Corporate report

The Coal Authority annual report and accounts 2022 to 2023: Accountability report

Updated 21 August 2023

1. Accountability report

The accountability report meets key accountability requirements to Parliament. The requirements are based on the Companies Act 2006, as adapted for the public sector.

It encompasses the matters required to be dealt with in a directors’ report and in the remuneration and staff report, as set out in chapter 6 of the Companies Act.

It covers such matters as directors’ salaries and other payments, governance arrangements and the audit certificate and report. It is signed and dated by the accounting officer.

The accountability report consists of 3 main parts. These are the:

1. corporate governance report, dealing with the Coal Authority’s governance structures and how they support the achievement of the Coal Authority’s objectives

2. remuneration and staff report, containing information about senior managers’ remuneration and other staff related disclosures required by the Companies Act and other governmental sources

3. Parliamentary accountability and audit report, comprising additional disclosures required by Parliament, and a view on such matters as regularity of expenditure, fees and charges and long term expenditure trends. It includes the audit certificate and report

2. Corporate governance report

The corporate governance report consists of 3 main parts. These are the:

1. directors’ report, which covers a variety of statutory disclosures not outlined elsewhere in the annual report and accounts

2. statement of accounting officer’s responsibilities, which sets out clearly the responsibilities assumed with respect to the annual report and accounts by the nominated accounting officer, and the legislative basis for them

3. governance statement, which explains the composition and organisation of the Coal Authority’s board and governance structures and how they support the achievement of the Coal Authority’s objectives

3. Directors’ report

The Coal Authority presents its report and audited financial statements for the year ended 31 March 2023.

The accounts have been prepared in a form directed by the Secretary of State with the consent of HM Treasury in accordance with paragraph 15(1) (b) of Schedule 1 of the Coal Industry Act 1994.

The accounting officer authorised these financial statements for issue on the date of certification by the comptroller and auditor general (CAG).

3.1 Functions, duties and powers of the Coal Authority

The powers and functions of the Coal Authority were initially set out in legislation by the Coal Industry Act 1994 and the Subsidence Act 1991 (as amended by the Coal Industry Act 1994). We assumed our functions on 31 October 1994.

Read more about the Coal Authority: About us - Coal Authority - GOV.UK (www.gov.uk)

Our functions relate to the coal industry and the management of interests inherited from the British Coal Corporation, licensing of coal mining operations, dealing with coal mining subsidence and providing information.

The Coal Industry Act 1994 has been further amended by subsequent legislation, including the Water Act 2003 and the Water Services (Scotland) Act 2005.

This has extended the Coal Authority’s powers to prevent or lessen the effect of the discharge of polluted water from a coal mine onto any land or into watercourses.

The Energy Act 2011 extended the Coal Authority’s powers to use its expertise in other non-coal mining related contexts including action to protect water quality from the effects of polluted mine water discharge from abandoned mines, as required by the Water Framework Directives.

3.2 Review of operations

The chief executive’s report gives a summary of our activities during the year and the future outlook.

3.3 Finance risk management

The governance statement sets out the governance structures that we have used to monitor and control risk and the board’s approach to risk management.

This, with the performance report, also identifies and discusses the significant risks and the mitigation in place.

We have a strong system of financial control and active financial risk management. We have no borrowings and rely on grant in aid and other income to fund our cash requirements. We therefore have minimal exposure to liquidity, credit and cash flow risk.

All assets and liabilities are denominated in sterling and so there is no exposure to currency risk. We do not hold any assets that are directly impacted by interest rate movements nor do we engage in any hedge accounting. We hold some items on the Statement of Financial Position that are discounted using rates specified by HM Treasury, specifically provisions.

HM Treasury vary these discount rates from time to time, which will affect both the statement of financial position and the Statement of Comprehensive Net Expenditure.

This had a significant impact in 2022 to 2023 which largely offset the increase in 2021 to 2022 (decrease of £4,467 million in 2022 to 2023 compared to an increase of £2,759 million in 2021 to 2022). Please refer to note 13 to the accounts.

3.4 Future developments

Our future developments and objectives have been discussed in other areas of the annual report, including the chief executive’s report and the strategic risks section of the performance report.

3.5 Research and development activities

We undertake a range of research and development activities to improve the efficiency of our operations and in particular reduce the long term net cost of treating mine water.

This includes finding uses for our by-products (for instance iron ochre) and promoting the use of mine water flowing through abandoned mine workings as a source of geothermal heat and low carbon energy.

Updates on these initiatives are outlined within the performance report.

3.6 Post balance sheet events

We have no post balance sheet events requiring disclosure.

3.7 Branches outside the UK

We have no branches outside the UK.

3.8 Donations

We made no political or charitable donations during the year.

3.9 Employee involvement

We are committed to engaging with staff throughout the business, as outlined in our people report.

3.10 Employment

We are committed to equal opportunities and have a strong focus on diversity and inclusion.

This commitment means that decisions to appoint, reward, train, develop and promote are taken on the basis of skills and abilities, matched against the requirements of the job.

We continue our work to attract, develop and maintain a more diverse workforce.

We are making progress but know there is more to do and we will keep delivering against our quality, diversity and inclusion plan to create a great place to work for everyone.

We seek to attract and retain high calibre employees.

Opportunities for training are given high priority to ensure that all staff can contribute to their own career development.

3.11 Pensions and other post retirement benefits

Former and current employees who have chosen to join are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS) which is an unfunded multiemployer defined benefit scheme.

The accounting policy is given in note 1 to the accounts and further information about the scheme is provided in the remuneration and staff report.

3.12 Personal data

There were no Information Commissioner’s Office (ICO) reportable data breaches during the year.

The governance statement provides further details of our information risk management activities.

3.13 Long-term expenditure trends

Long-term expenditure trends are reviewed by the directors as part of the annual review of provisions. Please see note 13 to the accounts.

3.14 Auditors

The CAG was appointed under the Coal Industry Act 1994 and reports to Parliament on the audit examination.

The audit fee was £89,000. No remuneration was paid to our auditors for non-audit work and no other services were provided.

3.15 Access to information and complaints

As a public body, we have a duty to answer requests under the Freedom of Information Act 2000 (FOIA) and the Environmental Information Regulations 2004 (EIR).

We received 83 requests (FOIA, EIR and Subject Access Requests) during the year.

All requests except one have been answered within the required 20 working days, or agreed extensions, therefore meeting the standards set by the ICO. No requests have gone to appeal.

We received 34 letters from MPs, 4 from Members of the Scottish Parliament and none from Welsh Senedd Members.

We received 8 complaints from members of the public and other customers.

No complaints were referred to the ombudsman.

All complaints were dealt with under our complaints procedure and resolved within the organisation.

Read about the Coal Authority’s complaints procedure: Complaints procedure - Coal Authority - GOV.UK (www.gov.uk).

4. Board of directors

4.1 Board and their interests

No board member of the Coal Authority has any financial interest in the Coal Authority.

A register of interests is maintained, which is open to the public to view at our offices in Mansfield or can be accessed online here: Publication scheme - Coal Authority - GOV.UK (www.gov.uk)

There were no related party transactions in respect of board members in 2022 to 2023.

Lisa Pinney MBE, chief executive

• appointed as chief executive from 1 June 2018
• appointed as board director from 1 June 2018 to 31 March 2020
• reappointed to 31 March 2023
• reappointed to 31 March 2026

Paul Frammingham, chief finance and information officer

• appointed as board director from 1 April 2011 to 31 March 2014
• reappointed to 31 March 2017
• reappointed to 31 March 2020
• reappointed to 31 March 2023
• reappointed to 31 March 2026

Carl Banton, operations director

• appointed as board director from 22 March 2021 to 31 March 2023
• reappointed to 31 March 2026

Jeff Halliwell, chair

• appointed as board director from 1 April 2021 to 31 March 2024
• appointed as chair from 1 April 2021 to 31 March 2024

Steve Wilson, non-executive director

• appointed as board director from 1 April 2017 to 31 March 2020
• reappointed to 31 March 2023
• reappointed to 31 March 2024

Jayne Scott, non-executive director

• appointed as board director from 1 April 2019 to 31 March 2022
• reappointed to 31 March 2025

David Brooks, non-executive director

• appointed as board director from 1 April 2022 to 31 March 2025

Bev Smith, non-executive director

• appointed as board director from 1 April 2023 to 31 March 2026

5. Statement of the accounting officer’s responsibilities

Under paragraph 15(1)(b) of schedule 1 to the Coal Industry Act 1994, the Secretary of State, with the consent of HM Treasury, has directed the Coal Authority to prepare for each financial year a Statement of Accounts in the form and on the basis set out in the Accounts Direction.

The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Coal Authority and of its net expenditure, financial position, changes in taxpayers’ equity and cash flows for the financial year.

In preparing the accounts, the accounting officer is required to comply with the requirements of the government’s financial reporting manual and in particular to:

• observe the accounts direction issued by the Secretary of State, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
• make judgements and estimates on a reasonable basis
• state whether applicable accounting standards, as set out in the government’s financial reporting manual, have been followed, and disclose and explain any material departures in the financial statements
• prepare the financial statements on a going concern basis
• confirm that the annual report and accounts as a whole is fair, balanced and understandable and take personal responsibility for the annual report and accounts and the judgements required for determining that it is fair, balanced and understandable

The accounting officer for the Department for Energy Security and Net Zero has designated the chief executive as accounting officer of the Coal Authority.

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 Coal Authority’s assets, are set out in Managing Public Money, published by HM Treasury.

As 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 Coal Authority’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.

6. Governance statement

Our governance statement explains the governance, risk management and control arrangements we have in place to ensure achievement of the Coal Authority’s objectives.

It explains how these remain effective as the Coal Authority continues to develop so that we can continue to make a better future for people and the environment in mining areas.

6.1 The Coal Authority’s governance framework

We are committed to high standards of corporate governance. We work within a framework document that is reviewed and agreed periodically with the Department for Energy Security and Net Zero (and before that the Department for Business Energy and Industrial Strategy (BEIS)).

Read our latest framework document: Publication scheme - Coal Authority - GOV.UK (www.gov.uk)

It sets out the purpose of the Coal Authority, the core elements of our relationship with our sponsoring body and the framework within which we operate.

The Coal Authority has an established governance framework supported by an appropriate organisational culture and this is further explained through the statement.

6.2 The board and its committees

Board of directors

The Coal Authority has an established governance framework supported by a board of directors.

The board sets and communicates strategic intent and direction, makes strategic decisions that cannot be delegated and monitors and challenges corporate business performance.

Non-executive directors are recruited and appointed to the board by the Secretary of State for the Department for Energy Security and Net Zero.

Statutory executive directors are recruited to their posts by the board and appointed to the board by the Secretary of State for the Department for Energy Security and Net Zero.

During 2022 to 2023 we held 3 board meetings in public, one each in Scotland, Wales and England.

These meetings were also video-streamed to reach a wider audience.

Alongside these meetings the board made site visits to Bilston Glen in Scotland, Abercwmboi in Wales and Lynemouth in England.

Other board and committee meetings are held in person or by use of videoconferencing, using our learnings from the period of COVID-19 restrictions to obtain the benefits from a hybrid approach.

Membership and attendance of the board and its committees is shown in the tables below.

Non-executive directors:

	Board (7 meetings)	ARAC (3 meetings)	HR and Remuneration (4 meetings)	Safety, health and environment (3 meetings)
Jeff Halliwell, chair of board	7	N/A[footnote 1]	4	3
David Brooks, chair of HR and remuneration committee	6	3	4	3
Steve Wilson, chair of safety, health and environment committee	7	3	4	3
Jayne Scott, chair of ARAC	6	3	3	2

Statutory executive directors:

	Board (7 meetings)	ARAC (3 meetings)	HR and Remuneration (4 meetings)	Safety, health and environment (3 meetings)
Lisa Pinney MBE, chief executive	6	2[footnote 2]	3	3
Paul Frammingham, chief finance and information officer	6	3[footnote 2]	0[footnote 2]	N/A [footnote 1]
Carl Banton, operations director	7	1[footnote 2]	2[footnote 2]	3

The innovation and engagement director, people and resource director, community and emergency response director and head of legal and records attended the board by invitation.

Other senior managers attend the board or committees in order to present papers and join strategic discussions and to support their learning and development.

During 2022 to 2023 the Coal Authority had 7 directors (4 non-executive and 3 statutory executive).

From April 2023 this will increase to 8 directors (5 non-executive and 3 statutory executive), in line with our revised framework document agreed with the Department for Energy Security and Net Zero.

In February 2023, Bev Smith was appointed as non-executive director. Bev’s formal tenure began on 1 April 2023. She attended the March 2023 meeting of the board as an observer.

Steve Wilson was extended as a non-executive director for 12 months from 1 April 2023.

With effect from 1 June 2023 the safety, health and environment committee will be replaced by 2 new committees. Bev Smith will chair the health, safety and wellbeing committee and Steve Wilson will chair the new environment and sustainability committee.

These new arrangements will support the Coal Authority’s increased focus on sustainability, a key theme of our business plan.

From 1 June 2023 the HR and remuneration committee will change its title to become the people and remuneration committee.

The board has also established a new task and finish committee to provide scrutiny and assurance of our inland salinity programme. This committee will be chaired by Bev Smith.

Board performance

Compliance with the corporate governance code

We comply with the corporate governance code in central government departments and government guidance in so far as is relevant for an arm’s length body of our size and complexity. In line with our framework document:

• the board monitors the Coal Authority’s performance in an effective manner
• the board plays an active role in managing key stakeholder relationships
• the board constructively challenges and helps to develop strategy, supported by the effective leadership of the chair who oversees a high standard of discussion and debate at meetings
• the board receives accurate, timely and clear information to support its decision making which is concise and fit for purpose – this includes frequent updates on the Coal Authority’s financial position, and a corporate scorecard showing achievement against corporate objectives
• the board ensures that a balanced and reasonable assessment of performance is reported to the Department for Energy Security and Net Zero and regularly debates the main risks facing the Coal Authority
• through its ARAC, the board maintains sound risk management and internal control systems
• the board annually reviews the Coal Authority’s corporate governance documentation and the terms of reference for the board’s sub-committees
• the board has an appropriate balance of skills and experience to enable it to discharge its responsibilities effectively
• the HR and remuneration committee agrees executive remuneration within the guidelines set by HM Treasury and the Department for Energy Security and Net Zero, while non-executive remuneration is set by the Department for Energy Security and Net Zero and reviewed annually

Board performance and effectiveness review

The board undertakes regular evaluation of its own performance and that of its directors.

All board members’ performance is appraised annually. The board undertakes regular development sessions outside of formal board meetings to reflect on key aspects of its work.

During the 2022 to 2023 period, structured board site visits have recommenced at our sites across the nations we serve.

In December 2022 a session was run with an external facilitator to examine how the change of a non-executive director may affect the board’s balance of work preferences and collective strengths.

The board sets annual objectives and reviews these periodically.

The board reviewed its collective objectives during 2022 to 2023 and agreed updated objectives.

The board considers that it has substantively achieved its objectives and has continued to operate effectively during 2022 to 2023.

The board intends to undertake its next externally facilitated board effectiveness review, aligned to the Cabinet Office arm’s length body board effectiveness review principles during 2024.

Board committees

Audit and risk assurance committee (ARAC)

The Coal Authority’s ARAC is chaired by Jayne Scott, non-executive director, who has recent, relevant financial experience.

The ARAC members comprise of three non-executive directors. The chair of the board is not a member of the ARAC. The chief executive, the chief finance and information officer and the head of finance attended meetings by invitation.

Other senior managers attended the committee in order to present papers and join discussions. In addition, one committee meeting was observed by a member of the BEIS ARAC.

The committee ensures that we operate effective and integrated risk management and control systems to ensure the overall level of assurance is adequate.

It reviews external audit strategy and outcomes, provides an annual report to the board and recommends the approval of the annual report and accounts, and oversees the internal audit function provided by the Government Internal Audit Agency (GIAA).

The committee regularly reviews its effectiveness. The committee met 3 times during the year.

During the year the committee has:

• continued to focus on financial reporting risk and reviewed our accounting policies, including review of significant judgements made in preparing the accounts and assumptions underlying our provisions balance
• received regular updates on the risk management and assurance framework, fraud prevention strategy and the Coal Authority’s work to manage cyber risk
• reviewed internal audit reviews undertaken by GIAA including:
  • IT strategy
  • cyber incident response
  • innovation projects
  • business continuity and disaster recovery
  • key financial controls
  • business planning
  • operational unusual assets

The internal audit opinion for 2022 to 2023 offered management a moderate level of assurance over the adequacy and effectiveness of the framework of governance, risk management and internal controls of the organisation.

It also provided recommendations to enhance controls in specific areas which have been adopted as appropriate.

HR and remuneration committee

During 2022 to 2023, membership of the HR and remuneration committee comprised of all 4 non-executive directors and the chief executive.

The committee was chaired by David Brooks. The people and resources director, and other members of the executive leadership team, attended meetings by invitation.

The HR and remuneration committee met 4 times within the year and has continued to support the Coal Authority in improving organisational capability to meet future business requirements.

During the year the committee has considered:

• Performance Development Review (PDR) distribution for 2021 to 2022 to ensure the equitable distribution of performance related pay
• the pay remit principles prior to submission to government
• the approach to manage the diversity pay gap and associated reporting
• the anti-racism plan prior to publishing on gov.uk
• the results of the 2022 people survey
• people related management information and analytics for areas such as absence, employee retention, recruitment and Equality, Diversity and Inclusion (EDI)
• the organisation’s approach to recruitment and development
• progress with the great place to work for everyone strategy

Safety, health and environment (SHE) committee

The SHE committee was chaired by Steve Wilson. During 2022 to 2023, membership of the committee consisted of all of the non-executive directors of the board; chief executive; operations director; people and resources director; community and emergency response director; head of health, safety, wellbeing and facilities; sustainability manager; head of people and organisation development and chair (or alternate member) of the staff safety, health, environment and wellbeing (SHEW) group.

The committee’s main responsibilities are to provide oversight of the Coal Authority’s health, safety and wellbeing plan and sustainability plan, ensure a positive health and safety culture is embedded throughout the organisation and advise the board on SHE matters to support the business plan.

The SHE committee review detailed information on health, safety and wellbeing and on environmental and sustainability performance to gain assurance on how the organisation is performing and to set the priorities.

The committee met 3 times during the year.

During the year the committee has considered:

• the annual management review which provides assurance on the suitability, adequacy and effectiveness of the SHE management system and proposed future objectives to enable continued improvement
• health, safety and wellbeing culture and behaviours
• the British Safety Council’s 5-Star audit of the organisation
• the organisation’s environmental management system
• sustainability and environmental compliance
• the organisation’s new sustainability plan

6.3 Performance management – executive leadership team

The executive leadership team (ELT) comprises the chief executive, the chief finance and information officer, the operations director, the people and resources director, the innovation and engagement director and the community and emergency response director.

Each director on the ELT reports to the chief executive and is responsible for the leadership and delivery of their directorate and is also collectively responsible for leadership and delivery across the organisation.

ELT meetings are also attended by the head of legal, the head of development and a further head of department who attends meetings as a development opportunity on a 6 monthly basis.

Fortnightly business meetings were mostly held by videoconference during 2022 to 2023.

These have a formalised rolling agenda which considers all aspects of the organisation’s work.

The meeting also considers the chief executive’s monthly update report which provides a high level oversight of how the business is performing as a whole and normally includes:

• updates from each directorate and programme board
• a review of organisational performance
• a financial summary report
• a review of the Coal Authority’s corporate risk
• information on our people and the health, safety and wellbeing of our people, suppliers and the public.

ELT also holds monthly strategy meetings which are predominantly face to face.

These generally consider more strategic and longer term items which require more in depth discussion, steer and shape.

6.4 Financial control

The Coal Authority has a strong system of financial control based on well-defined levels of delegated authority and a clear budgetary framework.

Other than the exception noted below, this system has remained effective with no other significant control issues noted by internal or external audit during the year.

Matters reserved for the board are clearly set out in the framework of strategic control with further detailed guidance in respect of policies, procedures and delegated authority levels published and available to staff.

The investment and opportunities board (IOB) is chaired by the chief finance and information officer or the head of finance in his absence.

To be quorate the IOB will always include two executive directors plus the chief finance and information officer or head of finance.

Project sponsors attend the IOB meetings to explain and justify their proposals.

The IOB is an important part of our financial controls framework and has delegated authority from the chief executive to approve capital expenditure, key programmes, projects and commercial opportunities provided they are:

• in line with the Coal Authority’s strategy as set out in its 3 year business plan agreed by the board
• within the board’s risk appetite
• not a matter reserved to a government department
• in line with other government guidance relevant to the Coal Authority

Once programmes and projects have been approved by the IOB they are overseen by a relevant programme board, with the IOB receiving regular updates and providing further oversight as required.

As part of our financial control framework we undertake an annual detailed review of our provisions for liability arising from past coal mining.

Our business teams validate key assumptions and revise estimates that feed into this balance based on latest information.

This is followed by comprehensive review and challenge by our finance team and members of the ELT and analysis of drivers behind our provisions balance and key movements are presented to the ARAC.

Outputs from the provisions model feed into our annual financial statements (see note 13 to the accounts) as well as providing a framework for our detailed budget setting and medium-term business planning.

In-year expenditure control breach

The Coal Authority breached a Cabinet Office digital expenditure control approval during the period.

Expenditure at March 2023 against a specific supplier contract stood at £2.5 million, increasing to £2.7 million in May 2023, against BEIS approval of £1.2 million.

During May 2023 a replacement contract was approved by Cabinet Office and procured.

The expenditure incurred on the original contract was appropriate and necessary to deliver core Coal Authority services.

Overall budgetary control remained strong and Coal Authority digital services were delivered within Board and Executive Leadership team agreed budgets through the period.

On identifying the breach the Coal Authority proactively notified BEIS/Department of Energy Security and Net Zero to work with the spend controls team to seek approval to procure new contracts to regularise this budgeted, essential expenditure as soon as possible.

Coal Authority board and ARAC chairs, departmental team, departmental chief digital and information officer and National Audit Office (NAO) were also proactively notified.

We have controls in place designed to prevent overspend against supplier contracts and have undertaken a comprehensive exercise to understand how these controls failed and identify actions to prevent reoccurrence.

These actions include specific measures to enhance hard system controls and dissemination and targeted training to reinforce a positive and proactive contract management and assurance culture.

A full report including lessons identified has been scrutinised and challenged by the Coal Authority’s ELT and ARAC and approval was gained from the Coal Authority’s board to continue to use the contract to provide essential services in the interim as a new contract was approved and procured.

We are committed to learn the lessons from this isolated incident. We will enhance our controls and continue to drive a positive culture, empowering our staff to deliver within clear frameworks.

6.5 Risk management

Embedded risk management and culture

We have continued to focus on continually improving our risk management and assurance processes, promoting understanding of our risk management and assurance framework (RMAF) to promote real time reporting and good quality conversations across all levels of the organisation.

Risk management is live and embedded within a culture that encourages real-time discussion and ownership of risks.

This is evidenced by:

• clear alignment of our strategic risks to our 3-year business plan
• ongoing ARAC support, scrutiny and challenge including a deep dive review of target risk levels of our strategic risks, which was reviewed at the ARAC
• ongoing, live interaction between our managers, ELT members and board members that promotes an understanding of the board’s risk appetite and risk management good practice
• continued explicit incorporation of risk appetite into our discussions and decision making through the investment and opportunities board framework
• processes that ensure, in line with our framework of strategic control, any issue or project that falls outside the board’s risk appetite is formally considered by the board for decision
• monthly risk reviews at a directorate level including horizon scanning and deep dives across directorate and department level risks
• a risk register that is live, regularly updated and subject to quarterly management sign off, periodic audit committee, ELT and business team review
• ongoing communication of the RMAF and high levels of engagement at risk management workshops

Information assurance and cyber security

The Coal Authority does not hold top secret or secret information and the inherent information risk posed to government through the Coal Authority is relatively low.

The senior information risk owner (the chief finance and information officer) is a board member and ensures that proportionate controls are implemented to manage information risk in line with the board’s risk appetite.

While the impact of COVID-19 has seen no material change to the organisation’s residual information security risk assessment, the current global issues have led to a heightened cyber security threat being declared by the National Cyber Security Centre (NCSC).

We recognise that a positive cyber security culture is key to maintaining an effective defence.

Over the year we have undertaken a range of communications to continue to improve information security awareness.

We continue to work towards improving our staff’s understanding of cyber risks through ongoing cyber awareness training, blogs and phishing campaigns to ensure that staff can recognise threats.

We have an appropriate risk assessment, information risk management and data protection policy and an information asset register.

We have increased our proactive monitoring of the threat landscape and promote awareness of threats to our supply chain.

We continue to manage our overall information risk using appropriate technical controls, processes, procedures and training.

We continually improve our technical controls and a technical security strategy of strength through depth has been effective in trapping threats.

We are not aware of any significant breaches of security or policy or loss of personal protected information during the year.

Risk assessment

Aligned to our 3-year business plan we have identified the key threats and opportunities which could potentially impact achieving our objectives, and regularly discuss mitigation at an ELT and board level.

Further explanation of the risks and control measures is provided in the strategic risks section of the performance report.

We do not attempt to eliminate risk but pursue opportunities to make a better future for people and the environment by ensuring risk is considered and managed.

Explicit reference to risk appetite allows us to adopt a common language across the Coal Authority and provides a framework for managers to confidently make risk based decisions.

Counter fraud

Our counter fraud activity is led by an appropriately trained member of the government counter fraud profession.

We undertake regular fraud risk assessments and assess our fraud response against appropriate government standards.

Our counter fraud strategy and progress against objectives are periodically reviewed by the ELT and ARAC.

We have continued to promote strong counter fraud awareness amongst our staff through workshops and mandatory training.

We are committed to creating a transparent environment and have a robust policy framework including clear policies for counter-fraud (incorporating bribery and corruption) and whistleblowing.

Each policy provides guidance to staff and is part of the induction process.

These policies are reviewed on an annual basis for relevance and clarity, before being briefed to staff and published on our intranet.

Assessment of activity and feedback confirms that policies are well understood, effective and easy to use.

The board is particularly committed to ensuring that staff feel empowered, supported and protected should they need to raise any areas of concern.

6.6 Other considerations

Alexander tax review

The Coal Authority has complied with the Alexander tax review off-payroll procedures as per HM Treasury requirements to ensure any off-payroll staff are paying the appropriate income tax and national insurance.

MacPherson review (2013) of quality assurance

The Coal Authority does not currently operate any business critical analytical models as defined in the MacPherson review (2013).

Government functional standards

Where applicable, the Coal Authority manages its activities in line with government functional standards.

Preventing modern slavery

We have updated our modern slavery statement and approach in relation to supporting the requirements of the Modern Slavery Act 2015: Modern slavery statement - GOV.UK (www.gov.uk)

6.7 Robust and continually improving control environment

As outlined in the performance report, our organisation has continued to grow and change as we manage larger and more complex programmes of work to keep people safe, provide peace of mind and protect and enhance the environment.

Our business plan is ambitious and we will continue to evolve our organisation to make a better future for people and the environment in mining areas as we move into its second year.

During 2022 to 2023 we have continued to promote an even stronger risk management culture, further improved our counter fraud awareness and executed our action plan, and strengthened cyber risk controls.

We have also continued to improve the consistency of project management across the organisation to ensure it is flexible, dynamic and can flex based on scale and risk.

We have embedded a structured hybrid working approach that builds on our learnings from the lock down period and best enables us to provide our services across the nations we serve while ensuring that systems and governance processes have remained effective and the Coal Authority’s critical activities are delivered well.

We realise that it is important to ensure that we are not complacent and will ensure that we act on the lessons identified from the spending control breach outlined above.

We will continue to review and evolve our control environment to ensure that it stays proportionate and effective as the external environment and our organisation continue to change.

6.8 Effectiveness of control environment

The system of governance, risk management and control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives.

It can therefore only provide reasonable and not absolute assurance of effectiveness.

The system of internal control has been in place in the Coal Authority for the year ended 31 March 2023 and, as illustrated, up to the date of approval of the annual report and accounts, in accordance with HM Treasury guidance.

Based on all of the elements of the Coal Authority governance framework, I am satisfied that the Coal Authority’s governance, risk management and internal control arrangements are proportionate, fit for purpose and working as intended.

7. Remuneration and staff report

7.1 Introduction

This report has been prepared in accordance with the government’s financial reporting manual.

The report is made by the accounting officer on behalf of the board on the recommendations of the HR and remuneration committee.

As part of the accountability report, the remuneration and staff report details key information relating to salaries and other payments, any exit payments or other significant awards to current or former senior managers.

It also contains certain policies on pay, wider issues and statutory disclosure relating to such issues as fair pay and off-payroll engagements.

The following tables and sections within this report are subject to audit:

• non-executive directors’ remuneration
• executive directors’ remuneration
• executive directors’ pension entitlements
• average numbers of persons employed
• staff and related costs
• reporting of civil service and other compensation schemes
• pay multiples

7.2 The HR and remuneration committee

As explained in the governance statement, the Coal Authority has an established HR and remuneration committee.

This determines and keeps under review the pay and reward strategy for all staff of the Coal Authority and approves the principles of the pay remit for submission to the Secretary of State for the Department for Energy Security and Net Zero.

The committee’s terms of reference prescribe that the chief executive shall not be present when their remuneration and conditions of employment are being considered.

7.3 Remuneration policy for the executive directors

The HR and remuneration committee reviews and makes recommendations about the remuneration of the executive directors including the chief executive.

All executive pay is agreed within the framework of the senior civil servant pay remit guidance set by Cabinet Office.

7.4 The Trade Union (Facility Time Publication Requirements)

Under the above regulations the Coal Authority is required to provide details of trade union time. For 2022 to 2023, there is no activity to report.

7.5 Staff turnover

59 employees left the organisation during the year, a percentage of 18.5%, compared to a percentage of 10.3% in 2021 to 2022.

We have experienced a significant increase in colleagues moving on from the organisation during the year due to external factors such as post pandemic movement and cost of living pressures.

Some fixed term contracts have also come to an end.

We began to see a reduction towards the end of the year and expect our turnover rate to reduce closer to previous levels during 2023 to 2024.

We have focused on improving our recruitment approaches, as we have recruited more people as a result of turnover and continued growth due to increased externally funded service provision.

We continue to ensure that the Coal Authority is a great place to work for everyone.

7.6 Staff sickness absence

Overall average working days lost per staff year was 5.9 days as against 5.2 days for 2021 to 2022.

This increase is mainly due to cases of COVID-19 and other infectious diseases like cold and influenza.

We continue to encourage colleagues not to work if they are ill and not to attend the office if they may be contagious.

Colleagues who have extended periods of absence are supported in their return to work through occupational health assessments and the use of our employee assistance programme (EAP).

7.7 Performance development reviews (PDR)

The executive directors participate in our PDR process.

Individual assessments are made by the chief executive and reviewed by the chair and the HR and remuneration committee.

The chief executive’s assessment is made by the chair and reviewed by the HR and remuneration committee.

Appraisal of individual performance is based on the achievement of defined objectives and behaviours assessed against 4 performance scores.

7.8 Performance related pay (PRP)

PRP is non-contractual and non-pensionable and is subject to obtaining annual approval via the pay remit process from the Department for Energy Security and Net Zero.

The pay remit for 2022 to 2023 was approved by BEIS (the predecessor of the Department for Energy Security and Net Zero) in November 2022.

PRP is earned based on a corporate award so that it reflects both corporate and individual performance against objectives.

Corporate performance for 2022 to 2023 has been assessed by the board at 100% and PRP has been awarded accordingly.

7.9 Executive directors’ contracts

It’s our policy that executive directors should have employment contracts with an indefinite term providing for 6 months’ notice.

The details of the executive directors’ employment contracts are shown below:

	Date of continuous service	Notice entitlement to be given by the Coal Authority
Lisa Pinney MBE	1 June 2018	6 months
Paul Frammingham	6 May 2008	6 months
Carl Banton	5 January 2004	6 months

The notice period to be given by a director to the Coal Authority is: by the chief executive, 6 months, and by the remaining executive directors, 3 months.

7.10 Non-executive directors’ remuneration

Non-executive directors have been appointed by BEIS or the Department for Energy Security and Net Zero in line with the code of practice issued by the commissioner for public appointments.

Their terms of engagement and remuneration are determined by the Department for Energy Security and Net Zero.

They are not eligible to participate in the pension schemes or to receive PRP.

The fees paid to the non-executive directors are shown below:

	Contract end date	2022 to 2023 (£)	2021 to 2022 (£)
Jeff Halliwell	31 March 2024	27,050	27,050
Steve Wilson	31 March 2023	11,666	11,666
Jayne Scott	31 March 2025	11,666	11,666
David Brooks	31 March 2025	11,666	1,944
Bev Smith[footnote 3]	31 March 2026	845	N/A
Gemma Pearce	31 March 2022	N/A	11,666

7.11 Executive directors’ remuneration

	Salary (£000) in 2022 to 2023	Salary (£000) in 2021 to 2022	Allowance (£000) in 2022 to 2023	Allowance (£000) in 2021 to 2022	PRP (£000) in 2022 to 2023	PRP (£000) in 2021 to 2022	Pension (£000) in 2022 to 2023	Pension (£000) in 2021 to 2022	Total (£000) in 2022 to 2023	Total (£000) in 2021 to 2022
Lisa Pinney MBE	140-145	135-140	-	-	15-20	15-20	55	54	210-215	210-215
Paul Frammingham	95-100	90-95	10-15	10-15	5-10	10-15	40	39	155-160	160-165
Carl Banton[footnote 4]	80-85	80-85	5-10	5-10	5-10	(21)	98	75-80	195-200

The value of 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 increases exclude increases due to inflation or any increase or decrease due to a transfer of pension rights.

Executive directors’ remuneration includes salary, non-consolidated PRP earned in the year under the PDR process (non-contractual), certain allowances and the value of pension benefits accrued during the year.

Allowances include car and responsibility allowances in both years for Paul Frammingham and a responsibility allowance in both years for Carl Banton.

PRP is based on performance levels attained and is made as part of the performance review process.

PRP relates to the performance in the year in which it becomes payable to the individual.

We also participate in an HMRC approved cycle to work scheme. Carl Banton participated in this scheme during 2021 to 2022 and 2022 to 2023 and Lisa Pinney participated in this scheme during 2022 to 2023.

No executive directors received any benefits in kind during 2021 to 2022 or 2022 to 2023.

7.12 Executive directors’ pension entitlements

	Accrued pension at pension age at 31 March 2023 and related lump sum (£000)	Real increase in pension and related lump sum at pension age (£000)	CETV at 31 March 2023 (£000)	CETV at 31 March 2022 (£000)	Real increase in CETV (£000)
Lisa Pinney MBE	15-20	2.5-5	179	135	26
Paul Frammingham	30-35	0-2.5	440	391	21
Carl Banton	30-35	-	596	552	(34)

Cash equivalent transfer values (CETV)

A CETV is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time.

The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme.

A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme.

The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements.

They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost.

CETV are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

CETV figures are calculated using the guidance on discount rates for calculating unfunded public service pension contribution rates that was extant at 31 March 2023.

HM Treasury published updated guidance on 27 April 2023; this guidance will be used in the calculation of 2023 to 2024 CETV figures.

Real increase in CETV

This reflects the increase/(decrease) in CETV that is funded by the employer.

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

Civil Service pensions Pension benefits are provided through the Civil Service pension arrangements.

From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or Alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s state pension age (or 65 if higher).

From that date all newly appointed civil servants and the majority of those already in service joined Alpha.

Prior to that date, civil servants participated in the PCSPS.

The PCSPS has 4 sections: 3 providing benefits on a final salary basis (Classic, Premium or Classic Plus) with a normal pension age of 60; and one providing benefits on a whole career basis (Nuvos) with a normal pension age of 65.

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year.

Pensions payable under Classic, Premium, Classic Plus, Nuvos and Alpha are increased annually in line with pensions increase legislation.

Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015.

Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 will switch into Alpha sometime between 1 June 2015 and 1 February 2022.

Because the government plans to remove discrimination identified by the courts in the way that the 2015 pension reforms were introduced for some members, eligible members with relevant service between 1 April 2015 and 31 March 2022 may be entitled to different pension benefits in relation to that period (and this may affect the CETV shown in this report – see below).

All members who switch to Alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave Alpha.

The pension figures quoted for officials show pension earned in PCSPS or Alpha – as appropriate.

Where the official has benefits in both the PCSPS and Alpha, the figure quoted is the combined value of their benefits in the 2 schemes.

Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a defined contribution (money purchase) pension with an employer contribution (partnership pension account).

Employee contributions are salary-related and range between 4.6% and 8.05% for members of Classic, Premium, Classic Plus, Nuvos and Alpha.

Benefits in Classic accrue at the rate of 1/80th of final pensionable earnings for each year of service.

In addition, a lump sum equivalent to 3 years’ initial pension is payable on retirement.

For Premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service.

Unlike Classic, there is no automatic lump sum.

Classic Plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in Premium.

In Nuvos, a member builds up a pension based on the member’s pensionable earnings during their period of scheme membership.

At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with pensions increase legislation.

Benefits in Alpha build up in a similar way to Nuvos, except that the accrual rate is 2.32%.

In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is an occupational defined contribution pension arrangement which is part of the Legal & General Mastertrust.

The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member).

The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution).

Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age.

Pension age is 60 for members of Classic, Premium and Classic Plus, 65 for members of Nuvos, and the higher of 65 or State Pension Age for members of Alpha.

The pension figures quoted for officials show pension earned in PCSPS or Alpha – as appropriate.

Where the official has benefits in both the PCSPS and Alpha, the figure quoted is the combined value of their benefits in the 2 schemes, but note that part of that pension may be payable from different ages.

Find further details about the Civil Service pension arrangements: https://www.civilservicepensionscheme.org.uk/

The PCSPS is an unfunded multi-employer defined benefit scheme in which the Coal Authority is unable to identify its share of the underlying assets and liabilities.

A full actuarial valuation was carried out as at 31 March 2016. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation: https://www. civilservicepensionscheme.org.uk/about-us/ resource-accounts/.

For 2022 to 2023, employers’ contributions of £3,508,000 were payable to the PCSPS (2021 to 2022: £3,162,000) at one of 4 rates in the range 26.6% to 30.3% of pensionable pay, based on salary bands (2021 to 2022: 26.6% to 30.3%).

The scheme actuary reviews employer contributions every 4 years following a full scheme valuation.

The salary bands and contribution rates were revised for 2019 to 2020 and will remain unchanged until 2024 to 2025.

The contribution rates reflect benefits as they are accrued, not when the costs are actually incurred, and reflect past experience of the scheme.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution.

Employer contributions of £42,292 (2021 to 2022: £35,475) were paid in respect of 10 (2021 to 2022: 8) employees were enrolled in partnership accounts in the year.

There were no early retirements on ill health grounds in either 2022 to 2023 or 2021 to 2022.

7.13 Average number of persons employed

Department	Staff 2022 to 2023	Other 2022 to 2023	Total 2022 to 2023	Staff 2021 to 2022	Other 2021 to 2022	Total 2021 to 2022
Development and information	64	3	67	64	1	65
Operations	116	3	119	109	5	114
Commercial and innovation	42	1	43	34	1	35
Digital and Information technology	34	4	38	35	2	37
Corporate management and services	63	2	65	58	2	60
Staff numbers	319	13	332	300	11	311

Average number of persons employed as analysed above is consistent with the Coal Authority’s organisational structure for both years and reflects continued growth in the Coal Authority’s operational programmes and externally funded work.

9.1 full time equivalent persons were charged to capital projects during 2022 to 2023 (2021 to 2022: 7.7).

7.14 Staff and related costs

	Staff 2022 to 2023 (£000)	Other 2022 to 2023 (£000)	Total 2022 to 2023 (£000)	Staff 2021 to 2022 (£000)	Other 2021 to 2022 (£000)	Total 2021 to 2022 (£000)
Wages and salaries	13,717	-	13,717	12,437	-	12,437
Social security costs	1,636	-	1,636	1,382	-	1,382
Other pension costs	3,508	-	3,508	3,162	-	3,162
Agency staff costs	-	1,004	1,004	-	773	773
Total staff costs	18,861	1,004	19,865	16,981	773	17,754

7.15 Staff composition

As at 31 March 2023	Non-executive directors	Executive leadership team	Senior managers	Staff	Total
Male	3	4	13	163	183
Female	2	2	6	144	155
Total	5	6	19	307	338

Disability, diversity and inclusion

We are an inclusive employer and actively encourage and welcome applications from everyone who might have the right skills to help us make a better future for people and the environment in mining areas.

This means that we do the basics like providing reasonable adjustments for disabled and differently abled candidates at interview and help them succeed at work.

We encourage flexible working, part time and term based hours, and we aim to go further than this and be a more diverse, inclusive and actively anti-racist organisation – a truly ‘great place to work for everyone’.

We champion the career development, career progression and retention of all our employees.

We have encouraged and supported a range of diversity networks and we work to ensure that a wide variety of voices can be heard at all levels of the organisation.

We have an equality, diversity and inclusion plan and an anti-racism plan which focus on practical steps to help us be even better and we continue to listen and learn.

We know we have more to do and are committed to continuing to improve and grow.

We are continuing work to attract, recruit and retain greater diversity in staff at all levels and to develop them through the organisation.

We continue to encourage everyone to feel comfortable to confidentially self-disclose diversity data to improve the accuracy of our reporting and enable us to put clear actions in place.

Further information about our diversity and inclusion work can be seen in the our people section of this report.

7.16 Reporting of civil service and other compensation schemes – exit packages

2022 to 2023 (2021 to 2022 in brackets)	Number of compulsory redundancies	Number of other departures agreed	Total number of exit packages
£0 to £25,000	1 (0)	1 (0)	1 (0)
£25,000 to £50,000	0 (0)	1 (0)	1 (0)
£50,000 to £100,000	0 (0)	0 (0)	0 (0)
Total number of exit packages	0 (0)	2 (0)	2 (0)
Total cost (£000)	0 (0)	60-65 (0)	60-65 (0)

During 2022 to 2023 there were 2 agreed departures, costing £60,000 to £65,000 (2021 to 2022: nil).

Exit costs in 2022 to 2023 were accounted for in the year of departure and the award was determined in accordance with the provisions of the Civil Service Compensation scheme, a statutory scheme made under the Superannuation Act 1972.

7.17 Reporting of high paid off-payroll appointments

Highly paid off-payroll worker engagements as at 31 March 2023, earning £245 per day or greater:

Existing engagements as of 31 March 2023	8
Of which, have existed for (at time of reporting):
less than 1 year	5
between 1 and 2 years	3
between 2 and 3 years	-
between 3 and 4 years	-
4 or more years	-

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

Number of off-payroll workers engaged during the year ended 31 March 2023	17
Of which:
not subject to off-payroll legislation	17
subject to off-payroll legislation and determined as in-scope of IR35	-
subject to off-payroll legislation and determined as out-of-scope of IR35	-
Number of engagements reassessed for compliance or assurance purposes during the year, of which:
number of engagements that saw a change to IR35 status following the consistency review	N/A

The Coal Authority routinely performs checks on proposed roles, including HMRC’s Employment Status Service tests, to determine IR35 status prior to any offer.

Where these checks suggest that assurance as to income tax and national insurance obligations is required, contracts include the above mentioned clauses and assurance is requested from either the worker or the agent through whom they work.

Off-payroll engagements of board members and/or senior officials with significant financial responsibility, between 1 April 2022 and 31 March 2023:

Number of off-payroll engagements of ‘board members and/or senior officials with significant financial responsibility’ during the financial year	-
Number of individuals that have been deemed ‘board members and/or senior officials with significant financial responsibility’ during the financial year. This figure includes both off-payroll and on-payroll engagements	10

Consultancy expenditure for the year was £nil (2021 to 2022: £nil).

7.18 Pay multiples

The percentage change from the previous financial year for salary and allowances, and performance related pay, of the highest paid director and the employees of the Coal Authority (excluding agency staff) are:

	2022 to 2023	2021 to 2022
Salary and Allowances:
Highest paid director (mid-point of band for 2023 and 2022: £155,000-£160,000)	3.6%	0.0%
Employees of the Coal Authority	4.9%	1.1%
Performance related pay:
Highest paid director (mid-point of band)	0.0%	0.0%
Employees of the Coal Authority	5.4%	14.8%

In 2022 to 2023, the average pay award was 2% across all levels in the organisation, with an additional 1% to address pay disparity in specific areas which is included in the percentage changes above (no pay award was made in 2021 to 2022).

Performance related pay is linked to the achievement of organisational performance targets, which were met in full during 2022 to 2023.

The significant increase during 2021 to 2022 is a consequence of the previous year (2020 to 2021), which used a different methodology and a lower assessment for the achievement of performance targets due to the impact of COVID-19.

The performance related pay for the highest paid director is capped.

The ratio of the highest paid director’s remuneration to that of the employee at the 3 quartiles is as below:

Year	25th percentile	Median	75th percentile
2022 to 2023	4.7	3.5	2.9
2021 to 2022	5.1	3.7	3.0

Total remuneration includes salary, allowances and non-consolidated performance related pay.

It does not include severance payments, employer pension contributions or the cash equivalent transfer value of pensions.

The figures upon which these calculations are based are:

Year	25th percentile total pay and benefits	25th percentile salary	Median total pay and benefits	Median salary	75th percentile total pay and benefits	75th percentile salary
2022 to 2023	33,368	30,861	44,486	41,224	54,223	52,531
2021 to 2021	31,131	29,227	43,122	41,381	52,466	48,406

In 2022 to 2023 and 2021 to 2022, no employee received remuneration in excess of the highest paid director.

Remuneration ranged from £19,968 to £160,000 (2021 to 2022: £18,182 to £160,000).

8. Parliamentary accountability and audit report

As part of the accountability report, the parliamentary accountability and audit report sets out those additional disclosures required by Parliament, if not detailed elsewhere in the annual report and accounts, and contains the external audit report.

The following sections are subject to audit.

8.1 Regularity of expenditure: losses, special payments and gifts

There have been no losses or special payments in excess of £300,000, or any gifts during 2022 to 2023.

There has been one breach of a Cabinet Office expenditure control caused by an overspend against a specific digital supply contract.

This was reported immediately to the chair of the Coal Authority’s ARAC, the NAO, and the Department for Energy Security and Net Zero spend controls team, sponsor team and chief digital and information officer.

The expenditure was necessary and appropriate to deliver the Coal Authority’s core services.

A full lessons learned exercise has been undertaken and scrutinised by the Coal Authority’s executive leadership team and ARAC with a summary presented to the board.

This breach is further outlined within the governance statement.

8.2 Fees and charges

The Coal Authority complies with the cost allocation and charging requirements set out in HM Treasury’s Managing Public Money.

The Coal Authority’s most significant income streams, as outlined at notes 2 and 4 of the financial statements, are explained below.

Commercial and innovation operating segment includes the provision of mining reports which generated income of £6,980,000 (2021 to 22: £8,350,000), costs of £3,175,000 (2021 to 2022: £4,001,000) and a surplus of £3,805,000 (2021 to 2022: £4,349,000 surplus).

Expenditure associated with specific programmes and activities is managed and reported under the operations segment, but relates to the enhancement of data and information.

The financial objective for mining reports is to provide services at a commercial rate.

Commercial and Innovation operating segment includes the provision of advisory and technical services which generated income of £6,802,000 (2021 to 2022: £6,371,000), costs of £6,639,000 (2021 to 2022: £6,297,000) and a surplus of £163,000 (2021 to 2022: £74,000 surplus).

The financial objective for the provision of advisory and technical services is either full cost recovery (including an allowance for overhead recovery) when providing services across government, or commercial rates, which reflect the increased levels of risk, when providing services into competitive markets.

The proportion of income as a result of full cost recovery is in excess of 99% for both financial years, reflecting the continued provision of services to our customers across government as we support them in the delivery of key programmes.

Development and information operating segment includes the provision of data licensing and mining information which generated income of £1,593,000 (2021 to 2022: £1,531,000), internal recharges of £1,610,000 (2021 to 2022: £1,917,000), costs of £3,144,000 (2021 to 2022: £3,017,000) and a surplus of £59,000 (2021 to 2022: £431,000 surplus).

The financial objective for the provision of data licensing and mining information is full cost recovery (including an allowance for overhead recovery).

Development and information includes the provision of licensing and permissions activities which generated income of £784,000 (2021 to 2022: £767,000), costs of £974,000 (2021 to 2022: £1,070,000) and a deficit of £190,000 (2021 to 2022: £303,000 deficit).

The financial objective for the provision of advisory and technical services is either full cost recovery (including an allowance for overhead recovery) when providing services across government, or commercial rates, which reflect the increased levels of risk, when providing services into competitive markets.

8.3 Remote contingent liabilities

Remote contingent liabilities are not required to be disclosed under International Accounting Standard (IAS) 37, but are considered here for parliamentary reporting and accountability purposes.

The Coal Authority believes that sufficient disclosure is available in the financial statements, in note 16 contingent liabilities and note 13 provisions, to give the reader a full understanding of the liabilities it faces and may face.

8.4 Going concern

This report has been created on the basis of the Coal Authority being a going concern as detailed in note 1.3 of the financial statements

This accountability report has been approved by the chief executive and accounting officer, Lisa Pinney MBE, 10 July 2023.

9. The certificate and report of the CAG to the House of Commons

9.1 Opinion on financial statements

I certify that I have audited the financial statements of the Coal Authority for the year ended 31 March 2023 under the Coal Industry Act 1994.

The financial statements comprise the Coal Authority’s:

• statement of financial position as at 31 March 2023
• statement of comprehensive net expenditure, statement of cash flows and statement of changes in taxpayers’ equity for the year then ended
• the related notes, including the significant accounting policies

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

In my opinion, the financial statements:

• give a true and fair view of the state of the Coal Authority’s affairs as at 31 March 2023 and its net income for the year then ended
• have been properly prepared in accordance with the Coal Industry Act 1994 and Secretary of State directions issued thereunder

9.2 Opinion on regularity

In my opinion, in all material respects, the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

9.3 Emphasis of matter

I draw attention to the disclosures made in notes 1.20 and 13 to the financial statements concerning the uncertainties inherent in the provisions in respect of mine water treatment, public safety and subsidence claims and subsidence pumping stations, totalling £2,127.0 million as at 31 March 2023 (2022: £5,379.0m).

As set out in the notes, given the long-term nature of these liabilities and the number and nature of the assumptions on which the estimates of the provisions are based, management has needed to make significant judgements in estimating the provision and a considerable degree of uncertainty remains over the value of the liabilities.

Significant changes to the liabilities could occur as a result of subsequent information and events that are different from the current assumptions adopted by Coal Authority.

My opinion is not modified in respect of this matter.

9.4 Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (ISA) UK, applicable law and Practice Note 10 Audit of Financial Statements and Regularity of Public Sector Bodies in the United Kingdom (2022).

My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019.

I am independent of the Coal Authority in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK.

My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

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

9.5 Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Coal Authority’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Coal Authority’s ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.

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

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

9.6 Other information

The other information comprises information included in the annua lreport, but does not include the financial statements and my auditor’s certificate and report.

The accounting officer is responsible for the other information.

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

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

If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves.

If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

9.7 Opinion on other matters

In my opinion the part of the remuneration and staff report to be audited has been properly prepared in accordance with Secretary of State directions, issued under the Coal Industry Act 1994.

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

• the parts of the Accountability Report subject to audit have been properly prepared in accordance with the Coal Industry Act 1994 and Secretary of State directions issued thereunder
• the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements and is in accordance with the applicable legal requirements.

9.8 Matters on which I report by exception

In the light of the knowledge and understanding of the Coal Authority and its environment obtained in the course of the audit, I have not identified material misstatements in the Performance and Accountability Reports.

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

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

9.9 Responsibilities of the accounting officer for the financial statements

As explained more fully in the statement of accounting officer’s responsibilities, the accounting officer is responsible for:

• maintaining proper accounting records
• providing the CAG with access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters
• providing the CAG with additional information and explanations needed for his audit
• providing the CAG with unrestricted access to persons within the Coal Authority from whom the auditor determines it necessary to obtain audit evidence
• ensuring such internal controls are in place as deemed necessary to enable the preparation of financial statements to be free from material misstatement, whether due to fraud or error
• ensuring that the financial statements give a true and fair view and are prepared in accordance with the Coal Industry Act 1994 and Secretary of State directions issued thereunder
• ensuring that the annual report, which includes the remuneration and staff report, is prepared in accordance Coal Industry Act 1994 and Secretary of State directions issued thereunder
• assessing the Coal Authority’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the accounting officer anticipates that the services provided by the Coal Authority will not continue to be provided in the future

9.10 Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Coal Industry Act 1994.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISA (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was considered capable of detecting non-compliance with laws and regulations, including fraud I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulations, including fraud.

The extent to which my procedures are capable of detecting non-compliance with laws and regulations, including fraud is detailed below.

Identifying and assessing potential risks related to non-compliance with laws and regulations, including fraud In identifying and assessing risks of material misstatement in respect of non-compliance with laws and regulations, including fraud, I:

• considered the nature of the sector, control environment and operational performance including the design of the Coal Authority’s accounting policies, key performance indicators and performance incentives
• inquired of management, the Coal Authority’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Coal Authority’s policies and procedures on:
  • identifying, evaluating and complying with laws and regulations
  • detecting and responding to the risks of fraud
  • the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Coal Authority’s controls relating to the Coal Authority’s compliance with the Coal Industry Act 1994 and Managing Public Money
• inquired of management, the Coal Authority’s head of internal audit and those charged with governance whether:
  • they were aware of any instances of non-compliance with laws and regulations
  • they had knowledge of any actual, suspected, or alleged fraud
  • discussed with the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud

As a result of these procedures, I considered the opportunities and incentives that may exist within the Coal Authority for fraud and identified the greatest potential for fraud in the following areas: revenue recognition, posting of unusual journals, complex transactions, and bias in management estimates.

In common with all audits under ISA (UK), I am required to perform specific procedures to respond to the risk of management override.

I obtained an understanding of the Coal Authority’s framework of authority and other legal and regulatory frameworks in which the Coal Authority operates.

I focused on those laws and regulations that had a direct effect on material amounts and disclosures in the financial statements or that had a fundamental effect on the operations of the Coal Authority.

The key laws and regulations I considered in this context included the Coal Industry Act 1994, Managing Public Money, and relevant employment law, pensions and tax legislation.

9.11 Audit response to identified risk

To respond to the identified risks resulting from the above procedures:

• I reviewed the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described above as having direct effect on the financial statements
• I enquired of management, the audit and risk committee and in-house legal counsel concerning actual and potential litigation and claims
• I reviewed minutes of meetings of those charged with governance and the board, and internal audit reports
• in addressing the risk of fraud through management override of controls, I tested the appropriateness of journal entries and other adjustments; assessed whether the judgements on estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business

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

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website: Auditor’s responsibilities for the audit.

This description forms part of my certificate.

9.12 Other auditor’s responsibilities

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

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

9.13 Report

I have no observations to make on these financial statements.

Gareth Davies, CAG, 10 July 2023, National Audit Office, 157-197 Buckingham Palace Road, Victoria, London, SW1W 9SP

1. The director is not a member of this committee ↩ ↩²

2. The director is not a member of this committee but attends by invitation ↩ ↩² ↩³ ↩⁴ ↩⁵

3. Bev Smith’s formal tenure begins on 1 April 2023 and she undertook induction activity during March 2023 ↩

4. During 2022 to 2023, Carl Banton transitioned from a final salary pension scheme to Alpha pension scheme. Where the change in pension (normally an increase year on year) is insufficient to offset the inflationary increase, in real terms, the pension value reduces, resulting in the negative value above. ↩