusion

Diversity and inclusion continued to be a priority for the department. We remained focused on three strategic aims which were to bring in diverse talent, to bring on and develop diverse talent and to build a fully inclusive culture. We launched a refreshed Diversity and Inclusion Strategy in July 2021 formulated around these aims. Alongside a pledge to be connected to the places that we serve, to improve our systems and delivery mechanisms, to be agile and innovative and to be inclusive. We adopted a broader and more outward looking view of diversity (such as socioeconomic, work experience and geographic backgrounds etc) recognising that geographical diversity and place were of central importance to a department that operates on the need to understand and draw from the communities we serve.

Notable achievements and progress during the year included remaining one of the Civil Service high performers for Inclusion and Fair Treatment in the 2021 People Survey, having overall representation of women in our workforce of 53%, being ranked 16th of 200+ employers in the Social Mobility Employer 2021 Index and a top 30 place in the list of the top family-friendly employers in the UK. Diversity was a key theme in our recruitment for our new second HQ in Wolverhampton and we saw representation levels across a key range of protected categories (female, disabled, ethnic minority, LGBT) which was higher than the Department averages and higher than our London office average, previously our most diverse location. Wolverhampton was also our most diverse location in terms of representation at a lower socio-economic background. We continued to promote our ‘We are for everyone’ brand using internal role models as an ‘attraction vehicle’ in our external recruitment campaigns and in our outreach activities.

Staff Data

Gender Diversity

The department’s gender diversity statistics are shown in the graph below. In January 2022 we published data on our gender pay gap in line with other employers. The DLUHC Group gender pay gap data for 31 March 2022 will be published in January 2023 as part of a co-ordinated publication exercise across all Whitehall departments. The chart only includes staff that are on the departmental payroll.

Staff diversity by gender as at 31 March 2022

		Women %	Men %
Ministers		25.0%	75.0%
Executive team		27.3%	72.7%
Non-executive directors		50.0%	50.0%
Senior Civil Servants		53.4%	46.6%
Workforce		52.6%	47.4%

Health and Safety Management

The Department’s safety performance has remained consistent during 2021-22. No accidents were reported to the Health and Safety Executive under Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR) in 2021-22 (none in 2020-21), while a total of 2 accidents were reported by employees in 2021-22 against 0 in 2020-21.  Working with facilities management colleagues, mitigations have now been put in place for the 2 accidents.

The most significant health and safety challenge the Department faced was our continued response to the Covid pandemic. The Department established Covid safety arrangements which met the recommendations of the Government’s working safely during Coronavirus guidance and met the standards set by the Health and Safety Executive.

The Department completed Covid risk assessments for all the buildings of its estate and established appropriate mitigations.  Key physical mitigations were provision of enhanced ventilation, a desk-booking system allowing for a track-and-trace functionality, hand-gels and wipes as well as enhanced cleaning regimes. The physical mitigations sat in the wider context of the HR framework to support staff and ensure their wellbeing during the period, including special provision for staff who are clinically vulnerable.

Towards the end of 2021-22, the Government issued revised guidance looking towards living with Covid.  The Department completed revised risk assessments as a result will retain key safety measures such as improved ventilation and enhanced cleaning allowing a full return for staff to its offices.

Average working days lost

	Jan - Dec 2021	Jan - Dec 2020 (AWDL)(1,2)
Civil Service	TBC	6.1
Core Department	3.6	3.4
Executive Agency	4.0	3.8

Staff with no sickness absence

	Jan - Dec 2021	Jan - Dec 2020
Core Department	76%	76%
Executive Agency	74%	74%

(1) AWDL:Average working day lost

(2) Civil Service AWDL is based on April 2020 - March 2021 data

Trade Union Facility time

The following data relates to both the core department and executive agency (Planning Inspectorate).

Relevant union officials

Number of employees who were relevant union officials during 1 April 2021 - 31 March 2022	Full-time equivalent employee number
	40

Percentage of time spent on facility time

Percentage of time	Number of employees
0%	22
1-50%	18
51%-99%	-
100%	-

Percentage of pay bill spent on facility time

	Figures
Total cost of facility time	£147,067
Total pay bill	£244,067,000
Percentage of the total pay bill spent on facility time	0.06%

Paid trade union activities

Time spent on paid trade union activities as a percentage of total paid facility time hours

0%

Some relevant union officials did not spend facility time on union activities.

Staff Turnover Percentage

Staff turnover for the department for 2021-22 was 16.3% (2020-21: 18.9%). Turnover, in line with the Cabinet Office definition, includes all staff who have left the Civil Service.

Senior Civil Service salaries and staffing

At 31 March 2022 there were 170 Senior Civil Service staff including the Permanent Secretary on the core department’s payroll. This includes staff receiving temporary responsibility allowance at an SCS pay band.

Senior civil servant headcount by pay band	31 March 2022
Permanent Secretary £150,000 - £200,000	2
SCS3 £120,000 - £208,100	8
SCS2 £93,000 - £162,500	39
SCS1 £71,000 - £117,800	121
Total	170

Staff numbers and related costs (subject to audit)

The following sections below have been subject to audit: staff costs, average number of full time equivalent persons employed, and reporting of civil service and other compensation schemes.

Staff costs

					£’000
				2021-22	2020-21 restated
	Permanently Employed Staff	Others	Ministers	Total	Total
Wages & Salaries	244,551	24,990	161	269,702	252,546
Social Security Costs	31,664	-	19	31,683	27,382
Pension Costs	94,260	-	-	94,260	73,511
Other	-	-	-	-	2,194
Total Costs	370,475	24,990	180	395,645	355,633
Less Recoveries in respect of outward secondments	(2,592)	-	-	(2,592)	(1,809)
Total Net Costs	367,883	24,990	180	393,053	353,824
Of which:				-
Core Department	187,469	10,972	180	198,621	168,236
Agency	44,880	566	-	45,446	48,436
Designated Bodies	138,126	13,452	-	151,578	138,961

Average number of full-time equivalent persons employee

					2021-22	2020-21 restated
	Permanent staff	Others	Ministers	Special Advisors	Total	Total
Core Department	2,566	353	6	6	2,931	2,628
Agency	752	8	-	-	760	759
Designated Bodies	1,751	263	-	-	2,014	1,761
Total	5,069	624	6	6	5,705	5,148

This is the annual average based on month end full time equivalent staff numbers.

Although administered through Cabinet Office payroll, Special Advisors continue to be employed by the appointing Minister. Therefore Special Advisors are included when reporting staff numbers.

Staff redeployments

In accordance with Transfers within the Civil Service (February 2019), short-term staff loans of up to six months remained on the payroll and terms and conditions of their home department and the host department bore no responsibility for the costs of the loaned staff.

Number of staff	Inward (Hosted)	Outward (Loaned)	Total
Administrative Officers	1	1	2
Executive/Higher Executive Officers	74	34	108
Senior Executive Officers	12	12	24
Grade 7/6	73	36	109
Senior Civil Service	12	0	12
Total secondments	172	83	255

Average duration (months)	Inward (Hosted)	Outward (Loaned)	Total
Administrative Officers	5	23	14
Executive/Higher Executive Officers	10	13	11
Senior Executive Officers	9	11	10
Grade 7/6	12	12	12
Senior Civil Service	8		8
All grades	11	13	11

Civil Service Pension Schemes

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS) - known as “Alpha” are unfunded multi-employer defined benefit schemes, but the department is unable to identify its share of the underlying assets and liabilities. The scheme actuary valued the scheme as at 31 March 2016. You can find details in the resource accounts of the Cabinet Office: Civil Superannuation (https://www.civilservicepensionscheme.org.uk/about-us/resource-accounts/).

For 2021-22, employers’ contributions of £34,595,036 (2020-21: £28,202,446) were payable to the Principal Civil Service Pension Scheme at one of four rates in the range 26.6% to 30.3% of pensionable earnings, based on salary bands. The scheme’s Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2021-22 to be paid when the member retires and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. For 2021-22, employers’ contributions of £156,988 (2020-21: £140,200) were paid to the appointed stakeholder pension provider. Employer contributions are age-related and ranged from 8% to 14.75%. Employers also match employee contributions up to 3% of pensionable earnings. In addition, for 2021-22, employer contributions of 0.5% of pensionable pay were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service and ill health retirement of these employees.

Contributions due to the partnership pension providers at the accounting date were £15,270 (2020-21: £11,539). Contributions prepaid at that date were nil.

Two members of staff (2020-21: two) retired early on ill-health grounds, the additional accrued pension liabilities in the year amounted to £632 (2020-21: £15,469).

Reporting of civil service and other compensation schemes – exit packages (subject to audit)

In the core department and Agency, redundancy and other departure costs have been paid in accordance with the provisions of the Civil Service Compensation Scheme, a statutory scheme made under the Superannuation Act 1972. Exit costs are accounted for in full when the exit has been agreed in accordance with IAS 19 and 37. Where the department has agreed early retirements, the additional costs are met by the department and not by the Civil Service pension scheme. Ill health retirement costs are met by the pension scheme and are not included in the table.

Staff employed by other bodies in the Departmental Group are not civil servants and redundancy and other departure costs are paid in accordance with the rules applying to the bodies in question. Further details are in the accounts of the bodies concerned.

				2021-22	2020-21
					Core Department and Agency
Exit package cost band		Number of compulsory redundancies	Number of other departures agreed	Total number of exit packages by cost band	Total number of exit packages by cost band
<£10,000		-	-	-	-
£10,000 - £25,000		-	-	-	-
£25,000 - £50,000		-	1	1	-
£50,000 - £100,000		-	-	-	1
£100,000 - £150,000		-	-	-	-
£150,000 - £200,000		-	-	-	-
£200,001 onwards		-	-	-	-
Total number of exit packages		-	1	1	1
		£’000			£’000
Total cost		-	28	28	95
	2021-22				2020-21
					Departmental Group
Exit package cost band	Number of compulsory redundancies		Number of other departures agreed	Total number of exit packages by cost band	Total number of exit packages by cost band
<£10,000	-		-	-	-
£10,000 - £25,000	-		-	-	-
£25,000 - £50,000	-		1	1	-
£50,000 - £100,000	-		-	-	1
£100,000 - £150,000	-		-	-	-
£150,000 - £200,000	-		-	-	-
£200,001 onwards	-		-	-	-
Total number of exit packages	-		1	1	1
				£’000	£’000
Total cost	-		28	28	95

Expenditure on Consultancy and Temporary Staff

	2021-22	2020-21	2019-20	2018-19
	£000	£000	£000	£000
Cost of Contingent Labour
Core Department	7,702	4,991	5,992	5,180
Executive Agency	1,872	1,659	2,476	3,091
NDPBs	16,113	16,106	7,302	5,105
Total	25,687	22,756	15,771	13,376
Cost of Consultancy
Core Department	15,270	19,544	4,898	2,763
Executive Agency	-	-	106	60
NDPBs	1,483	604	225	430
Total	16,753	20,148	5,229	3,253
Overall Total	42,440	42,904	20,999	16,629

Contingent labour – This is the provision of workers to cover business-as-usual or service delivery activities within an organisation. Temporary Staff are also often referred to as “Contingent Labour”.

Consultancy staff – This is the provision to management of objective advice relating to strategy, structure, management or operations of an organisation, in pursuit of its purposes and objectives. Such advice will be provided outside the business-as-usual environment when in-house skills are not available and will be time-limited.

Consultancy and Contingent labour services supplied to the Department support programmes including the Building Safety programme, Grenfell Tower and memorial planning, IT services including Cyber Security, and other areas where specialist knowledge not held within the Department is required.

Reporting the tax arrangements of public sector appointees

As part of the Review of Tax Arrangements of Public Sector Appointees published by the Chief Secretary to the Treasury on 23 May 2012, departments and their arm’s length bodies must publish information on their highly paid and senior off-payroll engagements.

The Department has seen an increase due to critical expertise required in areas such as Building Safety, SAP finance, Digital, and the Holocaust Memorial teams, requiring the specialist skills not readily available across the Department or Civil Service. These skills include building standards expertise and knowledge, expertise of SAP finance systems, as well as digital architect, software and developer skills. There has been difficulty recruiting to long enduring roles permanently due to the limited supply and high demand for these skillsets within the current labour market.

Agency numbers refer to off-payroll engagements in the Planning Inspectorate. Engagements include the services of Non-salaried Inspectors, providing necessary flexibility in the Inspector workforce. The remainder of the engagements supported requirements as part of organisational transformation.

ALB figures refer to Homes England, using off-payroll arrangements for specialist or technical contractors and consultants to address urgent scarce skills gaps.

Off-payroll engagements as of 31 March 2022, for more than £245 per day and that last for longer than six months

	Main Department	Agency	ALBs
No. of existing engagements as of 31 March 2022	58	97	77
of which have existed for:
less than one year at time of reporting	45	19	38
between one and two years at time of reporting	6	1	27
between two and three years at time of reporting	3	10	8
between three and four years at time of reporting	3	67	1
four years or more at time of reporting	1	0	3

All temporary off-payroll appointments engaged at any point during the year ended 31 March 2022 and earning at least £245 per day

	Main Department	Agency	ALBs
No. of off-payroll workers engaged during the year ended 31 March 2022	115	130	166
Of which:
No. determined as in-scope of IR35	96	130	163
No. determined as out-of-scope of IR35	19	0	3
No. of engagements reassessed for compliance or assurance purposes during the year	70	102	0
Of which:
No. of engagements that saw a change to IR35 status following review	0	0	0
No. of engagements where the status was disputed under provisions in the off-payroll legislation	0	0	0
Of which:
No. of engagements that saw a change to IR35 status following review	0	0	0

All temporary off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2021 and 31 March 2022

	Main Department	Agency	ALBs
No. of off-payroll workers engaged during the year ended 31 March 2022	0	0	0
Of which:
No. determined as in-scope of IR35	0	0	0
No. determined as out-of-scope IR35	0	0	0
No. of engagements reassessed for compliance or assurance purposes during the year	0	0	0
Of which:
No. of engagements that saw a change to IR35 status following review	0	0	0
No. of engagements where the status was disputed under provisions in the off-payroll legislation	0	0	0
Of which:
No. of engagements that saw a change to IR35 status following review	0	0	0

Off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2021 and 31 March 2022

	Main Department	Agency	ALBs
No. of off-payroll engagements of board members, and/or senior official with significant financial responsibility, during the financial year	0	0	0
Total no. of individuals both on and off-payroll that have been deemed “board members and/or senior officials with significant financial during responsibility” during the financial year	12	9	60

Parliamentary Accountability and Audit Report

Introduction

The Parliamentary Accountability and Audit Report includes three sections: the Statement of Outturn against Parliamentary Supply, Parliamentary Accountability Disclosures and the Certificate and Report of the Comptroller and Auditor General. This introduction provides further detail on the figures presented in the Statement of Outturn against Parliamentary Supply and in the Core Tables of the Parliamentary Accountability Disclosure section.

The department’s spending is shown in two presentations in the Annual Report and Accounts.

The Parliamentary Accountability and Audit Report presents the department’s spend against the budgets set by Parliament in Supply Estimates. The final budgets for the year were set in the Supplementary Estimates.

The department’s budgets follow the international standards of the European System of Accounts (ESA). This allows HM Treasury to produce compliant National Accounts capable of international comparison.

The Financial Statements meanwhile apply International Financial Reporting Standards (IFRS) as adapted for government by the Financial Reporting Manual (FReM).

The diagram below shows how total spending from one presentation relates to the other. A more detailed reconciliation between resource expenditure shown in the Statement of Outturn against Parliamentary Supply (SoPS) 1.1 and net operating expenditure in the Statement of Comprehensive Net Expenditure in the Financial Statements can be found in Statement of Parliamentary Supply (SoPS) 2 below.

The Department’s Budget and Outturn

The diagram below shows the department’s control totals which are the budget totals that we must not breach and which are set in Supply Estimates. The department has two Resource DEL control totals, one for the funding we provide to local government on behalf of central government and one for the department’s own spending. These and other control totals are set out in the diagram below. xxxx

SoPS 1.1 and SoPS 1.2 report expenditure against each DEL or AME budgetary control limit, split by specific area of departmental expenditure, for example Housing & Planning or Troubled Families. SoPS 1.1 reports resource expenditure and SoPS 1.2 reports capital expenditure. The specific areas of departmental expenditure in budgets are called estimate rows. The Core Tables present expenditure at the same level of detail (i.e. by estimate row) and on the same basis as SoPS 1.1 and SoPS 1.2 over a six year period.

The next table shows the main streams of expenditure contained within each estimate row presented in SoPS 1.1, SoPS 1.2 and the Core Tables. Costs classified as administration expenditure by HM Treasury are all incurred within Communities Resource DEL. The administration expenditure Core Table provides a subset of figures from the Departmental Resource Spending Core Table. The Administration Costs table in the SoPS provides a subset of figures from the summary of Resource and Capital Outturn table and SoPS 1.1.

Estimate Row	Main Expenditure Streams
Communities DEL Estimate Rows
A: Local Government & Public Services	- Rough Sleeping Accommodation - COVID-19 - Grenfell Tower Site Management - London Settlement
B: Housing and Planning	- New Homes Bonus - Affordable Housing London - Flexible Homelessness Support Grant - PFI Housing Grants - Expenditure of the Planning Inspectorate
C: Decentralisation & Local Growth	- Devolution Deals - Local Growth Fund - Getting Building
D: Troubled Families	- Troubled Families Programme
E: Research, Data and Trading Funds	- Research & Development - ERDF Foreign Exchange Rate (Gains)/Losses - Regional Fire Control Centres
F: DLUHC Staff, Building and Infrastructure Costs	The majority is classified as administration expenditure: - Staff Pay - Estates costs e.g. rent, rates, utilities
G: Local Government & Public Services (ALB)(Net)	- Expenditure of the Valuation Tribunal Service (VTS) and the Commission for Local Administration in England (CLAE) - the majority of which is classified as administration expenditure.
H: Housing and Planning (ALB)(Net)	Expenditure by Homes England on programmes including: - Help to Buy - Affordable Homes Programme - Home Building Fund - Land Assembly Fund - Investment income received by Homes England - Administration expenditure on Homes England staff and estates - Expenditure by the Leasehold Advisory Service (LAS) and The Housing Ombudsman (THO) – most of which is classified as Administration expenditure - Expenditure by the Regulator of Social Housing – both Administration and Programme expenditure
I: Elections	Expenditure to Returning Officers for elections costs
Local Government DEL Estimate Rows
J: Revenue Support Grant	- Revenue support grant - central government funding provided to support local government services
K: Other Grants and Payments	- Business rates and council tax reliefs and support - Social Care grants (including improved Better Care Fund) - COVID-19 payments to Local Authorities
L: Business Rates Retention	- Payments to local authorities whose income from business rates is below a baseline level
AME Estimate Rows
M: Other Grants and Payments	- Recovery of Business Rate Relief support payments
N: Local Government and Public Services	- Grenfell Site provision
O: Housing & Planning; and	- Impairments of non-current and financial assets
U: Housing & Planning (ALB)	- Impairments and revaluations
P: Decentralisation and Local Growth	- Impairments and revaluations
Q: Research, Data and Trading Funds	- Unrealised exchange rate losses and gains
R: DLUHC Staff, Building and Infrastructure Costs	- Expenditure by the core department on creation and release/utilisation of provisions
S: Non-Domestic Rates Outturn Adjustment	- Expenditure relating to year-end adjustments for business rates retention outturn
T: Local Government & Public Services (ALB)(Net)	- Expenditure on pensions by the VTS and the CLAE
V: Business Rates Retention	- Includes the local share of business rates collected and retained by local authorities as well other business rates retention payments and receipts

Statement of Outturn against Parliamentary Supply (subject to audit)

In addition to the primary statements prepared under IFRS, the Government Financial Reporting Manual (FReM) requires DLUHC to prepare a Statement of Outturn against Parliamentary Supply (SoPS) and supporting notes. The SoPS and related notes are subject to audit, as detailed in the Certificate and Report of the Comptroller and Auditor General to the House of Commons.

The SoPS is a key accountability statement that shows, in detail, how an entity has spent against their Supply Estimate. Supply is the monetary provision (for resource and capital purposes) and cash (drawn primarily from the Consolidated fund), that Parliament gives statutory authority for entities to utilise. The Estimate details supply and is voted on by Parliament at the start of the financial year. Should an entity exceed the limits set by their Supply Estimate, called control limits, their accounts will receive a qualified opinion.

The format of the SoPS mirrors the Supply Estimates, published on gov.uk, to enable comparability between what Parliament approves and the final outturn. The SoPS contain a summary table, detailing performance against the control limits that Parliament have voted on, cash spent (budgets are compiled on an accruals basis and so outturn won’t exactly tie to cash spent) and administration. The supporting notes detail the following: Outturn by Estimate line, providing a more detailed breakdown (note 1); a reconciliation of outturn to net operating expenditure in the SOCNE, to tie the SoPS to the Financial Statements (note 2); a reconciliation of outturn to net cash requirement (note 3); and an analysis of income payable to the Consolidated Fund (note 4).

The SOPS and Estimates are compiled against the budgeting framework, which is similar to, but different from, IFRS. Further information on the Public Spending Framework and the reasons why budgeting rules are different to IFRS can also be found in chapter 1 of the Consolidated Budgeting Guidance.

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

Summary of Resource and Capital Outturn 2021-22

									2021-22	2020-21 restated
									£’000	£’000
		Outturn			Estimate			Outturn vs Estimate, saving/(excess)		Prior Year
Type of spend	Note	Voted	Non-Voted	Total	Voted	Non-Voted	Total	Voted	Total	Outturn Total
Departmental Expenditure Limit (DEL) - DLUHC Housing and Communities
Resource	SoPS1.1	2,709,571	54,929	2,764,500	2,995,984	90,900	3,086,884	286,413	322,384	2,687,000
Capital	SoPS1.2	6,142,371	-	6,142,371	7,351,582	-	7,351,582	1,209,211	1,209,211	9,096,418
Total		8,851,942	54,929	8,906,871	10,347,566	90,900	10,438,466	1,495,624	1,531,595	11,783,418
Departmental Expenditure Limit (DEL) - DLUHC Local Government
Resource	SoPS1.1	21,262,114	-	21,262,114	21,453,546	-	21,453,546	191,432	191,432	20,906,596
Capital	SoPS1.2	-	-	-	-	-	-	-	-	-
Total		21,262,114	-	21,262,114	21,453,546	-	21,453,546	191,432	191,432	20,906,596
Annually Managed Expenditure (AME)
Resource	SoPS1.1	7,666,661	-	7,666,661	10,845,070	-	10,845,070	3,178,409	3,178,409	16,648,350
Capital	SoPS1.2	-	-	-	-	-	-	-	-	-
Total		7,666,661	-	7,666,661	10,845,070	-	10,845,070	3,178,409	3,178,409	16,648,350
Total Budget
Resource	SoPS1.1	31,638,346	54,929	31,693,275	35,294,600	90,900	35,385,500	3,656,254	3,692,225	40,241,946
Capital	SoPS1.2	6,142,371	-	6,142,371	7,351,582	-	7,351,582	1,209,211	1,209,211	9,096,418
Total Budget Expenditure		37,780,717	54,929	37,835,646	42,646,182	90,900	42,737,082	4,865,465	4,901,436	49,338,364
Total Budget and Non-Budget		37,780,717	54,929	37,835,646	42,646,182	90,900	42,737,082	4,865,465	4,901,436	49,338,364

Figures in the areas outlined in thick line cover the voted control limits voted by Parliament. Refer to the Supply Estimates guidance manual, available on gov.uk, for detail on the control limits voted by Parliament.

Net Cash Requirement 2021-22

					£’000
		2021-22			2020-21
Item	SoPS Note	Outturn	Estimate	Outturn vs. Estimate: saving/(excess)	Prior Year Outturn
Net Cash Requirement	3	31,070,890	39,280,774	8,209,884	32,265,900

Administration Costs 2021-22

					£’000
		2021-22			2020-21 restated
Type of spend	SoPS Note	Outturn	Estimate	Outturn vs. Estimate: saving/(excess)	Prior Year Outturn
Administration Costs	1.1	274,090	346,217	72,127	263,333

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

Notes to the Statement of Outturn against Parliamentary Supply

SoPS 1. Outturn detail, by Estimate line

SoPS 1.1 Analysis of resource outturn by Estimate line

													£’000
												2021-22	2020-21 restated
		Resource Outturn							Estimate
		Administration			Programme
	Type of spend (Resource)	Gross	Income	Net	Gross	Income	Net	Total	Net Total	Virements	Total inc. virements(2)	Outturn vs Estimate, saving/(excess)	Prior Year Outturn Total
Spending in Departmental Expenditure Limits (RDEL) - DLUHC Housing and Communities
Voted expenditure
A	Local Government & Public Services	-	-	-	184,797	(932)	183,865	183,865	170,679	13,186	183,865	-	129,730
B	Housing and Planning	-	-	-	1,751,292	(14,075)	1,737,217	1,737,217	1,774,431	(16,710)	1,757,721	20,504	1,764,860
C	Decentralisation & Local Growth	-	-	-	653,104	(288,043)	365,061	365,061	361,560	3,501	365,061	-	413,799
D	Troubled Families	-	-	-	168,278	-	168,278	168,278	168,255	23	168,278	-	159,929
E	Research, Data & Trading Funds	-	-	-	(24,809)	(1,000)	(25,809)	(25,809)	11,993	-	11,993	37,802	3,874
F	DLUHC Staff, Building and Infrastructure Costs	260,817	(11,920)	248,897	19,975	(1,189)	18,786	267,683	276,004	-	276,004	8,321	225,572
G	Local Government & Public Services (ALB) (Net)(1)	17,925	-	17,925	-	-	-	17,925	17,995	-	17,995	70	17,975
H	Housing and Planning (ALB) (Net)(1)	7,268	-	7,268	(11,917)	-	(11,917)	(4,649)	215,067	-	215,067	219,716	(25,486)
Total Voted DEL		286,010	(11,920)	274,090	2,740,720	(305,239)	2,435,481	2,709,57	2,995,984	-	2,995,984	286,413	2,690,253
Non Voted Expenditure
	Returning Officers’ expenses England, Wales and Scotland
I	Elections	-	-	-	54,929	-	54,929	54,929	90,900		90,900	35,971	(3,253)
	Total non-voted DEL	-	-	-	54,929	-	54,929	54,929	90,900	-	90,900	35,971	(3,253)
Total spending in RDEL - DLUHC Housing and Communities		286,010	(11,920)	274,090	2,795,649	(305,239)	2,490,410	2,764,500	3,086,884	-	3,086,884	322,384	2,687,000

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result, and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

(3) A breakdown of Returning Officers expense under “Elections” is provided in Annex C

													£’000
												2021-22	2020-21
		Resource Outturn							Estimate
		Administration			Programme
	Type of spend (Resource)	Gross	Income	Net	Gross	Income	Net	Total	Net Total	Virements	Total inc. virements(2)	Outturn vs Estimate, saving/(excess)	Prior Year Outturn Total
Spending in RDEL - DLUHC Local Government
Voted expenditure
J	Revenue Support Grant	-	-	-	1,621,557	-	1,621,557	1,621,557	1,621,562	-	1,621,562	5	1,612,632
K	Other Grants and Payments	-	-	-	19,605,740	(2,065)	19,603,675	19,603,675	19,795,102	-	19,795,102	191,427	19,290,611
L	Business Rates Retention	-	-	-	36,882	-	36,882	36,882	36,882	-	36,882	-	3,353
Total Spending in RDEL - DLUHC Local Government		-	-	-	21,264,179	(2,065)	21,262,114	21,262,114	21,453,546	-	21,453,546	191,432	20,906,596
Total spending in RDEL		286,010	(11,920)	274,090	24,059,828	(307,304)	23,752,524	24,026,614	24,540,430	-	24,540,430	513,816	23,593,596

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result, and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

													£’000
												2021-22	2020-21
		Resource Outturn							Estimate				Outturn
		Administration			Programme
	Type of spend (Resource)	Gross	Income	Net	Gross	Income	Net	Total	Net Total	Virements	Total inc. virements(2)	Outturn vs Estimate, saving/(excess)	Total
Spending in Annually Managed Expenditure (RAME)
Voted expenditure
M	Other Grants and Payments				(17,941)	(5,624,692)	(5,642,633)	(5,642,633)	(4,109,631)	(1,433,320)	(5,542,951)	99,682	-
N	Local Government and public services	-	-	-	49,077	-	49,077	49,077	(18,976)	68,053	49,077	-	10,971
O	Housing and Planning	-	-	-	(8,028)	-	(8,028)	(8,028)	194,285	(68,053)	126,232	134,260	3,867
P	Decentralisation & Local Growth	-	-	-	7,313	(272)	7,041	7,041	11,000		11,000	3,959	(7,312)
Q	Research, Data & Trading Funds	-	-	-	-	-	-	-	2,000		2,000	2,000	-
R	DLUHC Staff, building and infrastructure costs	-	-	-	(10,567)	-	(10,567)	(10,567)	1,154		1,154	11,721	(1,100)
S	Non-Domestic Rates Outturn Adjustment	-	-	-	-	-	-	-	350,000		350,000	350,000	9,520
T	Local Government & Public Services (ALB) (Net) (1)	-	-	-	4,462	-	4,462	4,462	4,599		4,599	137	2,568
U	Housing & Planning(ALB) (Net)1	-	-	-	(139,736)	(761,496)	(901,232)	(901,232)	1,675,418		1,675,418	2,576,650	(64,989)
V	Business Rates Retention	-	-	-	17,228,301	(3,059,760)	14,168,541	14,168,541	12,735,221	1,433,320	14,168,541	-	16,694,825
Total spending in RAME		-	-	-	17,112,881	(9,446,220)	7,666,661	7,666,661	10,845,070	-	10,845,070	3,178,409	16,648,350
Total resource		286,010	(11,920)	274,090	41,172,709	(9,753,524)	31,419,185	31,693,275	35,385,500	-	35,385,500	3,692,225	40,241,946

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

SoPS 1.2 Analysis of capital outturn by Estimate line

									£’000
								2021-22	2020-21 restated
		Outturn			Estimate				Outturn
	Type of spend (Capital)	Gross	Income	Net Total	Net Total	Virements	Total inc. virements	Outturn vs Estimate saving / excess	Net
Spending in Departmental Expenditure Limit (CDEL) - DLUHC Housing and Communities
Voted expenditure
A	Local Government & Public Services	107,321	(21,651)	85,670	76,354	9,316	85,670	-	65,726
B	Housing and Planning	1,513,324	(572,572)	940,752	948,530	-	948,530	7,778	1,067,484
C	Decentralisation and Local Growth	1,565,731	(309,050)	1,256,681	1,560,858	(9,316)	1,551,542	294,861	2,131,729
D	Troubled Families	(69)	-	(69)	-	-	-	69	546
E	Research, Data & Trading Funds	7,112	(768)	6,344	9,508	-	9,508	3,164	3,158
F	DLUHC Staff, building and infrastructure costs	18,354	(172)	18,182	21,418	-	21,418	3,236	7,121
G	Local Government & Public Services (ALB)(Net)(1)	189	-	189	303	-	303	114	125
H	Housing and Planning (ALB)(Net)(1)	3,834,622	-	3,834,622	4,734,611	-	4,734,611	899,989	5,820,529
Total spending in CDEL - DLUHC Housing and Communities		7,046,584	(904,213)	6,142,371	7,351,582	-	7,351,582	1,209,211	9,096,418

(1) Expenditure and income on these estimate rows are presented net in the Gross column per HMT Treasury guidance. All other estimate rows present expenditure and income separately: expenditure in the Gross column and income in the Income column.

(2) Parliament does not vote on how budget within a control total is distributed across the estimate row sub-headings. As a result, and per the HMT Supply Estimates Manual, the department has discretion to move budget between estimate rows via ‘virements’.

The total Estimate columns include virements. Virements are the reallocation of provision in the Estimates that do not require parliamentary authority (because Parliament does not vote to that level of detail and delegates to HM Treasury). Further information on virements is provided in the Supply Estimates Manual

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

SoPS 2. Reconciliation of outturn to net operating expenditure

						£’000
Item		SoPS Note		2021-22		2020-21 restated
Total Resource Outturn in Statement of Parliamentary Supply:		1.1		31,693,275		40,245,199
Add:	Capital grants			3,730,446		4,745,221
	Capital budget adjustments(1)			10,708		30,291
	Asset transfers			-		1,039
Less:	Income outside the ambit of the estimate payable to the Consolidated Fund	4.1		(48,155)		(180,827)
	Prior Period Adjustment			-		-
Net Operating Expenditure in Consolidated Statement of Comprehensive Net Expenditure				35,386,274		44,840,923

(1) The capital budget adjustment include profit on disposal of certain financial assets that are recoded in net operating expenditure in the financial statements but are not recorded in SOPS budgets, research and development costs and the capital element of the Grenfell Tower provision which are recorded in net operating expenditure in the financial statements but are recorded in the capital budget rather than the budget in SOPS.

As noted in the introduction to the SoPS above, outturn and the Estimates are compiled against the budgeting framework, which is similar to, but different from, IFRS. Therefore, this reconciliation bridges the resource outturn to net operating expenditure, linking the SoPS to the Financial Statements. Reconciling items must be explained, if not already explained elsewhere, with reference to where and why budgeting rules diverge from IFRS. For example, capital grants are budgeted for as CDEL but accounted for as spend on the face of the SOCNE, and therefore function as a reconciling item between Resource and Net Operating Expenditure. £3.7 billion of capital grants were issued to local government for the purposes of funding capital spend by local authorities. Asset transfers in 2020-21 relate to the transfer of fixed assets to the Government Property Agency.

SoPS 3. Reconciliation of net resource outturn to net cash requirement

As noted in the introduction to the SoPS above, outturn and the Estimates are compiled against the budgeting framework, not on a cash basis. Therefore, this reconciliation bridges the resource and capital outturn to the net cash requirement.

				£’000
				2021-22
Item	SoPS Note	Outturn	Estimate	Outturn vs Estimate, saving/(excess)
Total Resource Outturn	1.1	31,693,275	35,385,500	3,692,225
Total Capital Outturn	1.2	6,142,371	7,351,582	1,209,211
Adjustments to remove non-cash items:
Depreciation and amortisation		(12,984)	(216,037)	(203,053)
Local Share (local authorities)
New provisions and adjustments to previous provisions		(60,455)	(10,335)	50,120
Other non-cash items		(5,583,724)	(7,507,355)	(1,923,631)
Adjustments for ALBs:
Remove voted resource and capital		(2,951,317)	(6,647,993)	(3,696,676)
Add cash grant-in-aid		2,065,136	2,966,934	901,798
Adjustments to reflect movements in working balances:
Increase/(decrease) in inventories		20,012	-	(20,012)
Increase/(decrease) in receivables		229,926	-	(229,926)
(Increase)/decrease in payables		(447,553)	8,021,629	8,469,182
Use of provisions and pension fund adjustments		26,178	27,749	1,571
Other Adjustments		4,954	-	(4,954)
Removal of non-voted budget items:
Consolidated Fund Standing Services		(54,929)	(90,900)	(35,971)
Net cash requirement		31,070,890	39,280,774	8,209,884

SoPS 4. Amounts of income to the Consolidated Fund

SoPS 4.1 Analysis of income payable to the Consolidated Fund

In addition to income retained by the department, the following is payable to the Consolidated Fund.

					£’000
Item		Outturn 2021-22		Outturn 2020-21
		Accruals	Cash basis	Accruals	Cash basis
Income outside the ambit of the Estimate (1)		48,155	48,155	180,827	180,827
Other amounts collectable on behalf of the Consolidated Fund (2)		1,901,730	1,901,730	1,068,492	1,068,492
Returning Officers’ Expenses England, Wales and Scotland
Forefeited Desposits Receivable				4	16
-2019 UK Parliamentary election
Excess cash surrenderable to the Consolidated Fund
Total amount payable to the Consolidated Fund		1,949,885	1,949,885	1,249,323	1,249,335

(1) Monies received from local authorities for excess receipts generated from the disposal of housing assets (i.e. assets held under part 2 of the Housing Act 1985 accounted for in local authorities Housing Revenue Accounts). Referred to as CFER income (consolidated fund extra receipt) in Note 5 to the Financial Statements.

(2) Receipts in relation to the Help to Buy scheme as those home owners who are part of the scheme sell their homes and repay their equity loan.

SoPS 4.2 Consolidated Fund Income

Consolidated Fund income shown in SoPS Note 4.1 above does not include any amounts collected by the department where it was acting as agent of the Consolidated Fund rather than as principal. Full details of income collected as agent for the Consolidated Fund are in the department’s Trust Statement.

Parliamentary Accountability Disclosures

Financial Overview

Significant variances against Estimate

At the start of each year we estimate our costs for each budget type and we monitor these throughout the year. The size of our budget, along with economic, environmental and social changes means there will inevitably be some variance from our Estimates. The Statement of Outturn against Parliamentary Supply shows our 2021-22 outturn figures against Estimates.

Where the comparison of outturn against Estimate has shown an overspend or an underspend of more than £2 million and 10% this is explained below:

	Estimate Subhead	Outturn £m	Budget £m	Variance to Estimate %	Explanation
	Resource Spending in Departmental Expenditure Limit (RDEL) - DLUHC Communities
E	Research, Data & Trading Funds	(26)	12	-315%	Variance is primarily due to £45m received from the EU in relation to the ERDF 2007-2013 programme.
H	Housing and Planning (ALB) (Net)	(5)	215	-102%	Income from the Greater London Authority relating to a legacy loan programme was lower than budgeted, and this was partially offset by lower spend on the Rough Sleeping accommodation programmes
I	Elections	55	91	-40%	The underspend consists of non-voted spend being lower than estimated by £32.4m due to fewer elections/by-elections held than anticipated.
	Resource Spending in Annually Managed Expenditure (RAME)
M	Other Grants and Payments	(5,643)	(4,110)	37%	The OSCAR budget reflects the net position of both the £5.6 bn income and the £1.5 billion payments included in the Business Rates Retention Section Estimate Row V below.
N	Local Government and public services	49	(19)	-359%	Variance relates to the increase in provision for the Grenfell Tower.
O	Housing and Planning	(8)	194	-104%	These budgets are held to manage expected losses on the Department’s guarantee programmes. Deterioration in credit quality was less than expected.
P	Decentralisation & Local Growth	7	11	-36%	Revaluation of the ERDF Euro balance sheet position and Greenwich Peninsula land asset value at year-end.
R	DLUHC Staff, building and infrastructure costs	(11)	1	-1016%	There was an upward revaluation of investment properties and therefore it was negative in AME (positive as increasing the value of the assets).
S	Non-Domestic Rates Outturn Adjustment	-	350	-100%	This is a year end contingency for movements in business rate outturns agreed at the Supplementary Estimate.
V	Business Rates Retention	14,169	12,735	11%	This is the corresponding £1.5 billion expenditure for the item under section Estimate Row M above, plus £100m contingency pending a Ministerial decision on the 21-22 levy surplus position.
	Capital Spending in Departmental Expenditure Limit (CDEL) - DLUHC Communities
A	Local Government & Public Services	86	76	12%	Income from the Greater London Authority relating to a legacy loan programme was lower than budgeted, and this was partially offset by lower spend on the Rough Sleeping accommodation programmes.
C	Decentralisation and Local Growth	1,257	1,561	-19%	The majority of the variance was due to slippage on Towns Fund, Levelling Up Fund and Brownfield Land Release Fund. Key information from Local Authorities only available in last quarter and budget set using Local Authority forecasts from earlier in year proving to be optimistic.
F	DLUHC Staff, building and infrastructure costs	18	21	-15%	Variance relates to data infrastructure projects, which underspent due to the pandemic and inhibited ability to dedicate capacity to deliver on technical commissions.
H	Housing and Planning (ALB)(Net)	3,835	4,735	-19%	Help to Buy is a demand led programme, so changes in demand create variances against budget. Less spending than forecast on the Affordable Homes Programme due to reprofiling of payments to reflect recent delivery pressures, including building materials supply chain issues, causing some projects to be delayed or fall through.

Core Tables – Departmental Expenditure Outturn and Plans

The Tables 1a, 1b and 2 show the department’s expenditure outturn for 2021-22 and the four prior years, along with the planned expenditure for the next three years.

Table 1a: Past, current and future departmental resource spending

	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
	Restated	Restated	Restated	Restated
	Outturn	Outturn	Outturn	Outturn	Outturn	Plan	Plan	Plan
Spending in DEL - DLUHC Communities	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Voted expenditure
Of which:
A: Local Government & Public Services	163,198	197,895	194,445	146,809	183,865	182,105	179,791	191,187
B: Housing and Planning	1,765,527	1,573,280	1,630,755	1,764,814	1,737,217	1,646,596	1,169,911	1,165,329
C: Decentralisation & Local Growth	113,313	178,143	215,151	413,796	365,061	560,014	218,930	198,908
D: Troubled Families	213,618	174,369	155,027	159,926	168,278	208,900	165,000	165,000
E: Research, Data and Trading Funds	1,535	2,927	12,239	3,875	(25,809)	7,200	12,161	11,926
F: DLUHC Staff, Building and Infrastructure Costs	138,723	167,770	210,633	233,356	267,683	259,373	249,928	250,373
G: Local Government & Public Services (ALB) (net)	19,110	17,756	18,948	17,956	17,925	18,241	18,227	18,229
H: Housing and Planning (ALB)(net)	(14,975)	41,788	72,780	(25,489)	(4,649)	210,124	174,541	158,874
Total Voted	2,400,049	2,353,928	2,509,978	2,715,043	2,709,571	3,092,553	2,188,489	2,159,826
Non Voted Expenditure
Returning Officers’ expenses England, Wales and Scotland
I: Elections	234,025	(462)	289,896	(5,485)	54,929	7,700	-	-
Total Non Voted	234,025	(462)	289,896	(5,485)	54,929	7,700	-	-
Departmental Expenditure Limit (DEL) - DLUHC Housing and Communities	2,634,074	2,353,466	2,799,874	2,709,558	2,764,500	3,100,253	2,188,489	2,159,826
Voted expenditure
Of which:
J: Revenue Support Grant	3,799,502	1,378,997	653,058	1,612,634	1,621,557	1,672,058	-	-
K: Other grants and payments	2,904,792	3,450,911	7,918,506	19,290,610	19,603,675	10,006,342	12,103,480	12,756,923
L: Business Rate Retention	9,252	3,928	212	3,352	36,882	87,470	-	-
Total Spending in DEL -DLUHC Local Govt	6,713,546	4,833,836	8,571,776	20,906,596	21,262,114	11,765,870	12,103,480	12,756,923
Total Resource DEL	9,347,620	7,187,302	11,371,650	23,616,154	24,026,614	14,866,123	14,291,969	14,916,749
Spending in Annually Managed Expenditure (AME)
Voted expenditure
Of which:
M:Other grants and payments	-	-	-	-	(5,642,633)	-	-	-
N: Local Government & Public Services	33,466	7,903	53,671	(9,360)	49,077	(19,254)	(23,962)	(16,073)
O: Housing and Planning	11,902	6,166	8,262	3,867	(8,028)	106,367	-	-
P: Decentralisation & Local Growth	1	5,802	(2,256)	(7,312)	7,041	5,000	-	-
Q: Research, Data and Trading Funds	(12,262)	(74)	-	-	0	-	-	-
R: DLUHC Staff, Building and Infrastructure Costs	6,171	1,267	(4,117)	(1,099)	(10,567)	(168)	(168)	(168)
S: Non-Domestic Rates Outturn Adjustment	30,167	(10,818)	2,586	9,520	0	350,000	-	-
T: Local Government & Public Services (ALB)(Net)	803	2,354	2,550	2,569	4,462	(1,716)	(1,716)	(1,716)
U: Housing and Planning (ALB)(Net)	143,962	174,887	(234,400)	(64,990)	(901,232)	1,477,926	(27,021)	(28,801)
V: Business Rate Retention	15,721,960	21,199,022	18,367,167	16,694,832	14,168,541	13,179,820	-	-
Total Resource AME	15,936,170	21,386,509	18,193,463	16,628,027	7,666,661	15,097,975	(52,867)	(46,758)
Total Resource	25,283,790	28,573,811	29,565,113	40,244,181	31,693,275	29,964,098	14,239,102	14,869,991

Table 1b: Past, current and future departmental capital spending

	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
	Restated	Restated	Restated	Restated
	Outturn	Outturn	Outturn	Outturn	Outturn	Plan	Plan	Plan
Spending in DEL -DLUHC Communities	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Voted expenditure
Of which:
A: Local Government & Public Services	771,574	885,336	14,782	65,666	85,670	131,433	35,037	34,666
B: Housing and Planning	78,556	454,754	1,823,678	1,067,484	940,752	1,999,741	1,765,475	2,034,618
C: Decentralisation & Local Growth	1,455,050	1,190,461	928,834	2,131,731	1,256,681	1,059,249	861,228	689,645
D: Troubled Families	532	697	749	545	(69)	750	1,000	1,250
E: Research, Data and Trading Funds	2,210	3,072	4,509	3,160	6,344	9,300	9,000	9,000
F: DLUHC Staff, Building and Infrastructure Costs	6,545	13,923	6,967	7,125	18,182	13,444	8,661	6,000
G: Local Government & Public Services (ALB)(Net)	448	494	250	125	189	1,869	360	360
H: Housing and Planning (ALB)(Net)	4,318,690	4,875,032	5,493,446	5,820,532	3,834,622	6,368,067	4,174,961	3,976,707
Total Spending in DEL - DLUHC Communities	6,633,605	7,423,769	8,273,215	9,096,368	6,142,371	9,583,853	6,855,722	6,752,246

Table 2: Administration budgets

	2017-18 restated	2018-19 restated	2019-20 restated	2020-21 restated	2021-22	2022-23	2023-24	2024-25
	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Outturn £’000	Plan £’000	Plan £’000	Plan £’000
B: Housing and Planning	36,963	36,022	-	-	-	-	-	-
F: DLUHC Staff, Building & Infrastructure Costs	137,288	163,196	204,491	221,784	248,897	257,314	249,104	249,549
G: Local Government & Public Services (ALB)(Net)	19,110	17,756	18,940	17,954	17,925	18,241	18,227	18,229
H: Housing and Planning (ALB)(Net)	32,222	39,485	26,433	31,351	7,268	67,680	66,849	56,991
Total Voted	225,583	256,459	249,864	271,089	274,090	343,235	334,180	324,769
Total Administration expenditure	225,583	256,459	249,864	271,089	274,090	343,235	334,180	324,769

Interpreting the Core Tables

Below, we have provided detail to help explain significant movements on the estimate row lines shown in the core tables above.

The rows in the Estimates called Departmental Unallocated Provision represent small unallocated budgets in both Resource DEL and Capital DEL which exist to help fund programmes in the future should the need arise.

Administration costs are included within the first section below regarding the Resource DEL – Communities budget.

Resource DEL – Communities

• A: Local Government & Public Services - The increase in outturn between 2020-21 and 2021-22 mainly relates to the introduction of costs for the Homes for Ukraine programme which started in March 2022.

• B: Housing and Planning – This covers funding for a large number of programmes at different stages in their lifecycles, that naturally have different requirements year-on-year, with the biggest driver of reduced outturn in 2021-22 being due to no new legacy payments on the New Homes Bonus.

• C: Decentralisation and Local Growth – The difference in 2020-21 and 2021-22 is mainly due to £175m allocated to Shielding in 2020-21 only, partially offset by new programme funding in 2021-22 to support the levelling up agenda.

• D: Troubled Families – Payments on this programme are demand-led, with payment made in accordance with the programme results achieved by local authorities. The budget for 2022-23 has been allocated to match with expected delivery.

• E: Research Data and Trading Funds – The difference between 2020-21 and 2021-22 is due to £45m income received after closing the 2007-13 European Regional Development Fund (ERDF) Programme.

• F: DLUHC Staff, Building and Infrastructure – The increase in our resource administration spend supported the employment of additional resources to deliver expanded programmes.

• G: Local Government and Public Services (ALB) (net) - The row records resource costs of the Valuation Tribunal Service (VTS) and the Commission for Local Administration in England (CLAE), which have remained consistent over time.

• H: Housing and Planning (ALB) (net) – The increase in expenditure was driven by new programmes and work undertaken to build the pipeline for projects in future years. In addition, there was a reduction in income from the land programmes compared to the previous year, but overall income continued to exceed expenditure. Income budgets for future years have not yet been set, and will reduce the net budget.

• I: Elections - This is non-voted funding required to run elections, which naturally varies from year to year depending on the number and scale of elections held. This year fewer elections/by-elections were held than budgeted for.

Resource DEL – Local Government

• J: Revenue Support Grant – Part of the department’s remit is to manage and provide funding to local government on behalf of central government. Revenue Support Grant forms part of this funding and can be spent by local authorities on any service. The 2022-23 value is consistent with recent years.

• K: Other Grants and Payments – In both 2020-21 and 2021-22 as result of the COVID-19 pandemic significant additional funding was made available to local government. For 2021-22 this included £10.6 billion of grants through LG DEL, largely for business rate relief measure ( £7.3 billion). Other measures included £1.6 billion for Covid expenditure pressures, £0.8 billion for Tax Income losses, £0.7 billion for Council Tax Support and £0.2 billion for Sales, Fees and Charges lost income

• L: Business Rates Retention – The row provides budget for the safety net payments to local authorities whose income from business rates is below a baseline level..

Resource AME

• M: Other Grants and Payments - To help local authorities manage the financial impact of Covid 19 on business rates, the on account additional business rate relief grant payments to them in 2020-21 were deliberately inflated to help with shortfalls resulting from the announcement of additional reliefs in year. A total of £10.6 billion was paid to local authorities. This led to significant adjustments after year end reconciliations with the return of £5.6 billion from local authorities in 2021-22.

• N: Local Government & Public Services - The row records the pension costs of the Audit Commission and accounting provisions relating to the London Settlement, Coalfields and Grenfell Tower. Variance represents the increase in provision of the Grenfell Tower.

• O: Housing and Planning – These budgets are held to cover potential losses on the Departments housing guarantee programmes. The reduction is due to applications not proceeding as planned for 2021-22 financial year.

• P: Decentralisation and Local Growth - Variance shows the change from the annual revaluation of the Greenwich Peninsula land asset and for write offs and exchange rate losses that may be incurred on the European Regional Development Fund (ERDF) programmes.

• R: DLUHC Staff, Building and Infrastructure – The row provides budget for the creation and release of the core department’s provisions. Variance is due to annual revaluation of the Department’s estate. Note 15 provides more detail.

• S: Non-Domestic Rates Outturn Adjustment – The row contains a £350 million budget for 2021-22 which has been set aside for outturn adjustments against prior year business rates expenditure and as contingency against audit changes at year end.

• T: Local Government and Public Services (ALB) (net) – The row records the pension costs of the Valuation Tribunal Service (VTS) and the Commission for Local Administration in England (CLAE).

• U: Housing and Planning (ALB) (net) – The row records revaluations of housing market related assets owned by Homes England which change the valuation of the Help to Buy portfolio. The change is driven by the movement in house prices between the years.

• V: Business Rates Retention – Since 2013-14, local authorities have retained at least 50% of the business rates they collect, which forms a significant portion of their income. Retained business rates are recorded as a non-cash expenditure item in the department’s accounts and the amount forecast to be retained by local authorities in 2021-22 is £11.4 billion.

Capital DEL – Communities

• A: Local Government & Public Services – Variance between 2020-21 and 2021-22 is due to lower income from the Greater London Authority relating to a legacy loan programme, partially offset by lower spend on the Rough Sleeping accommodation programmes in 2021-22.

• B: Housing and Planning – This covers funding for a large number of programmes at different stages in their lifecycles, that naturally have different requirements year-on-year. The biggest driver of reduced outturn in 2021-22 was to align the Department’s grant payments to payments made to housing providers under the Affordable Homes Programme (see Governance statement for further details).

• C: Decentralisation and Local Growth – Variance mainly due to reprioritisation and streamlining of the local funding landscape and winding down of the Local Growth Fund.

• D: Troubled Families – The decrease in outturn between 2020-21 and 2021-22 is mainly due to planned research not being commissioned.

• E: Research, Data and Trading Funds – The row records other capital expenditure on research and development.

• F: DLUHC Staff, Building and Infrastructure – The row records the core department’s expenditure on the purchase of non-current assets, mostly relating to IT system improvements, as well as costs associated with delivering the Beyond Whitehall agenda and the Places for Growth programme.

• G: Local Government and Public Services (ALB)(net) – The row records capital expenditure on the purchase of noncurrent assets by two ALBs: the Valuation Tribunal Service (VTS) and the Commission for Local Administration in England (CLAE).

• H: Housing and Planning (ALB)(net) – The variance between 2020-21 and 2021-22 is primarily driven by the introduction of changes to the Help to Buy programme, which limited eligibility and so reduced demand.

Regularity of Expenditure (subject to audit)

Losses, special payments and gifts

Managing Public Money and the FReM require the department to produce a statement showing losses and special payments by value and by type. Where cases individually exceed £300,000, details of those cases must be disclosed.

	2021-22				2020-21 Restated
	Core Department and Agency		Departmental Group		Core Department and Agency		Departmental Group
	Cases	£’000	Cases	£’000	Cases	£’000	Cases	£’000
Losses (general)	20	10	102	52	9	4	12	6
Exchange rate losses	3	8,850	3	8,850	1	2,221	1	2,221
Claims abandoned	-	-	25	17,573	72	1,962	93	5,455
Fruitless payments	1	103	2	1,217	1	2	1	2
Constructive losses	-	-	-	-	-	-	-	-

	2021-22				2020-21
	Core Department and Agency		Departmental Group		Core Department and Agency		Departmental Group
	Cases	£’000	Cases	£’000	Cases	£’000	Cases	£’000
Special Payments	45	1,072	45	1,072	80	1,510	81	1,572

Losses

Cases over £300,000	£’000
DLUHC: three ERDF batches subject to exchange rate losses	8,850
Homes England: five cases of loans written off or impaired	17,070
Homes England: one fruitless payment	1,114

The department manages funding claims on behalf of the European Regional Development Fund. The claims are measured in the financial statements at the pound sterling equivalent of the expected funding to be received from the fund in Euros. The timing of the claim being paid by the department and the reimbursement from the central fund can lead to losses for the department due to changes in the exchange rate. In 2021-22, the department recorded losses on three funding batches totalling £8.85 million (one batch totalling £2.21 million).

Under International Financial Reporting Standard 9: Financial Instruments (IFRS 9), financial asset investments are either classified as a basic lending arrangement at Amortised Cost or at Fair Value.

For assets which are measured at amortised cost, a write-off amount is recognised in the financial statements when it is considered that there is no realistic prospect of full recovery. There are also a number of loan investments which are managed operationally in line with the loan management processes however from an accounting point of view are measured at Fair Value through Profit or Loss (FVTPL). Where it has been assessed that there is no realistic prospect of full recovery for such loan investments, these have also been disclosed in this note. This is aligned with the FReM requirement to disclose losses in this note for the attention of Parliament at the earliest point at which a loss is expected.

For assets measured at Amortised Cost, the effect of discounting future cash flows (to reflect the present value of the anticipated recovery) is considered in order to determine the required write-off allowance for accounting purposes. The losses recognised here include an element of this discounting effect, which will subsequently be unwound in future years as interest income on the impaired balance.

During 2021-22 there were five cases of loan losses recognised where the amount written-off or impaired for accounting purposes was in excess of £300,000, totalling £17.1 million. More detailed information on these losses can be found in Homes England’s 2021-22 Annual Report and Accounts

Homes England additionally recorded a loss due to a fruitless payment made to HMRC arising from incorrect application of IR35 guidelines. The loss was recognised in the 2021-22 financial statements in the amount of £1.1 million.

Special Payments

There were no special payments recorded over £300,000.

Gifts

Gifts, as defined by Managing Public Money, must also be disclosed and detailed where the value is greater than £300,000. Neither the department, nor its ALBs made any reportable gifts in 2021-22 (2020-21: nil).

Fees and Charges (subject to audit)

The following information provides an analysis of the services for which a fee is charged.

						£’000
			2021-22			2020-21 restated
Objectives	Full Cost	Income	Surplus/ (Deficit)	Full Cost	Income	Surplus/ (Deficit)
DLUHC - Energy Performance Certificate Fees	(2,410)	3,143	733	(1,833)	5,556	3,723
Planning Inspectorate - Local Plans	(9,518)	3,549	(5,969)	(7,712)	2,635	(5,077)
Planning Inspectorate - National Infrastructure	(11,426)	5,304	(6,122)	(11,669)	4,749	(6,920)
Planning Inspectorate - Other Major Specialist Casework	(3,986)	1,556	(2,430)	(3,687)	1,109	(2,578)
THO - Membership of Housing Ombudsman scheme	(10,376)	10,376	-	(10,353)	10,353	-
RSH - The Regulator of Social Housing	(12,472)	12,472	-	(12,451)	12,451	-
Total	(50,188)	36,400	(13,788)	(47,705)	36,853	(10,852)

Ministerial Direction

The Annual Governance Statement explains the ministerial directions that occurred in the year.

Contingent liabilities not required to be disclosed under IAS 37 but included for parliamentary reporting and accountability purposes (subject to audit)

In addition to contingent liabilities reported within the meaning of IAS 37, the department also reports liabilities for which the likelihood of a transfer of economic benefit in settlement is too remote to meet the definition of contingent liability.

Quantifiable

The department has entered into quantifiable contingent liabilities by offering guarantees.

• The department operates two guarantee schemes for the affordable housing sector (AHGS). The AHGS 2013 closed to applicants in March 2016 and the programme is now in the portfolio management and monitoring phase, meaning there will be no new applicants or approvals. Therefore, there will be no further drawing against this scheme, with £3.2 billion drawn down. A financial guarantee against the 2013 scheme has been recognised in the Statement of Financial Position with a value of £28.2 million. A second scheme was launched in 2020, guaranteeing debt of no more that £3 billion. At the accounting date £320 million of borrowing had been approved, with £285 million drawn down. The financial guarantee in the Statement of Financial Position had a value of £2.1 million.
• The department has provided a guarantee scheme for the private rented sector, guaranteeing debt of no more than £3.5 billion. At the accounting date, the department has approved borrowing of circa £1.8 billion of which £1.5 billion has been drawn down and is covered by the guarantee scheme. The guarantees have been valued in accordance with IFRS 9 and have been recognised as a financial guarantee in the Statement of Financial Position with a value of £78.3 million.
• On the 7 May 2019, the department launched the ENABLE Build guarantee scheme, guaranteeing debt of no more than £1 billion. At the accounting date, £176 million has been drawn down and is covered by the guarantee scheme. The guarantees have been valued in accordance with IFRS 9 and have been recognised as a financial guarantee in the Statement of Financial Position with a value of £5.8 million.
• The guarantee schemes are designed to encourage investment in the housing market by guaranteeing to repay money borrowed in the event a borrower defaults. As at the reporting date there have been no calls on the guarantee.
• In 2019-20, the department provided a letter of comfort to the Queen Elizabeth II Conference Centre to confirm that a loan will be provided if required, in accordance with the Framework Agreement between the department and the trading fund. The department laid a Statutory Instrument on the 8th June 2021 to increase the trading fund’s borrowing limit from £2 million to £12 million. At 31 March 2022, the department had loaned the trading fund £4,579,000.

The department has not entered into any quantifiable contingent liabilities by offering indemnities.

Unquantifiable

The department has entered into the following unquantifiable contingent liabilities by offering guarantees, indemnities or by giving letters of comfort. None of these is a contingent liability within the meaning of IAS 37 since the likelihood of a transfer of economic benefit in settlement is too remote.

• The department provides a guarantee under the NewBuy scheme to underwrite a percentage of mortgage lending risk. These guarantees have been measured in accordance with IAS 37 as they do not fit the recognition criteria for a financial instrument under IFRS 9. Any liability arising as measured under IAS 37 is considered too remote for recognition as a contingent liability at the date of these accounts but is disclosed for parliamentary reporting and accountability purposes.
• To strengthen local authorities’ ability to enforce building safety remediation action, the department has indemnified the Joint Inspection Team (JIT) for professional indemnity and for death and personal injury claims resulting from their advice. The local authority retains responsibility for decisions on enforcement. The indemnity is unquantifiable and will continue for the duration of the period over which the JIT operates and 6 years thereafter for professional indemnity, and 125 years for death and personal injury.
• The department provides letters of comfort to ALBs in relation to their pension scheme liabilities. Ebbsfleet Development Corporation is no longer part of the Departmental Group for accounting purposes but the department continues to be responsible for governance arrangements and the letter of comfort continues to be in place.

Following the Machinery of Government transfer of functions from Cabinet Office in December 2021, the department has also taken on contingent liabilities associated with the reimbursement to Returning Officers for the cost of holding elections:

• An indemnity to Returning Officers for UK Parliamentary elections. For the purposes of UK Parliamentary elections, Returning Officers and Acting Returning Officers throughout Great Britain are statutorily independent officers. They stand separate from both central and local government. As a result, they can be exposed to a variety of legal risks varying from minor claims for injury at polling stations to significant election petitions challenging the outcome of a poll and associated legal costs. The indemnity is to cover the costs of any claims against them, which are not covered under the existing insurance policies that Returning Officers hold. The indemnity will cover costs arising in relation to UK Parliamentary elections including by-elections, where the date of the poll is on or before the 1 May 2024.
• An indemnity to Police Area Returning Officers and Local Returning Officers for the Police and Crime Commissioner elections held on 6 May 2021. For the purposes of Police and Crime Commissioner elections, Police Area Returning Officers and Local Returning Officers throughout England and Wales are statutorily independent officers. They stand separate from both central and local government. As a result, they can be exposed to a variety of legal risks varying from minor claims for injury at polling stations to significant election petitions challenging the outcome of a poll and associated legal costs.  The indemnity is to cover the costs of any claims against them, which are not covered under any existing insurance policies that Police Area Returning Officers and Local Returning Officers hold. The Department will also certificate the Returning Officers under The Employers’ Liability (Compulsory Insurance) Regulations 1998 in respect of any liability to their employees.  The indemnity and certificate will remain in place to provide cover to Police Area Returning Officers and Local Returning Officers for any by-elections that are held prior to the next scheduled Police and Crime Commissioner elections on 2 May 2024.
• An indemnity to Petition Officers for any Recall Petition that may be held between the date the indemnity came into force, 8 June 2016, and 6 May 2020. For the purposes of Recall Petitions, Petition Officers throughout Great Britain are statutorily independent officers. They stand separate from both central and local government. As a result, they can be exposed to a variety of legal risks varying from minor claims for injury at signing locations to recall petition complaints, challenging the outcome of a petition and associated legal costs. The Cabinet Office has not provided an indemnity for Petition Officers previously as the Recall Petition legislation came into effect only in 2015. This follows the same process where the Cabinet Office has provided an indemnity to Returning Officers for the UK Parliamentary elections in May 2015, as well as all other recent electoral events. The indemnity is to cover the costs of any claims against Petition Officers, which are not otherwise recoverable under the charges provisions contained in paragraph 3 of Schedule 1 to the Recall of MPs Act 2015.

The previous three indemnities were omitted in error from the departments disclosure of contingent liabilities within the Supplementary Estimate 2021-22.

Jeremy Pocklington CB 15 July 2022

Accounting Officer

Department for Levelling Up, Housing and Communities

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1. Attendance records relate to Ministerial Board meetings. ↩

2. Joined the department after the first Board meeting in 2021-22. ↩

3. Started as a minister in the former Ministry of Housing, Communities and Local Government ↩

4. Started as a minister in the former Ministry of Housing, Communities and Local Government ↩

5. Is not a Departmental Board member – attended two meetings during the year ↩

6. This publication offers guidance on how to manage public funds and can be found here: https://www.gov.uk/government/publications/managing-public-money ↩

7. http://qna.files.parliament.uk/ws-attachments/170890/original/PCPF%20MINISTERIAL%20SCHEME%20FINAL%20RULES.doc ↩