BEIS annual report and accounts 2017 to 2018 (print-ready PDF)
Source: data.gov.uk (2020-10-06)

BEIS annual reports and accounts. This series brings together the annual reports and accounts for the Department for Business, Energy and Industrial Strategy (BEIS).
The reports review the department’s activities over the course of each year, providing:
highlights of key projects
progress made in meeting the department’s objectives
financial information

Annual report
and accounts
31 March 2018

Accounts presented to the House of Commons pursuant to Section 6(4) of the Government
Resources and Accounts Act 2000
Ordered by the House of Commons to be printed on 12 July 2018
HC 1214
Annual report
and accounts
31 March 2018

© Crown copyright 2018
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This publication is available at www.gov.uk/government/publications
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Department for Business, Energy & Industrial Strategy
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Tel: xx-xxxx-xxxx Email: xxx@xxx.xx
ISBN 978-1-5286-0274-7
CCS0318267372 07/18
Printed on paper containing 75% recycled fibre content minimum.
Printed in the UK by the APS Group, on behalf of the Controller of
Her Majesty’s Stationery Office

Contents
Foreword by the Secretary of State
6
Report of the Permanent Secretary
7
Performance report
8
Overview
9

Our purpose
9

What we are aiming to achieve
9

Our business model
10

How we are organised: our structure
11

How we are organised: our group
12

Our highlights in 2017-18
14

Where we spent our money in 2017–18 16

Risks affecting delivery
of our objectives
18
Performance analysis
21

Our performance
21

Looking ahead
32

UN sustainable development goals
35

Anti-bribery and anti-corruption
36

Sustainability report
37
Accountability report
40
Statement of Accounting
Officer’s responsibilities
41
Directors’ report: financial review
42
Directors’ report: departmental board
and leadership team
50
Governance statement
58
Staff report
76
Remuneration report
86
Statement of parliamentary supply
102
Parliamentary accountability disclosures 111
Audit report
118
Financial statements
122
Consolidated statement of
comprehensive net expenditure
123
Consolidated statement
of financial position
125
Consolidated statement of cash flows
127
Consolidated statement of changes
in taxpayers’ equity
129
Notes to the accounts
132
Trust statement
222
Accounting Officer’s foreword
223
Statement of Accounting Officer’s
responsibility
230
Audit Report
231
Statement of revenue,
other income and expenditure
234
Statement of financial position
235
Statement of cash flows
236
Notes to the trust statement
237
Annexes
244
Annex A: our major projects
and programmes
245
Annex B: other annual report data
246
Annex C: common core tables
248
Annex D: glossary
256

Annual report and accounts 2017-18
6
Foreword by the Secretary of State
As the first Secretary of State for this department, I am immensely
grateful for the hard work and dedication of its staff. Over the last
12 months they’ve delivered a truly ambitious programme that puts our
Industrial Strategy at the heart of this Government’s economic policy.
Our Industrial Strategy White Paper, published in November,
is an unashamedly ambitious vision for the future of our country,
laying out how we tackle our productivity challenge, increase our earning
power and earn our way as a country in the future. We are at one of the
most important, exciting and challenging times in the history of global
enterprise. Powered by new technologies, the way we live our lives is
being transformed across the world. We are well-placed to benefit from
this new industrial revolution and we start from a position of significant
strength. We have a thriving research base and are home to a wide range
of innovative sectors, from advanced manufacturing and life sciences,
to fintech and creative industries. Our commitment to reach 2.4% of GDP
investment on research and development with business by 2027 will
ensure this continues.
This government believes in a country that works for everyone.
In 2017, we took important steps to ensure people earn more with a further
rise to the National Living Wage, whilst the UK also experienced a record
low economic inactivity rate and the lowest unemployment rate since 1975.
Our Good Work plan puts the UK at the front of the pack in addressing the
challenges and opportunities of modern ways of working and will enhance
our business environment as one of the best places to work, invest and
do business.
In August, we unveiled a world-leading package of corporate
governance reforms to increase boardroom accountability and trust
in business. One of Britain’s biggest assets in the global economy is
our reputation for being a dependable place in which to do business.
This package builds on our already strong reputation and ensures
our largest companies are more transparent and accountable to their
employees and shareholders.
Clean growth is at the heart of our Industrial Strategy showing
how the whole country can benefit from a low carbon economy whilst
ensuring Britain continues to lead the world in tackling climate change.
We are leading the way on decarbonising our energy system, including
our commitment to phase out unabated coal generation by 2025,
rolling out smart meters, and investing £2.5 billion in low carbon innovation
from 2015 to 2021. We want to maximise the advantages for UK industry
from the global shift to clean growth.
In this department’s third year we will continue to deliver on our vision
set out in the Industrial Strategy while working to secure a successful
EU Exit, endeavoring to represent and serve businesses, workers and
consumers across the UK.
The Rt Hon
Greg Clark MP
Secretary of State
for Business, Energy
and Industrial Strategy

Performance report
7
BEIS is at the heart of the Government’s commitment to build an economy
that works for everyone, with great places across the UK for people to work
and for businesses to invest, innovate and grow.
The Industrial Strategy White Paper was a landmark event for our
department this year. Following extensive consultation with businesses
and interested parties, the White Paper outlines government’s plans to
boost productivity and earning power across the country. It focuses on
5 foundations: ideas, people, infrastructure, business environment and
places. It also outlines 4 Grand Challenges that the UK must embrace to
put the UK at the forefront of the industries of the future. We announced
an additional £725 million over the next 4 years in the Industrial Strategy
Challenge Fund, in support of the Government’s commitment to increase
national investment in research and development to 2.4% of GDP
by 2027. Since the White Paper, we have published the first sector deals
– partnerships between Government and industry aiming to increase
sector productivity.
In preparation for exiting the EU, we continue to engage with
businesses and workers to ensure we represent their views. As set out
in the Industrial Strategy, we must build on our strengths, and utilise
opportunities before us. For example, we want the UK to be the go-to
place for scientists, innovators and tech investors across the world.
Alongside this, we secured additional funding for the major EU Exit
implementation work and are preparing for the significant domestic and
legislative changes required to manage exit from the EU.
We have continued to support business and economic growth
and announced our plan to inject £20 billion over the next 10 years in
innovative high-growth businesses. This includes establishing a new
£2.5 billion investment fund through the British Business Bank. We
also published our National Security and Investment Review. It outlines
proposals to increase national security protections for critical infrastructure.
In response to the Taylor Review of Modern Working Practices – The Good
Work Plan outlines new measures to protect workers’ rights, ensure fair
pay, and increase transparency in the business environment. In response
to our consultation on Corporate Governance, we intend to better align
executive pay with long-term company performance.
We launched our Clean Growth Strategy in October 2017.
This outlines how the whole country can benefit from low carbon economic
opportunities. We have also introduced legislation to tackle unfair practices
in the energy market to reduce energy bills. We launched a review on
the cost of energy in August 2017. Professor Dieter Helm put forward his
proposals for reducing costs in the power system in the long-term, which we
are currently considering. We have also shown our continued commitment
to tackling climate change, with the UK on track to meet the second carbon
budget and 23.4% of our electricity now generated from renewable sources.
We also continue to transform our Department. This includes
our commitment to increasing representation of BAME staff, people
with disabilities and LGBT+ staff at all grades, and to further reduce
our gender pay gap. We were delighted to welcome 3 new ministers
– Sam Gyimah, Andrew Griffiths and Lord Henley; and 3 new
Directors General – Sarah Harrison, Julian Critchlow and Nick Chism.
Report of the Permanent Secretary
Alex Chisholm
Permanent Secretary
and Principal
Accounting Officer

Leeds city centre – Local Industrial Strategies will be long-term,
based on clear evidence, and aligned to the national Industrial Strategy.
Performance
Report

Performance report
9
Overview
Maximise investment opportunities and bolster UK interests
We will deliver the best results for the UK from exiting the EU by creating a
world class business environment that drives investment and employment.
As we build our new relationship with the EU we will maintain business and
investor confidence and ensure their interests are reflected in the negotiations.
Promote competitive markets and responsible business practices
We will secure better outcomes for consumers by creating a more competitive
environment for business and industry. We will improve corporate governance
and ensure the labour market offers everyone the opportunity to obtain quality,
well-paid jobs and better working conditions.
Ensure the UK has a reliable, low cost and clean energy system
We will upgrade and diversify our energy supplies to meet future needs –
ensuring they are smarter, cleaner, more secure and affordable for consumers
and businesses. We will promote clean growth and take action to tackle climate
change, working in partnership with business and international communities.
Build a flexible, innovative, collaborative and business facing department
We will elevate BEIS from a well-functioning department to an exceptional one which
delivers for business on our strategic priorities in relation to the Industrial Strategy,
EU exit, and clean growth. We will enable digital, data and technology to deliver
exceptional services for our staff as well as the people and businesses we serve.
This section gives a summary of our department, its purpose, the key risks to
the achievement of its objectives, and how it has performed during the past year.
Our purpose
Our vision is an economy that works for everyone – with great places in every
part of the UK for people to work and for businesses to invest, innovate and grow.
What we are aiming to achieve
Deliver an ambitious industrial strategy
We will develop a modern, long-term industrial strategy that lays the foundations
for reinvigorating UK economic performance and boosts earning power throughout
the country. We will cultivate world-leading science and innovation, build on local
strengths and foster enterprise to ensure every place meets its potential.

Annual report and accounts 2017-18
10
Our business model
Our annual funding is agreed with Treasury
and Parliament. To the extent permissible,
ministers, with advice from the Board, Executive
Committee and officials, decide the allocation
of resources. In 2017-18, we were responsible
for the efficient stewardship of £12.2 billion of
departmental funds.
BEIS is responsible for designing and
implementing policy relating to the
Government’s Industrial Strategy, business,
science and innovation, energy and clean
growth and climate change. Our department
works closely with other government departments
and our partner organisations to deliver upon our
shared objectives, and builds trusted, two-way
relationships with our stakeholders by employing
a proactive approach, ensuring their views are
considered when shaping policy decisions.
Our core Department is made up of 7
groups, employing 3,307 people with
regional offices across the UK. Each group
is led by a Director General, and these groups
are in turn divided into 34 Directorates across the
Department. To ensure the effective co-ordination
and management of the department’s business
our Executive Committee meets around four
times each month and our Departmental Board
meets six times per year.
We also deliver our business through 40
partner organisations that employ more
than 30,000 public servants. Our network
of partner organisations is one of the largest
in government – made up of a diverse array
of bodies and people with a very wide span
of policy and operational responsibilities.
These range from large organisations such as
UK Research and Innovation and the Nuclear
Decommissioning Authority, through medium-
size organisations working on delivery and
regulation such as the Competition and Markets
Authority, to advisory committees including the
Committee for Climate Change.

Performance report
11
How we are organised: our structure
Our Department is led by the Secretary of State
for Business, Energy and Industrial Strategy who
is responsible to Parliament for the Department
as a whole. The Permanent Secretary is the
Principal Accounting Officer for the Department
and delegates within the Department to deliver
ministerial decisions and to support ministers
in policy-making and managing public funds.
Our non-executives provide advice and bring
an external perspective to the business of the
Department; they do not have decision-making
or spending powers.
Our ministers
Our management:
non-executives
Our management: executives
Minister of State
for Energy and
Clean Growth
The Rt Hon
Claire Perry MP
Director General,
Corporate Services
Sarah Harrison MBE
Director General,
Energy Transformation
and Clean Growth
Julian Critchlow
(14 May 2018)
Chief Financial Officer
Tom Taylor
BEIS Chief
Scientific Adviser
Professor John
Loughhead
CB OBE FReng FTSE
Director General,
Market Frameworks
Jaee Samant
Director, Policy,
Delivery and Private
Office
Caleb Deeks
Director General,
Enterprise
Nick Chism
(1 Jun 2018)
Director General,
EU Exit and Analysis
Sam Beckett
Director General,
Energy and Security
Jeremy Pocklington
Director General,
Business and Science
Gareth Davies
Parliamentary Under
Secretary of State,
Minister for Business
and Industry
Richard Harrington MP
Parliamentary Under
Secretary of State
The Rt Hon
Lord Henley
Minister of State
for Universities,
Science, Research
and Innovation
Sam Gyimah MP
Parliamentary Under
Secretary of State,
Minister for Small Bus-
iness, Consumers and
Corporate Responsibility
Andrew Griffiths MP
Lead non-executive
board member
Archie Norman
Non-executive
board member
Charles Randell CBE
Non-executive
board member
Professor Dame
Ann Dowling DBE
Non-executive
board member
Dame Carolyn McCall
Non-executive
board member
Kathryn Parsons
Non-executive
board member
Stephen A. Carter
Non-executive
board member
Stuart Quickenden
Secretary of State for Business, Energy and Industrial Strategy
The Rt Hon Greg Clark MP
Permanent Secretary and Accounting Officer
Alex Chisholm

Annual report and accounts 2017-18
12
How we are organised: our group
Public sector bodies can be grouped based
on the level of control the core Department
has over them. Our executive agencies act as
an arm of the core Department, undertaking
executive functions, rather than giving policy
advice. The other bodies in the Departmental
group are separate legal entities, but the
core Department usually sets their strategic
framework and normally appoints the chair
and all non‑executive members of the board
and is consulted on the appointment of the
CEO. The wider Departmental group includes
other public‑sector bodies which work with
us to achieve our objectives but have more
authority over their own policies and are not
consolidated into the group financial statements.
Our area of responsibility extends beyond the
bodies listed in the wider departmental group.
A more comprehensive picture can be seen
in our Accounting Officer System Statement,
published separately.

Performance report
13
Core Department and agencies
Committee on Fuel Poverty
Copyright Tribunal
Council for Science and Technology
Government Office for Science
Industrial Development Advisory
Board
Insolvency Service
Low Pay Commission
Nuclear Liabilities Financing
Assurance Board
Office of Manpower Economics
Office of Product Safety and
Standards
Office of the Regulator of Community
Interest Companies
Regulatory Policy Committee
UK Space Agency
Consolidated Departmental group
Advisory, Conciliation and Arbitration
Service (ACAS)
British Business Bank Plc
Central Arbitration Committee
Certification Officer
Civil Nuclear Police Authority
Coal Authority
Committee on Radioactive Waste
Management
Competition Appeal Tribunal
Competition Service
Electricity Settlements Company
Financial Reporting Council
Low Carbon Contracts Company Ltd
Nuclear Decommissioning Authority
Oil and Gas Authority
UK Atomic Energy Authority
UK Green Infrastructure Platform Ltd
UK Shared Business Services Ltd
UK Research and Innovation1
Wider departmental group
British Hallmarking Council
British Nuclear Fuels Limited
Committee on Climate Change
Companies House
Competition & Markets Authority
Groceries Code Adjudicator
Independent Complaints Reviewer
Intellectual Property Office
Land Registry
Met Office
National Nuclear Laboratory
National Physical Laboratory
Nuclear Liabilities Fund
OFGEM
Ordnance Survey
Pacific Nuclear Transport Limited
Post Office Ltd
Pubs Code Adjudicator
Small Business Commissioner
1
1
On 30 March 2018, the seven UK Research Councils and Innovate UK came together to form
UK Research and Innovation (UKRI).

Annual report and accounts 2017-18
14
On 27 November 2017 the Industrial Strategy
White Paper was published, setting out how
we are investing in the skills, industries and
infrastructure of the future.
A world-leading package of corporate
governance reforms was unveiled on
29 August 2017. The measures will increase
boardroom accountability and enhance trust
in business.
The Matthew Taylor Review into modern
working practices was published on 11 July
2017. The Government responded on 7 February
2018, outlining proposals that will give millions
of workers new rights.
On 17 October 2017 the department published
the National Security and Infrastructure
Investment Review, launching a consultation
on measures to update the merger system and
better protect national security.
In October 2017, Professor Dieter Helm
published his independent review into the cost
of energy. He was asked to consider the whole
electricity supply chain, to recommend how to
reduce costs, whilst maintaining a secure supply.
Sector deals boost productivity, employment,
innovation and skills. Since November 2017 we
have announced deals for the Life Sciences,
Automotive and Creative sectors.
Our highlights in 2017-2018

Performance report
15
The Clean Growth Strategy, published on
12 October 2017, set out proposals to accelerate
the pace of ‘clean growth’, delivering increased
economic growth and decreased emissions.
The Space Industry Bill achieved Royal Assent
on 15 March 2018. It establishes a regulatory
framework that will enable exciting new
technologies to operate safely from the UK.
The new Office for Product Safety and
Standards created on 21 January 2018 has
national oversight of identifying consumer
risks and managing responses to large-scale
consumer product recalls and repairs.
The transition to BEIS from DECC and BIS
was completed by Summer 2017. This included
agreeing a new vision, objectives and team
structures – providing clarity over everyone’s
roles in BEIS.
The Domestic Gas & Electricity (Tariff Cap)
Bill was introduced into Parliament on
26 February 2018. This legislation will protect
11 million households across England, Wales
and Scotland.
The Contracts for Difference (CfD) auction
in September 2017 secured a record amount
of renewable energy capacity. New offshore wind
projects will be delivered 50% lower than the first
auction held in 2015.

Annual report and accounts 2017-18
16
Where we spent our money in 2017-2018
The departmental group incurred spending
against parliamentary budgets for the year
ending 31 March 2018 of £12.2 billion1. Of this,
£4.5 billion related to the core Department and
agencies, and £7.7 billion related to our partner
organisations.
The diagram opposite shows our major areas of
spend either through our partners or in each core
Department business. The significant items (more
than £250 million) of expenditure recorded in the
core Department were:
• £2,273 million of funding for Science and
Research – mainly grants to the Higher
Education Funding Council for England
• £598 million to deliver an ambitious
industrial strategy including £303 million
of support for energy intensive industries
• £338 million of capability spending,
including staff costs to support the delivery
of departmental objectives, and our
transformation programmes
• £330 million to maximise investment
opportunities and bolster UK interest –
primarily £307 million on International Climate
Finance Official Development Assistance,
as part of the Government’s commitment
to spend 0.7% of Gross National Income on
overseas aid
• £274 million to deliver the department’s
objective of managing our energy legacy
safely and responsibly. This includes
£193 million to meet certain obligations
arising from the restructuring of British Energy
in January 2005. Further details are provided
in note 19.1
Notes:
1. This expenditure corresponds to total DEL expenditure for our departmental group. DEL is the
controllable budget total, issued by HM Treasury on behalf of Parliament, that the department uses
to fund delivery of its strategic objectives. The diagram opposite excludes AME expenditure which
represents volatile, demand-led spend and technical accounting matters. These concepts are fully
explained on page 42.

Performance report
17
Core Department
Partner organisations
Executive agencies
Research
Councils
£4,820m
UKSA
£367m
Insolvency
Service
£23m
Nuclear
Decommission-
ing Authority
£2,129m
BBB
£388m
Diamond Light
Source Ltd
£123m
UKAEA
£53m
ACAS
£49m
Other
£42m
Coal Authority
£37m
UK SBS Ltd
£34m
Delivering
affordable
energy for
households
and businesses
£75m
Promote competitive markets and
responsible business practices
£89m
Taking action on climate change
and decarbonisation £143m
Managing our
energy legacy
safely and
responsibly
£274m
Maximise
investment
opportunities
and bolster
UK interests
£330m
Capability
£338m
Deliver an ambitious
industrial strategy
£598m
Science and
Research
£2,273m
Where we spent our
money in 2017-18
£12,185m

Annual report and accounts 2017-18
18
Relative
severity

High

Medium

Low
Change during
the year

Increasing risk

Decreasing risk

Stable
H
L
M
Risks affecting delivery of our objectives
The Department’s approach to the management of risk has continued
to mature over the last year. The process, detailed in our corporate
governance statement, builds on best practice established in the
HM Treasury Orange Book of Risk Management and the ISO 31000
industry standards. We continue to develop the process with the support
of our Audit Risk and Assurance Committee and have a rigorous audit
schedule that provides the senior leadership with the required assurances.
The tables below describe principal risks we have faced during the year.
Delivering an ambitious
industrial strategy
Maximise investment
opportunities and bolster
UK interests
Promote competitive
markets and responsible
business practices
Ensure the UK has a
reliable, low cost and
clean energy system
Build a flexible, innovative,
collaborative and business
facing department
Icons in the table map
the risks to our objectives

Performance report
19
Risk
Mitigating activities
Direction of risk
trend at year end
EU Exit negotiations may end
in suboptimal outcomes for
business, leading to an adverse
impact for the UK economy
f
f Supported Her Majesty’s Government to secure
political agreement to an implementation period.
f
f Dedicated EU Exit programme in place to ensure
BEIS can deliver its EU Exit responsibilities, alongside
building capacity and capability.
f
f BEIS represented on all key EU Exit Cabinet
Committees.
f
f Active role in separation and withdrawal negotiations,
planning for multiple scenarios.
f
f Dedicated team focused on legislative planning,
including an established secondary legislation
programme.
H
Progress is being made
as negotiations continue.
BEIS continues to build
capability and capacity to
deliver a smooth EU Exit.
Government policy may not
be seen by industry as a
sufficient catalyst to generate
the market conditions to
improve productivity
f
f Working with businesses and industry to
communicate the strategy and ensure delivery.
f
f Working across Whitehall with Local Government on
implementing the strategy.
f
f Decision to create the position of Director General
Enterprise with focus on enterprise and investment in
support of UK businesses.
f
f Linked closely with EU Exit programme to understand
how negotiations could affect implementation of the
strategy across the whole country.
f
f UK Research and Innovation has a specific focus
on managing the Industrial Strategy Challenge Fund.
f
f PM-chaired Economy and Industrial Cabinet Committee
to monitor implementation of the Industrial Strategy.
M
The Industrial Strategy
White Paper was
well received across
both the government
and business sectors
increasing confidence
in approach taken.
Interruptions to energy supply
may occur due to industrial
action, cyber-attack, terrorism,
extreme weather, accident or
financial failure
f
f Maintaining adequate electricity capacity via capacity
market, to cope with peak demand.
f
f Making the electricity system smarter and more
flexible including enabling more storage.
f
f Working with industry to improve cyber security
across the sectors, ensuring companies are
protecting themselves.
f
f Working with Office for Nuclear Regulation and
the Civil Nuclear Constabulary to maintain safety
and security.
f
f Maintain the UK’s oil stocking regime and work
internationally to identify and mitigate energy
supply risks.
M
2017-18 electricity market
margin considerably
improved on 2016-17.
The gas system
experienced extreme
demand on 1 March but
the system responded
flexibly. National Grid
confirm there was no
danger to domestic supply
at any point.
Climate change mitigation
policy interventions may not
be sufficient to keep on track
for carbon budgets 4 or 5 and
the 2050 target in the Climate
Change Act
f
f Engaging extensively with stakeholders on overall
strategy for carbon budget 4 and 5
as set out in Clean Growth Strategy.
f
f Developing a robust governance and implementation
plan for Clean Growth Strategy within BEIS, across
government and with industry.
f
f Active modelling and monitoring of forecast scenarios.
M
Developed a detailed
project plan and monitoring
against key metrics. Public
reporting of progress
against carbon budgets in
order to consider further
intervention if required.

Annual report and accounts 2017-18
20
Risk
Mitigating activities
Direction of risk
trend at year end
Comparatively low investment
in research and development
may hinder UK competitiveness
and collaboration between
UK and EU higher education
institutions
f
f Recent creation of UK Research and Innovation
to bring together the seven Research Councils,
Innovate UK and Research England will help connect
the best researchers and innovators with customers,
users and the public.
f
f Active engagement with senior stakeholders across
higher education, research and innovation, ministerial
and official engagements.
f
f Developing options to boost access to talent including
additional funding for PhDs and research leadership
programmes.
f
f Develop contingency options, negotiations and
influencing strategies on research mobility and EU
and research and innovation programmes.
M
Future partnership paper
on collaboration on science
and innovation outlined
ambition for an ambitious
agreement on science and
innovation. It reinforced
research and innovation as
a key objective for the UK
in the negotiations.
Increase in skills demand
across UK may lead to
insufficient skills capability and
capacity for BEIS to deliver
fully on ministerial objectives
f
f We have a new resourcing approach and have
reduced the time to hire.
f
f BEIS has a competitive attraction and retention
strategy in place.
f
f Increasing the number of secondees within
our business.
f
f Utilising central government functional consultancy
and other innovative routes to market.
f
f Expanded learning and development package
including negotiations skills.
M
Progress is being made
but challenge remains high
in a competitive market
for skills.
The enabling resources
necessary to deliver key
priorities (systems, processes,
technology) may not perform
in ways which are optimal
resulting in failure to deliver on
ministerial, Parliamentary and
public expectations
f
f Resilience and recovery built into the design of
Departmental systems and IT to protect us from
malicious attacks.
f
f Good practice and training programmes rolled out
to increase staff awareness of new challenges
(e.g. GDPR).
f
f Joined up working across corporate services
and professions.
f
f Strong governance and collaborative working with our
partner organisations and stakeholders.
f
f Transformation programme to enhance the capacity
and capability of BEIS and its staff.
f
f Implementation of best practice in risk identification
and management.
M
Progress has been made
in rolling out a programme
designed to transform
the Department’s ICT by
delivering modern, reliable
and secure technology.

Performance report
21
Our performance
1. Deliver an ambitious

industrial strategy
1.1 Build a Britain for the future
One of the most significant achievements of
2017-18 was the publication in November 2017 of
the Industrial Strategy White Paper. This was the
culmination of months of work building on last
year’s Green Paper consultation, which closed in
April 2017, with over 2,000 responses received.
The Industrial Strategy sets out a long-term plan
to boost the productivity and earning power of
people throughout the UK by focusing on the five
foundations of productivity, which align to our
vision for a transformed economy:
• ideas: to be the world’s most innovative
economy
• people: good jobs and greater earning power
for all
• infrastructure: a major upgrade to the UK’s
infrastructure
• business environment: the best place to start
and grow a business
• places: prosperous communities across
the UK
The Strategy sets out Grand Challenges to put
the UK at the forefront of industries of the future.
The first 4 Grand Challenges are focused on the
global trends which will transform our future:
• growing the artificial intelligence and data
driven economy: we will put the UK at the
forefront of the AI and data revolution
• clean growth: we will maximize the advantage
for UK industry from the global shift to
clean growth
• future of mobility: we will become a world
leader in the way, people, goods and
services move
• ageing society: we will harness the power
of innovation to help meet the needs of an
ageing society
1.2 Invest in science and innovation
In April 2017 the Higher Education and Research
Act achieved Royal Assent. The passing of the
Act represented a significant cross-government
achievement between BEIS and DfE, enabling
major reforms to the research and innovation
landscape. The Act created a single body,
UK Research and Innovation (UKRI) that formally
came into existence on 30 March 2018, to act
as the strategic centre of the UK’s research and
innovation funding system. It incorporates the
seven existing research councils, Innovate UK
and the research funding roles of the Higher
Education Funding Council for England.
In the Autumn Budget 2017, the Chancellor
referenced several measures that, along
with the creation of UK Research and
Innovation, are designed to improve the UK’s
productivity, helping deliver on our vision to
build an economy that works for everyone.
Budget announcements included:
• a further £2.3 billion for investment in
research and development, and an increase
in the main research and development tax
credit, up to 12%. This will support the
government’s ambition to increase research
and development investment nationally to 2.4%
of GDP by 2027
• £170 million will be made available through the
Industrial Strategy Challenge Fund to back a
construction sector deal to support innovation
and skills
• £100 million has been allocated for the plug-
in car grant and £200 million to support the
role out of charging infrastructure for zero
emission vehicles
• £123 million will be invested in the Redcar
steelworks site – this is made up of
£118 million for securing and making safe the
site and £5 million to allow the South Tees
Development Corporation to take ownership
of the site
In December 2017 we announced funding to
help exploit the UK’s potential to become a
world-leader in nuclear technologies, to support
research and development into innovative
advanced and small modular reactors, and to
assess their feasibility and accelerate the
Performance analysis

Annual report and accounts 2017-18
22
development of promising designs. We also
launched phase two of the Nuclear Innovation
Programme.
In addition, the Government has awarded the
UK Atomic Energy Authority (UKAEA) £86 million
to establish a fusion innovation centre of global
significance. The national fusion technology
platform will be set up at the Culham Centre for
Fusion Energy in Oxfordshire. This will reinforce
the UK’s world leading fusion research and
development capability, and allow UK firms
to compete for up to a further £1 billion of
international contracts for fusion technologies,
including for the International Thermonuclear
Experimental Reactor (ITER).
1.3 Support world leading sectors
The first 4 Grand Challenges of the Industrial
Strategy focused on growing the artificial
intelligence and data driven economy,
clean growth, the future of mobility and the
ageing society.
We have also invested in areas where the
UK already has significant strengths such as
satellite development and battery technology.
The Government has an ambition for the UK to
be a leading player in the global space industry.
The decreasing cost of launching small satellites
is a great opportunity for the UK, and commercial
space travel and space tourism are becoming
real future possibilities. Therefore, in March 2018
the Government introduced the Space Industry
Act 2018. The Bill creates a regulatory framework
for the expansion of commercial space activities
and the development of a UK space port.
ln July 2017 BEIS announced the launch of
the first phase of a £246 million Government
investment into battery technology, known
as the Faraday Challenge, to ensure the UK
leads the world in the design, development
and manufacture of electric vehicle batteries.
The Challenge’s competitions are divided into
three programmes designed to drive a step-
change in translating the UK’s world-leading
research into market-ready technology.
In November 2017, £80 million of the £246 million
Challenge Fund was allocated to the creation
of the new National Battery Manufacturing
Development Facility (NMDF) – the first ever
facility of its kind. Based in Coventry and
Warwickshire, this facility, which is a key element
of the Automotive Sector Deal, is designed to
make the UK a world leader in battery innovation.
Over the next year or so government and
industry will be launching further sector deals to
drive investment in key areas of the UK economy.
The first of these, the Life Sciences Sector Deal,
was announced in December 2017. It includes
several significant commitments and investments
into the UK by 25 global organisations. It sets
out a plan for key priorities for the sector, with a
programme of action under the themes of
research, technologies of the future, the evolution
of UK clinical trials capabilities and business
environment. It draws in substantial investment,
ensuring the next wave of breakthrough
treatments, innovative medical research and
technologies, and high skilled jobs are created
throughout the world-class life sciences clusters
already in place across the country.
Similarly, the Automotive Sector Deal, announced
in January 2018 between government and
the automotive industry, seeks to build on the
unique strengths of the UK automotive sector
and further develop the strong collaborative
partnership established between BEIS and
industry. The Deal, which seizes opportunities
to engage with the wider world beyond
Europe, brings together several long-term joint
commitments between government and industry
that will help build and establish the UK’s
leadership in meeting the Future of Mobility and
Clean Growth Grand Challenges. These include
low-carbon automotive technologies, automotive
research and development, transitioning to ultra-
low and zero emission vehicles and Connected
Autonomous Vehicles (CAV) technology, funding
for 22 projects that were announced in February
2018 and a supply chain competitiveness and
productivity programme.

Performance report
23
1.4 Support business to start and grow1
Throughout the year there have been several
announcements launching new funds that
will be made available to invest directly in UK
businesses, to help leverage additional private
investment or to strengthen the role of those that
oversee UK markets to ensure a fair playing field:
• the National Productivity Investment Fund has
been extended out to 2022/23, increasing
the size of the fund by £7 billion to £31 billion
• the British Business Bank has been provided
with £2.5 billion to establish an investment
fund to help unlock £20 billion of patient
capital investment
• £2.8 million a year has been allocated to the
Competition and Markets Authority so that it
can take on more cases against companies
that are acting unfairly
• there will be an extension of the Enterprise
Finance Guarantee, which provides loans to
smaller businesses, to March 2022
1
https://www.gov.uk/government/publications/small-business-survey-2015-businesses-with-employees
1.5 Drive growth across the country
In addition to the many regional elements
of the Industrial Strategy and its supporting
Challenges we have also been working to
improve the support that is provided directly
to local businesses. Following funding
announcements in the Autumn Budget to
support local economic development through
initiatives such as Growth Hubs, city region
mayors, Local Enterprise Partnerships,
the Northern Powerhouse and the Midlands
Engine, the department has been working
with the Ministry of Housing, Communities and
Local Growth to take forward these initiatives,
with several policy announcements due in
summer 2018.

Annual report and accounts 2017-18
24
2. Maximising opportunities

and bolstering UK interests
2.1 Encouraging inward Investment234
The Secretary of State announced £300 million
of funding from the Industrial Strategy Challenge
Fund (ISCF) that will bring together the UK’s
world-class research expertise with business
investment to develop technologies that can
help the UK prepare for the challenge of an
ageing society. From the £300 million of funding,
£98 million has been allocated to investigate
healthy ageing and £210 million to improve early
diagnosis and precision medicine.
Business Investment in the UK
was estimated to have increased
Q4 2017: £46.2 billion
Q4 2016: £43.5 billion2
Number of inward investment projects
involving Department for International Trade
(a cross-government figure showing the work
of BEIS, DIT and others)
2017: 1,8593
2
https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/businessinvestment/octobertodecember2017re-
visedresults
3
Department for International Trade Annual Reports and Accounts 2016-2017 – latest available.
4
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/bulletins/
businessenterpriseresearchanddevelopment/2016
Expenditure by UK businesses on research
and development (at constant prices)4
2.2 Ensuring our economy is resilient
and seizing opportunities
We have reviewed our horizon scanning and
enhanced business intelligence to improve early
identification and prevention of shocks, as well
as provide a more effective intervention through
targeted contingency planning, and clear roles
and responsibilities.
16
17
18
19
20
21
22
23
2012
2013
2014
2015
2016
£bn

Performance report
25
2.3 Promoting interests of UK businesses
in EU exit negotiations
BEIS has one of the most diverse portfolios
within the EU Exit negotiations. We continue
to analyse the impacts of EU exit on the wide
range of sectoral and cross-cutting interests
for which we are responsible, including the
impact on businesses, a range of economic
sectors and consumers. We are ensuring
these views are reflected in HM Government’s
negotiating priorities and approach as well as
preparing for any domestic policy changes
required as a result of the exit.
Additionally we are working to ensure a smooth
exit for the UK’s nuclear sector from Euratom
and the EU, delivering future arrangements
to facilitate trade, our ambitious nuclear
programme, and continued nuclear research
and development collaboration whilst providing
compliance with international standards.
5
https://www.gov.uk/government/publications/2017-uk-climate-finance-results
2.4 Building a profile of the UK
on the international stage5
As well as working with EU colleagues to deliver
continued innovation after EU Exit, we are
establishing new partnerships with non-EU
leading science nations to make it easier for our
researchers and innovators to collaborate with
our broader international partners. We have
sought to promote UK research and innovation
internationally to drive investment and export
opportunities and are working with other
countries to address shared global challenges
through science and innovation. This includes
designing and implementing a £1.5 billion fund
to support cutting-edge research that addresses
the challenges faced by developing countries.
We also continue to support international action
on climate change including through mobilising
£2 billion international climate finance (ICF)
within BEIS. A set of key performance indicators
(KPIs) have been developed and tested to
capture the results achieved by this funding.
Between 2012 and 2017,
ICF programmes:
i.
supported 34 million people to cope with
the effects of climate change
ii. provided 12 million people with improved
access to clean energy
iii. reduced or avoided 9.2 million tonnes of
greenhouse gas (GHG) emissions (tCO2e)
iv. installed more than 400 MW of clean
energy capacity
v. mobilised £2.2 billion public and £500
million private finance for climate change
purposes in developing countries4

Annual report and accounts 2017-18
26
3. Promote competitive markets and
responsible business practices
3.1 Reforming corporate governance
In April 2017, the Government published its
response to the Green Paper consultation on
Corporate Governance reform. Since then we
have been working with the Financial Reporting
Council, the Institute of Chartered Secretaries
and Administrators, and the Investment
Association to implement reforms aimed at:
• strengthening shareholder control on executive
pay and increasing transparency on pay
• strengthening employee and other stakeholder
voices in company boardrooms
• ensuring high standards of corporate
governance in the UK’s largest private
businesses
3.2 Promoting fairness in the labour market678
In February 2018, the Department outlined its
Good Work Plan through which millions of flexible
workers will receive new rights. The Plan is in
response to the independent Matthew Taylor
Review into the impact that modern working
practices are having on working life, which was
launched in July 2017.
The Good Work plan seeks to ensure workers
know their rights and receive the benefits they
are entitled to, and that action is taken against
employers who breach these rights. It includes
proposals on first-day entitlements to holiday and
sick pay, a new right to payslips for all workers
– including casual and zero hour workers – and
a right for all workers to request a more stable
contract, providing more financial security for
those on flexible contracts.
6
https://www.gov.uk/government/publications/national-minimum-wage-low-pay-commission-report-2017
7
Source: Hampton-Alexander review. Release schedule: annua
8
This compares to 14% BAME representation in the UK population. Source: Parker Review, 2017. Release schedule: annual
Matthew Taylor recognised in his review that the
UK’s employment and tax laws can fail to provide
clarity. In response, BEIS is will be launching
a consultation to examine options, including
new legislation, to make it easier for both the
workforce and businesses to understand
whether someone is an employee, worker or
self-employed.
The Government has again responded to the
Low Pay Commission’s recommendations,
increasing the National Living Wage in line with
our ambition for it to be 60% of median earnings
by 2020, subject to sustained economic growth.
We also continue to work towards improving the
equitable representation of those with protected
characteristics under the Equalities Act on
company boards.
National Living Wage
April 2017: we raised the National Living
Wage to £7.50. This is 57.6% of median
earnings6
Proportion of board positions held
by women amongst FTSE 350
October 2017: 24.5%7
Proportion of BAME directors on
boards of FTSE 100 companies
October 2017: 8%
This compares to 14% BAME
representation in the UK population8

Performance report
27
3.3 Ensuring UK has the right regulatory
frameworks
The Department published a consumer Green
Paper in April 2018 to help consumers benefit
from strong protections and competitive markets.
These include allowing tougher action against
companies that break consumer law, developing
proposals to protect consumers from facing
unexpected payments when a subscription is
renewed or when a free trial ends and making
terms and conditions clearer, simpler and shorter.
We continue to support small businesses and
have been focusing on the issue of late payments.
The total overall late payment debt to small and
medium-size businesses is currently £14.2 billion
and an estimated 50,000 businesses fail every
year due to delays being paid what they are owed.
We have been working with partners across
government and industry to create a culture where
prompt payment is the norm and not the exception.
From April 2017, large businesses must provide
information to the government on their typical
payment terms and policies and how well they
meet them. Businesses will be able to use this
data to make better informed decisions about
who they work with.
In December 2017 we launched the role of the
Small Business Commissioner, which was taken
up by Paul Uppal. The Commission will provide
information about how to avoid and resolve
payment issues. It will also consider complaints
from small businesses, allowing them to
challenge poor practice without taking the more
drastic step of legal action.
Following the General Election in June 2017,
the Business Impact Target to achieve £10 billion
of regulatory savings by 2020 (the expected end
of the Parliament) was closed, with a replacement
target being introduced. Pro-rata the target for
the last Parliament was £4 billion. A final report
on target delivery is expected this summer.
3.4 Safeguarding UK interests in investments
in national infrastructure
In October 2017, we launched a consultation on
a review of National Security and Infrastructure
Investment. Earlier this year, Parliament agreed
to our proposed amendments to the Enterprise
Act 2002. As a result, our powers to intervene
into mergers which may raise national security
concerns has been expanded.
Part two of the consultation on the longer-term
reforms closed on 9 January 2018. We are now
considering the responses received and will lay
out plans for long-term reform shortly.
In December 2017 BEIS announced £370 million
of funding to secure the future of the UK’s Post
Office network. The investment will help maintain
and modernise the Post Office network so it
can continue to provide essential services to its
17 million customers across the UK, and introduce
changes including extending opening hours and
cutting queue times.
Published figures reveal the network has grown
for the second year running with 99.7% of people
living within three miles of their local post office
and number of rural branches rising to 6,185.
Delivering on our objective to promote competitive
markets, BEIS has worked with the Post Office
to extend the availability of banking services
to SMEs and 95% of small business customers
can now access day-to-day banking services
in branch.

Annual report and accounts 2017-18
28
4. Ensuring the UK has a reliable,
low-cost and clean energy system
4.1 Ensure our energy system is reliable
and secure91011
We have successfully improved our security
of supply through 2017-18. Loss of Load
Expectation (LOLE) is used to measure security
of the electricity supply. It is the expected amount
of time per year that the electricity supply cannot
meet demand, when National Grid may need
to use back-up balancing tools. The lower the
LOLE, the more secure the electricity system,
and the Government has a legal target to not
exceed 3 hours.
Security of electricity measured
by Loss of Load Expenditure (LOLE)
2017-18 LOLE: 0.01 hours
2015-16 LOLE: 0.5 hours
This is the time that the National Grid forecast
they may need to use balancing tools in the
electricity supply9
We also have a very high level of gas security.
Gas system capacity is measured on how the
system would cope – indicating what percentage
of demand could be met – if it lost its largest
single piece of infrastructure (the ‘N-1’ indicator).
Gas system capacity
Percentage of demand that could be met if
largest piece of gas infrastructure failed, in a
severely cold winter:
2016: 127%
2015: 112%10
9
https://www.nationalgrid.com/sites/default/files/documents/Winter%20Outlook%202017.pdf
10
https://www.gov.uk/government/publications/statutory-security-of-supply-report-2017
11
This is a 17% increase from the previous quarter, and a 71% increase on the number of meters in operation as at
31 December 2016. https://www.gov.uk/government/statistics/statistical-release-and-data-smart-meters-great-brit-
ain-quarter-4-2017
4.2 Deliver affordable energy for households
and businesses
This year saw significant steps taken to cut the
cost of energy to consumers and to further
improve clean growth.
The Domestic Gas and Electricity (Tariff Cap)
Bill, introduced to Parliament in February
2018, will put in place a requirement on the
independent regulator, Ofgem, to cap energy
tariffs until 2020, with the possibility of it
being extended to 2023 if necessary. It will
mean an absolute cap can be set on poor
value tariffs, protecting 11 million households.
The Government intends Ofgem to be able to
set the temporary price cap by the end of 2018
so that it is in place for next winter.
The Bill is part of a package of measures
being introduced by government to increase
competition in the retail energy market and lower
prices for consumers, including the rollout of
smart meters in every household and initiatives
to promote smarter and faster switching.
Number of smart and advanced meters
operating in homes and businesses across
Great Britain
March 2018: 11.06 million
March 2017: 6.78 million
March 2016: 3.6 million11
4.3 Climate change and low-cost
decarbonisation
Over the past 25 years the UK has been among
the most successful countries in the developed
world in growing our economy while reducing
emissions. Since 1990, we have reduced
emissions faster than any other G7 nation,
while leading the G7 group of countries in growth
in national income over this period.

Performance report
29
12
2016 Final estimates of UK greenhouse gas emissions 1990-2016; release schedule: annual.
The Clean Growth Strategy, published in October
2017, outlined the Government’s commitment to
continue that progress. We project that we will
outperform against our second and third carbon
budgets, covering the years 2013 to 2022, by
almost 5% and 4% respectively. Our economy
is expected to grow by 12% over that time.
Wind and solar generation overtook nuclear in
Q4 2017 to be the UK’s second highest source
of electricity for the first time. This was due to
increased wind and solar capacity and higher
wind speeds in Q4 2017, combined with lower
nuclear generation.
Annual greenhouse gas emission reporting
against carbon budgets
2016 total greenhouse gas emissions:
468 MtCO2e.
The UK was on track to meet
the Second Carbon Budget
(2,782 MtCO2e in 2013-17)12
4.4 Manage our energy legacy safely
and responsibly12
The Department has worked closely with the
Nuclear Decommissioning Authority (NDA)
and UK Government Investments (UKGI) to
improve governance and reporting of the NDA’s
activities. The NDA business plan covers 113
targets encompassing site restoration, spent
fuels, integrated waste management, business
optimisation and critical enablers. Progress as
at end of September 2017 is summarised below.

Target complete – 4

On target – 88

Behind target with possibility
of recovery – 13

Behind target – 5

Deferred – 3
https://www.gov.uk/government/publications/nda-mid-
year-performance-report-quarter-2-status-for-2017-18
Following an announcement in March 2017,
Steve Holliday, the former Chief Executive of
National Grid, is leading an independent inquiry
into the procurement, litigation, settlement and
termination of the Magnox contract. The Inquiry
delivered its initial findings in October 2017 and
has since continued to pursue additional avenues
of inquiry.
Our Department also sponsors the Coal
Authority to manage the £4.3 billion long-term
mining legacy and to regulate the coal industry.
We also sponsor the Oil and Gas Authority,
who are charged with revitalising exploration,
improving stewardship and promoting investment
in the UK Continental Shelf.
UK GDP +67%
G7 GDP +61%
G7 emissions
-3% (1990-2015)
UK emissions
-42%
20
40
60
80
100
120
140
160
180
1990
1995
Index (1990 = 100)
2000
2005
2010
2015
0
20
40
60
80
100
120

Annual report and accounts 2017-18
30
5. Building a flexible, innovative,
collaborative and business
facing Department
5.1 People Strategy
In conjunction with business planning processes
the Department has developed and implemented
a revised Strategic Workforce Plan to identify
the size, shape and strategic delivery framework
that will be required for future years. This has
been adapted to include planning rounds for
EU Exit resource across BEIS and has been
used alongside the People Plan to provide
the overarching framework for other key
HR strategies.
The Department has also improved
organisational and individual capability and talent
development through a learning and talent offer
that provides opportunities for all our people
to develop knowledge and skills in priority areas.
This was supported by a focus on developing
expertise across the professions and in the
strong leadership and management required
to meet our organisational objectives.
We have also focused on our understanding of
business by developing a learning offer that will
provide a foundation on how businesses work,
their priorities and how they interact with BEIS,
its agencies and wider government as well as
supporting deeper specialist learning for more
experienced teams. To encourage innovation
and create an innovative environment, we will
roll out a workshop to provide our senior civil
servants and selected teams with high quality
tools and techniques.
5.2 Enabling digital, data and technology
Throughout the year BEIS has worked to identify
a new operating model for its digital services
that achieves a balance between the use of in-
house teams that can make the strategic links of
projects across the digital portfolio and the use
of external resource where there is a short-term
need for specific skills or to tackle a higher than
usual workload.
5.3 Deliver a workspace that supports and
enables BEIS to deliver its objectives
The Department has worked closely with the
Government Property Agency (GPA) and is one
of the first departments to transfer significant
elements of its asset management to the GPA.
We have developed an asset management
approach that will ensure the BEIS estate meets
the needs of the Department whilst contributing
to Government’s wider aims for its property
portfolio. This has involved a significant number
of movements of teams into and out of 1 Victoria
Street to ensure that we can accommodate
the core Department while also enabling us to
improve efficient usage of space.
5.4 Using resources efficiently to deliver
ministers’ strategic priorities
As well as improvements to departmental
workforce strategy and improved prioritisation
through our business planning round the
department has sought to improve the efficient
use of those people in key professions. HR and
the leads for government professions have
contributed to BEIS-wide resource planning and
have enabled the Department to better co-
ordinate the recruitment across key professions
such as Project Management, targeting new
arrivals to those areas with the greatest need.

Performance report
31
5.5 Building an exceptional department
In April 2017 BEIS completed its Transition
Programme, designed to bring the Department
together after the Machinery of Government
changes, and co-locate ex-DECC and BIS staff
in 1 Victoria Street.
At the same time, we launched the new
Transformation Programme to ensure we
are best equipped for the future – whatever
opportunities or challenges it may bring.
Transformation is about building on what we
do well and recognising where we can develop
– making sure BEIS is a great place to work,
where we’re able to deliver our objectives and
make a real-world impact.
The key focus was to embed a shared culture
in BEIS, help make BEIS a great place to work
including a new performance management
system and IT platform rollout, and improve the
way we work with our partner organisations.
After a significant consultation exercise through
the summer and autumn, in December 2017,
BEIS launched its new sponsorship model
for working with our partner organisations.
The model is based on 4 key principles –
to improve engagement, promote assurance,
align strategically and foster talent. At the same
time, the BEIS partnership team has been
strengthened to deliver a common, consistent
and collective approach to the way we engage
with our partner organisations.
Following consultation to ensure that they
were representative of our people’s views,
we launched the ‘BEIS values’ and developed
the BEIS story as a tool to show how values and
delivery of our objectives fit together. This has
been reinforced regularly through the year,
including the use of regular team profile stories
that show how each area of the Department can
directly link their delivery to the achievement
of our strategic objectives.
Annual People Survey score on organisational
objectives and purpose index
Oct 2017: 75%
Oct 2016: 52%
The values were also embedded within the
departmental performance management system.
Objectives for the year had to reflect how the
individual would achieve their goals not just what
those goals were.
The organisation-wide consultation to develop
a new performance management approach
for 2018/2019 onwards received 1,250 survey
responses and over 300 colleagues attended
face-to-face sessions. Through consultation,
feedback and collaboration with networks,
employee volunteer groups and senior
stakeholders performance management
recommendations have been developed and
agreed ready for implementation in April 2018.
To support the successful implementation we
have produced a range of support materials and
to introduce the new performance management
framework we conducted 34 briefing sessions
for managers covering 6 regional areas
(London, Aberdeen, Cardiff, Leeds, Birmingham
and Teddington) and recorded a total attendance
of 1,246 staff.

Annual report and accounts 2017-18
32
Maximising investment opportunities
and bolstering UK interests
To do this, we will:
• promote the interests of UK businesses and
wider BEIS interests in EU and Euratom
Exit negotiations
• attract investment into the UK by identifying
innovative solutions to emerging trends
and challenges both in the UK and globally,
delivering on our vision for the future economy
• seize economic opportunities by providing
targeted promotion and support for investors
to increase investment into the UK
• improve resilience to economic shocks through
early identification and mitigate risk through
investigation of future trends and enhanced
business intelligence
• build the profile of the UK on the international
stage and ensure that our Industrial Strategy
is well understood globally and benefits from
the experience of our international partners
Looking ahead
Delivering an ambitious industrial strategy
To do this we will:
• deliver the government’s modern Industrial
Strategy which sets out a long-term plan to
boost the productivity and earning power of
people throughout the UK
• build a Britain fit for the future by focusing
on the five foundations of productivity: ideas,
people, infrastructure, business environment
and places
• establish an Independent Industrial Strategy
Council to develop measures of success and
evaluate the performance of the strategy
• work to increase investment in research and
development across the economy to 2.4%
of GDP by 2027, and work with industry to
develop a roadmap to meet this target
• support world leading sectors and launch
our Grand Challenges to put the UK at the
forefront of the industries of the future
• support businesses to start and grow,
driving productivity in businesses of all sizes
by increasing collaboration, building skills
and ensuring everyone has the opportunity of
‘good work’ and better, higher skilled jobs
• drive growth across the country by
working with the Ministry of Housing,
Communities and Local Government to
introduce Local Industrial Strategies and
further strengthen local leadership through
Local Enterprise Partnerships and Mayoral
Combined Authorities

Performance report
33
Ensuring the UK has a reliable,
low-cost and clean energy system
To do this, we will:
• maximise the advantages for UK industry
from the global shift to clean growth through
the new Clean Growth Grand Challenge,
and taking action on climate change
• ensure we maintain adequate energy capacity,
for example through the annual operation of
the capacity market, to guarantee that we can
cope with unexpected peaks in demand and
enable a reliable supply of electricity and gas
• deliver affordable energy for households and
businesses, including by ensuring that every
household and small business in the country
has been offered a smart meter by the end
of 2020
• deliver safe, cost effective and environmentally
sensitive decommissioning of offshore oil
and gas infrastructure in the North Sea, while
making sure that the UK benefits from the job
opportunities this will create
• work with and through the Nuclear
Decommissioning Authority to develop and
deliver a robust plan for safe, cost effective,
environmentally sensitive decommissioning
of our civil nuclear waste through a geological
disposal facility, creating jobs and opportunities
for UK companies in the supply chain
Promoting competitive markets
and responsible business practices
To do this, we will:
• ensure businesses are run responsibly and
transparently, including by encouraging
companies to adopt best practice in corporate
reporting and responsibility as well as good
business practice
• promote fairness in the labour market,
improved working conditions and
greater earning power for all, and build
on the recommendations of the
Matthew Taylor Review
• ensure the UK has the right regulatory
frameworks to help meet business and
consumer needs
• safeguard UK interests in investments in
national infrastructure
• reform regulatory approaches to support
innovation and productivity, including by
establishing a new £10 million Regulators’
Pioneer Fund to help regulators to develop
innovative approaches aimed at getting new
products and services to market

Annual report and accounts 2017-18
34
Building a flexible, innovative, collaborative
and business facing Department
To do this, we will:
• elevate BEIS from a well-functioning
department to an exceptional one which
delivers for business on our strategic priorities
in relation to the Industrial Strategy, EU exit,
and clean growth
• deliver our people strategy to provide the
capability to achieve our objectives, improving
organisational and individual capability and
talent development through a learning and
talent offer that provides opportunities for all
our people to develop knowledge and skills
in priority areas
• enable digital, data and technology to deliver
exceptional services for our staff as well as
the people and businesses we serve
• ensure good knowledge and information
management supports our policy making,
and that we handle and protect information
responsibly
• provide estate, support services and
security that enable our ministers,
policy teams, and partner organisations
to deliver their objectives

Performance report
35
United Nations sustainable development goals
The Sustainable Development Goals (SDGs) are the current global goals for 2016 – 2030 adopted
by UN member states. They include 17 global goals, 169 targets and 231 indicators. The UK
government played a key role in the negotiations. UK Government departments are required to look
within their single department plans to identify policies and programmes that will support the delivery
of the SDGs.
Sustainable
development goal
BEIS delivery area
Progress in 2017-18
Goal 1
End poverty in all its forms
3.2 Promoting fairness in the labour market
Department outlined its Good Work Plan through
which millions of flexible workers will receive new rights
and increasing the National Living Wage to 57% of
median earnings.
Goal 7
Ensure access to affordable,
reliable, sustainable and
modern energy for all
4.2 Delivering affordable energy for households
and businesses
The Domestic Gas and Electricity (Tariff Cap) Bill was
introduced which enables Ofgem to put an absolute cap
on poor value tariffs, protecting 11 million households.
As at 31 December 2017, there were 10.04 million smart
and advanced meters operating across homes and
businesses in Great Britain.
4.3 Climate change and low-cost decarbonisation
UK emissions in 2017 were provisionally estimated to
be 43% lower than in 1990 and 3% lower than 2017,
at 456 MtCO2e. The Clean Growth Strategy, published in
October 2017, outlined the Government’s commitment to
continue progress.
Goal 8
Promote sustained, inclusive
and sustainable economic
growth, full and productive
employment and decent
work for all
1.5 Drive growth across the country
Improved support to local businesses and supporting
local economic development through initiatives such
as Growth Hubs, city region mayors, Local Enterprise
Partnerships, the Northern Powerhouse and the
Midlands Engine.
1.2 Investing in science, research and innovation
The Autumn Budget 2017 announced a further £2.3 billion
for investment in research and development, and an
increase in the main research and development tax credit,
up to 12%.
1.3 Support world leading sectors
Delivery of the Industrial Strategy through a range of
Grand Challenges that will fund research, development
and scale up to production in key areas of the economy.
1.4 Supporting businesses to start and grow
Launching new funds to invest directly in UK businesses,
to help leverage additional private investment or to
strengthen the role of those that oversee UK markets to
ensure a fair playing field.
Goal 9
Build resilient infrastructure,
promote inclusive and
sustainable industrialization
and foster innovation
1.2 Investing in science, research and innovation
Royal Assent of the Higher Education and Research Act
enabling major reforms to the research and innovation
landscape, and creating the single body, UK Research
and Innovation (UKRI) to act as the strategic centre of the
UK’s research and innovation funding system.

Annual report and accounts 2017-18
36
Sustainable
development goal
BEIS delivery area
Progress in 2017-18
Goal 11
Make cities and human
settlements inclusive, safe,
resilient and sustainable
1.4 Supporting businesses to start and grow
Allocated funds to the Competition and Markets Authority
so that it can take on more cases against companies that
are acting unfairly and extending The National Productivity
Investment Fund and the Enterprise Finance Guarantee
which provides loans to smaller businesses.
Goal 12
Ensure sustainable
consumption and
production patterns
4.1 Ensuring that our energy system is reliable
and secure
Improved security of electricity supply measured through
the Loss of Load Expectation (LOLE), and high security
of the gas system capacity measured through the
‘N‑1’ indicator.
Goal 13
Take urgent action to
combat climate change
and its impacts
4.3 Taking action on climate change and
decarbonisation
Continue to support the UK Climate Change Act through
the Clean Growth Strategy and continued reduction in
UK emissions.
Goal 16
Promote peaceful and
inclusive societies for
sustainable development,
provide access to justice
for all and build effective,
accountable and inclusive
institutions at all levels
4.2 Delivering affordable energy for households
and businesses
Cutting the cost of energy to consumers through the
Domestic Gas and Electricity (Tariff Cap) Bill and further
improving clean growth.
Anti-bribery and anti-corruption
There is active and ongoing commitment from
senior management to counter bribery and
corruption and a policy of zero tolerance which
is communicated throughout the organisation.
BEIS has adopted a risk-based approach to
managing bribery and corruption which helps
to identify and rightly focus efforts to the areas
of highest risk within the business. We are
developing an operating model for countering
fraud bribery and corruption which will further
provide the necessary skills, capabilities and
support to manage these risks effectively within
BEIS and its partner organisations.
There were no identified cases of bribery or
corruption within BEIS this year. Nonetheless,
we will continue to raise staff awareness of good
practice to avoid any complacency.

Performance report
37
Sustainability report
Our department is committed to sustainability
in the way we make policy, procure goods
and services. We are also committed to
environmental sustainability. As part of the
Government Greening Commitments (GGC),
we report on our greenhouse gas (GHG)
emissions, water use, paper use and waste.
Policy development
Rural proofing
Our Industrial Strategy policy outlines
government plans to increase productivity and
economic growth – this is across every part
of the country. It covers issues in rural areas,
including a shortage of work premises, slow
internet connections and a lack of knowledge
transfer between business communities spread
across wide areas. Rural proofing is built into our
impact assessments.
Climate change adaptation
Climate change adaptation refers to adapting
to the consequences of climate change,
recognising that some of those consequences
are unavoidable. We contribute to the cross-
government National Adaptation Plan, published
every 5 years. The plan sets out how risks
of extreme weather events will be managed
(e.g. flood resilience measures) in relation to
communities, the built environment, businesses
and local government.
Sustainable procurement
Suppliers
We use Crown Commercial Service framework
to procure goods and services. The procurement
service keeps its policies under regular review.
It also works with its partners individually to
ensure sustainability goals are achieved.
Engagement with small and medium
enterprises (SMEs)
We continue to introduce new measures to
improve SME engagement. In 2017-18, the share
of procurement made directly with SMEs was
28.4%. Of this the core department share was
20.8%. We are committed to meeting the cross-
government target of 33% directly and through
the supply chain by the end of 2022.
Prompt payments:
We comply with the prompt payment code from
the Institute of Credit Management. Whilst our
standard terms and conditions specify payment
within 30 days of receipt, we aim to make
payments within 5 working days. In 2017-18,
for the core department, 99.3% of undisputed
invoices were paid with 30 days (2016-17:
99.4%) and 97.1% of undisputed invoices were
paid within 5 working days (2016-17: 96.3%).
The proportion of the aggregate amount owed to
trade creditors at year-end, compared with the
aggregate amount invoiced by suppliers during
the financial year, in terms of creditor days,
equaled less than one day.

Annual report and accounts 2017-18
38
Environmental sustainability
Greenhouse gas emissions
We have created a Green Guardians network
for BEIS. The network monitors our energy
consumption and recycling and engages
staff in initiatives to promote sustainability
in the home.
Water and paper
We recently received accreditation to ISO
50001 (energy efficiency) and ISO1400
(waste management). We will be reviewed
annually against these standards and we
will seek continuous improvement in both.
We have a closed paper cycle whereby all
paper is recycled for reuse.
Waste
We have installed bins for recycling a variety
of materials.
Food and catering
We are committed to sustainable (and where
possible British) food products.
Sustainable construction
We have had no new builds or major
refurbishments in the last year. We worked
with the shadow Government Property
Agency to ensure any construction work
prioritises sustainability, and reaches the
government buying standard for construction.
Biodiversity and the natural environment
The department has no significant impact on
biodiversity. However, site licence companies
managing NDA nuclear sites are contractually
required to have suitable biodiversity action
plans in place.
Progress on Greening Government Commitments1
Targets by 2019 -2020 compared to 2009 -10 baseline
Progress in 2017-18 compared to 2009 -10 baseline
Total GHG emissions: reduce by 32%2

53%
Domestic flights: reduce by 30%

67%
Vol. of water used: reduce generally

61%
Reams of paper procured: reduce by 50%

86%
Total non-hazardous waste generated: reduce generally

67%
Waste to landfill: reduce proportion to 10%
11.7% in 2017-18
Waste recycled/reused: increase generally

17%
Notes
1.
These are provisional figures. Actual figures to be confirmed in the Greening Government Commitments
Annual Report 2017-18.
2.
As we outlined in the Clean Growth Strategy, we are currently working with departments to agree higher targets
for 2020 and actions to further reduce greenhouse gas emissions beyond this date. We will publish the new
targets shortly.

Performance report
39
Greening Government Commitments: data1,2
GHG
2017-18
2016-17
2009-10
Non-financial indicators
Gross emissions scope 1 (direct)
(tonnes CO2e)
8,007
6,109
17,837
Gross emissions scope 2 & 3
(indirect) (tonnes CO2e)
22,325
25,480
46,507
Total emissions – scope 1, 2 & 3
(tonnes CO2e)
30,332
31,589
64,344
Related energy
consumption
Electricity: non-renewable (MWh)
29,221,350
30,360,293
45,323,891
Electricity: renewable (MWh)
17,428,973
19,540,688
38,675,792
Gas (MWh)
36,185,503
29,071,359
62,905,227
District heating (MWh)
149,220
124,776
–
Other heat (MWh)
6,824,394
2,664,381
9,865,113
Total energy consumption (MWh)
89,809,439
81,761,497
156,770,023
Financial indicators
Expenditure on energy (£000s)
6,755
6,467
n/a
CRC licence expenditure (£000s)
598
497
n/a
Expenditure on official business
travel (£000s)
7,559
11,660
n/a
Total expenditure on energy
and business travel (£000s)
14,912
18,624
n/a
Travel
2017-18
2016-17
2009-10
Non-financial indicators
Number of domestic flights
(tonnes CO2e)
2,689
5,125
8,078
Water
2017-18
2016-17
2009-10
Non-financial indicators
Water consumption (m3)
110,457
126,468
283,495
Financial indicators
Water supply & sewage costs (£000s)
325
329
n/a
Waste
2017-18
2016-17
2009-10
Non-financial
indicators
Total waste
2,468
2,159
7,541
Non-hazardous waste
Landfill
289
197
2,986
Reused/recycled
1,779
1,775
4,107
Composted/
biodigestion
49
60
25
Total ICT waste
Reused
–
–
7
Recycled
11
51
2
Incinerated/energy from waste
389
181
448
Reams of paper procured
61,825
97,893
441,134
Financial indicators
Total disposal cost
468
432
n/a
Note
1.
These are provisional figures. Actual figures
to be confirmed in the Greening Government
Commitments Annual Report 2017-18.
2.
Entities include: i. BEIS core Department,
ii. Companies House, iii. Ordnance Survey,
iv. Insolvency Service, v. Intellectual Property Office,
vi. Land Registry, and vii. Natural Environment
Research Council.
Alex Chisholm
Permanent Secretary and
Principal Accounting Officer
3 July 2018

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Accountability
Report

Accountability report
41
Under the Government Resources and Accounts
Act 2000 (the GRAA), HM Treasury has directed
the Department for Business, Energy and
Industrial Strategy to prepare, for each
financial year, consolidated resource accounts
detailing the resources acquired, held or
disposed of, and the use of resources during the
year by the Department (inclusive of its executive
agencies), and its sponsored non-departmental
and other arm’s-length public bodies. These
other bodies are designated by order made
under the GRAA by Statutory Instrument 2017
no 1256 (together known as the ‘Departmental
group’, consisting of the Department and
sponsored bodies listed at note 27 to the
accounts). The accounts are prepared on an
accruals basis and must give a true and fair
view of the state of affairs of the Department
and the Departmental group, and of the net
resource outturn, application of resources,
changes in taxpayers’ equity and cash flows of
the Departmental group for the financial year.
In preparing the accounts, the Accounting
Officer of the Department is required
to comply with the requirements of
Government Financial Reporting Manual
and in particular to:
• observe the Accounts Direction issued by the
Treasury, including the relevant accounting and
disclosure requirements, and apply suitable
accounting policies on a consistent basis
• ensure that the Department has in place
appropriate and reliable systems and
procedures to carry out the consolidation
process
• make judgements and estimates on a
reasonable basis, including those judgements
involved in consolidating the accounting
information provided by non-departmental
and other arm’s-length public bodies
• state whether applicable accounting
standards as set out in the Government
Financial Reporting Manual have been
followed, and disclose and explain any
material departures in the accounts
• prepare the accounts on a going
concern basis
HM Treasury has appointed the Permanent
Head of the Department as Accounting
Officer. The Accounting Officer 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 non‑departmental or other arm’s length
public body for which the Accounting Officer
is responsible, are set out in Managing Public
Money published by HM Treasury.
Accounting Officer’s confirmation:
I have taken all the steps I ought to have
taken to make myself aware of any relevant
audit information and to establish that the
Department’s auditors are aware of that
information. The annual report and accounts
is fair, balanced and understandable. I take
personal responsibility for the annual report
and accounts and the judgements required
for determining that it is fair, balanced and
understandable.
Alex Chisholm
Permanent Secretary and
Principal Accounting Officer
3 July 2018
Statement of Accounting
Officer’s responsibilities

Annual report and accounts 2017-18
42
Directors’ report: financial review
Expenditure
How expenditure is presented
The Department’s expenditure is reported on two
different bases in this Annual Report and Accounts:
• The Statement of Comprehensive
Net Expenditure (page 123) presents
net expenditure of £86.5 billion for our
Departmental Group and £12.7 billion
for the core Department and agencies.
This expenditure is calculated following
accounting standards and guidance which are
explained in more detail in note 1.1 (page 132)
and on a similar basis to those rules generally
applied by private sector businesses.
• The Statement of Parliamentary Supply
(page 102) presents a total expenditure for
our Departmental Group of £86.1 billion and
compares this with the budget presented to
Parliament of £97.8 billion. These figures are
calculated in accordance with HM Treasury’s
Consolidated Budgeting Guidance, which
differs in several respects with the accounting
basis above. An overview of HM Treasury’s
budget framework, including the terms used
for different types of expenditure, is included
in the box on the right. The summaries
and explanations of key movements
below have been prepared on this basis,
except where stated otherwise.
An overview of our expenditure
The Total Managed Expenditure (TME) of the
departmental group was £86.1 billion, broken
down by HM Treasury’s spending categories as
set out in the table below.
2017-18
outturn
2017-18
budget
2016-17
outturn
£m
£m
£m
TME
86,112
97,754
16,343
– Resource DEL
1,720
2,002
1,945
– Capital DEL
10,465
10,856
10,849
Total DEL1
12,185
12,858
12,794
– Resource AME
75,124
85,746
3,564
– Capital AME
(1,197)
(850)
(15)
Total AME
73,927
84,896
3,549
1.
This expenditure is analysed in ‘Where we spent our
money’ on page 16.
Our Budget Framework
HM Treasury sets the overall budgetary
framework for government spending.
The total amount the department spends
is referred to as its TME, Total Managed
Expenditure. Budgets are classified
as either AME: Annually Managed
Expenditure; or DEL: Departmental
Expenditure Limit.
AME budgets are volatile or demand-led in
a way that the department cannot control.
HM Treasury do not set firm AME budgets
in spending reviews, but the department
monitors AME forecasts closely and these
are updated annually.
DEL budgets are understood and
controllable. HM Treasury set firm limits for
each type of DEL budget. This is done at
spending reviews which occur every 3 to 5
years. DEL budgets are divided into RDEL:
resource spend and CDEL: capital spend.
The RDEL budget is further split into:
• programme’ budgets for direct frontline
service provision
• ‘administration’ budgets for the running
costs of the department such as back-
office staff, rent and IT
The CDEL budget is further split into:
• ‘financial transactions’ for loans given
or shares purchased
• ‘general capital’ for spending on all other
assets or investments
Programme
RDEL
Admin
RDEL
General
capital
Financial
transactions
Resource
DEL
Capital
DEL
AME
DEL
TME

Accountability report
43
This does not represent cash spend.
The Departmental group’s performance in any
year is significantly impacted by accounting
‘fair value’ movements, most significantly
those included in the ‘Resource AME’ lines.
These accounting adjustments are referred to
as ‘non-cash’ and as such tend not to feature
in conventional descriptions of Departmental
‘spending’ of the kind shown in the Performance
Report. The largest movements are driven
by changes in discount rates which have a
highly material impact on the value of nuclear
decommissioning and other provisions. The main
categories of spend and variations in expenditure
against budget and the prior year are explained
in further detail below.
Comparison of expenditure to prior years
Our key areas of net expenditure for the last 3 years are shown in the table below.
2017-18
2016-17
2015-16
£m
£m
£m
NDA
73,218
5,082
92,066
Science and research
6,740
6,374
6,248
Contracts for Difference
3,558
(273)
10,122
Innovate UK
973
801
735
Coal Authority
1,545
34
1,936
Green Investment Bank
24
845
308
Renewable Heat Incentive
687
545
372
International Climate Finance
330
333
319
Post Office Limited
140
220
280
Green Investment Bank sale receipts
(1,621)
–
–
Other
518
2,383
1,146
Total
86,112
16,344
113,532
While spending on areas such as Science and
Research and International Climate Finance
remains broadly consistent, there are 3 categories
where expenditure shows a high variation in the
current year. All of these are driven by accounting
fair value movements to assets and liabilities,
rather than in-year cash or other expenditure.
These amounts can be volatile in years when
inputs underlying accounting estimates, such as
discount rates, are changed. These are explained
in detail in the review of the Statement of Financial
Position on the following pages as follows:
Nuclear Decommissioning Authority (NDA)
In addition to expenditure incurred in the period,
changes to the discount rate assumption have
increased the provision values and resulted
in a significant expense. A full explanation of
the reasons behind this is set out in (a) Impact
on changes in discount rate (page 46) and (b)
Nuclear Decommissioning Authority provisions
(page 48). In the current year the change in
discount rate alone accounted for an expense of
£71.0 billion (see also Financial Statements notes
4.3 and 19.1).
Coal Authority
The Authority has long-term future liabilities
arising from its responsibilities arising from the
ownership of abandoned coal mines. These
are again highly sensitive to movements in
discount rates, with an impact of £1.5 billion in
the year (see also Financial Statements notes 4.3
and 19.2).
Contracts for Difference (CfD)
Fair value movements of £3.7 billion have been
driven by changes to inflation and forecast price
inputs into the valuation model. This is further
explained in (c) Contracts for Difference (page 49)
and Financial Statements note 9.

Annual report and accounts 2017-18
44
Comparison of outturn to budget
The table below summarises the outturn of the
Total Managed Expenditure of our Departmental
group, in comparison with the budgets agreed
by Parliament.
Outturn
Budget
Variance
£m
£m
£m
%
TME
86,112
97,754
11,642
11.9
– Resource DEL
1,720
2,002
282
14.1
– Capital DEL
10,465
10,856
391
3.6
Total DEL
12,185
12,858
673
5.2
– Resource AME
75,124
85,746
10,622
12.4
– Capital AME
(1,197)
(850)
347
40.8
Total AME
73,927
84,896
10,969
12.9
Explanations for the key variances from budget
are as follows, split by budget line headings from
the Statement of Parliamentary Supply.
Total Managed Expenditure (TME)
Our TME budget was £97.8 billion; against this
the department had an outturn of £86.1 billion.
The difference of £11.7 billion resulted from
lower than budgeted AME expenditure,
mainly accounting valuation adjustments as
explained below.
Resource DEL
The Estimate was £2 billion. Outturn against the
adjusted Estimate was £1.7 billion. The department
spent less than budget by £282 million due to
a mixture of underspends across various areas
and organisations. The significant components
include £84 million of programme contingency
and centrally held budget which were not required
and could not be spent elsewhere due to their
ringfenced nature. Also there were £27 million
of additional receipts from British Business Bank
and Green Investment Bank.
Capital DEL
The Estimate was £10.9 billion. The capital DEL
outturn was £391 million lower than budget.
A significant proportion of the underspends
is attributed to limited capital calls by financial
institutions under the Enterprise Financial
Guarantees schemes operated by the British
Business Bank on behalf of the Department.
The extent of annual capital calls is not wholly
predictable, as it is intrinsically linked to the
financing needs of the underlying business.
Resource AME
The Estimate was £85.7 billion, and outturn was
£75.1 billion. The majority of our resource AME
costs in 2017-18 relate to:
i. increases to the NDA nuclear provision
(£72.9 billion) and Coal Authority provision
(£1.5 billion), largely arising from changes
to the long-term discount rate used for
provisions. The underspend of £4.4 billion
compared to the budget, which reflects the
estimate uncertainty when budgeting for
these provisions, represents less than 6% of
the total increase
ii. increases in CfD liabilities (£3.6 billion).
This was £5.3 billion lower than budgeted due
to higher than expected wholesale electricity
price projections, which translates into lower
CfD costs for the Department
Capital AME
The £347 million underspend on capital AME
is almost entirely due to lower than expected
demand by Post Office Limited for working
capital funding.
Our charging policy
Our core Department provides only a limited
number of services for which it charges fees.
Any such fees are set to comply with the cost
allocation and charging requirements set out
in HM Treasury and Office of Public Sector
Information guidance.
The Insolvency Service sets its fees to recover
costs. It has a range of fees covering three areas:
• case administration, where fees reflect the
average costs of administering bankruptcy
cases and compulsory company liquidation
cases and also the average cost of completing
debt relief orders
• insolvency practitioner regulation, where fees
include the cost of authorising and monitoring
insolvency practitioners and registering
individual voluntary arrangements
• estate accounting, where fees reflect the cost
of financial transactions on insolvency cases
using the Insolvency Service account

Accountability report
45
Details of charging policies relating to partner
organisations may be found in their respective
published accounts.
Expenditure on Official Development
Assistance
Under agreed statistical reporting methodology,
expenditure on Official Development Assistance
(ODA) is reported on a calendar year and cash
basis. BEIS provided £769 million of ODA in 2017.
Provisional expenditure by DAC 5 sector code
3 digit
code
Sector
Provisional
2017 net ODA
(£,000)
111
Education, Level
Unspecified
13,221
113
Secondary Education
1,636
114
Post-Secondary Education
7,004
121
Health, General
83,804
122
Basic Health
204
151
Government and civil
Society-General
1,402
160
Other Social
Infrastructure and Services
507
210
Transport and storage
1,932
231
Energy Policy
19,520
232
Energy Generation,
Renewable Sources
15,229
250
Business and other
Services
266
311
Agriculture
60,871
312
Forestry
72,867
313
Fishing
1,175
321
Industry
11,877
410
General Environment
Protection
80,591
430
Other Multisector
387,624
910
Administrative Costs
of Donors
8,919
Total
768,649
Notes
1.
The split between different funds may not sum due
to rounding
2.
DAC 5 sector code: http://www.oecd.org/dac/stats/
purposecodessectorclassification.htm
3.
Further information on the Department’s ODA
expenditure in 2017 may be found in the publication
Provisional UK Official Development Assistance as
a Proportion of Gross National Income
available at: https://www.gov.uk/government/statistics/
statistics-on-international-development-provision-
al-uk-aid-spend-2017
In 2017 we delivered £326 million of climate and
energy related ODA. This includes £318 million
invested in international climate finance including:
• £123 million through large-scale multilateral
funds such as the Green Climate Fund
• £52 million in the UK Sustainable Infrastructure
Programme (SIP), a bilateral programme
delivered by the Inter-American Development
Bank (IDB). SIP will support countries in
‘greening’ their national infrastructure plans
in line with their Nationally Determined
Contributions (NDCs) under the Paris
Agreement
• £43 million in the REDD+ Early Movers
Programme, a results-based programme
for the most ambitious and committed efforts
to reduce emissions from deforestation
• £5 million on International Carbon, Capture &
Storage (CCUS). This will support developing
countries and emerging economies to develop
both the technical and institutional knowledge
necessary to enable CCUS deployment
In 2017 we delivered £443 million in research
and innovation related ODA expenditure,
including £102 million from the Newton Fund
and £181 million from the Global Challenges
Research Fund (GCRF). The latter became
operational as of April 2016. Our ODA funded
research and innovation covered a wide range of
social, economic and environmental challenges
facing developing countries, with an aim of
reducing poverty by generating and putting
into use knowledge and technology to address
development challenges. This includes: work
to introduce parasite resistant crops, support
sustainable land management practices in
East Africa, improve access to maternal health
care, inform policy-making on drugs policy in
Columbia, combat antimicrobial resistance and
improve access to affordable, clean energy.
This expenditure also contributes towards the
continued strengths of the UK’s research and
innovation system, and supports our wider
scientific, trade and diplomatic objectives as
a globally engaged nation.

Annual report and accounts 2017-18
46
Financial position
The significant increase in the Department’s net
liability position from the prior year is driven by
changes to discount rates and the impact of those
changes on nuclear decommissioning provisions.
The most significant assumptions and balances
underlying the Statement of Financial Position are:
(a) Impact of changes in discount rates; (b) Nuclear
Decommissioning Authority provisions; and (c)
Contracts for Difference. A fuller explanation of the
nature of these matters is set out below.
(a) Impact of changes on discount rates
Category
2017-18
2016-17
Rationale
Nuclear decommissioning
provisions
Short term < 5 years
-2.42%
-2.70%
Set by HM Treasury Public Expenditure
System (PES) Secretariat 11 Dec 2017
Medium-term 6-10 years
-1.85%
-1.95%
Long-term > 10 years
-1.56%
-0.80%
CfD financial instruments
Real rate (as contracts are in real terms)
+0.70%
+0.70%
As above
Coal pensions
Real rate + 3% RPI (as contractual
figures are in nominal values)
+3.70%
+3.70%
As above: financial instruments discount rate
(non-indexed)
Repayable Launch Investments
Higher of the implicit rate of return
or the financial instrument’s rate
+3.50%
+ RPI 2.45%
+3.50%
+ RPI 2.55%
Risk-free rate for government investment
appraisal set by HM Treasury Green Book,
adjusted for inflation
Some of our priorities carry obligations that are
very long-term and will involve expenditure over
decades to come. The eventual costs of these
long-term projects are uncertain but we are required
to present a single number in the annual accounts.
This single number is based on our best estimate
of costs, technology and other relevant factors,
adjusted to reflect the changing value of money
over time.
The worth of the Department’s future cash
flows are calculated at present value in accordance
with accounting standards. This present value
reflects the time value of money. The accounts
use a number of different discount rates
depending on the nature of the transaction and
the regulation applicable.
In the past, the time value of money has usually
been positive which means money could be
invested in the present for a return in the future that
would exceed the rate of inflation – this is known
as a positive ‘real’ return. Government bonds are
seen as a low risk form of investments. Usually,
therefore, government bonds bring a lower rate of
return than other investments. As bonds pay a fixed
cash amount when they mature, the higher the price
paid for the bonds now, the lower the rate of return
is considered to be. Following the global financial
crisis, demand for lower–risk investments increased,
particularly government bonds. As a result, the price
of government bonds rose. This has resulted in
government bonds providing a negative ‘real’ return.
The long-term discount rate has been negative
since 2015.
When negative discount rates are applied to the
Department’s long-term obligations, this has the
effect of significantly increasing the reported value
of the liabilities, even when the cash the Department
expects to pay has not changed. But not all rates
are negative. For investment appraisal government
continues to use positive rates, to ensure that
projects are correctly appraised and generate
future benefits. Our accounts use positive discount
rates to determine the present value of future
income generated from assets and investments.
When positive rates have been used to discount
future cash receipts, then the present value of
them is lower than the cash the department will
receive. The following tables sets out the specific
material balances in our accounts that have been
discounted. The impact of the discounting can be
assessed by comparing the discounted value with
the undiscounted value.

Accountability report
47
Impact on assets
Assets have been discounted at positive rates. For financial instruments
we are required to use the prescribed HM Treasury discount rate of 0.7%
real and 3.7% nominal, or the rate of return implicit in the contract if higher.
For the repayable launch investments, we assessed the implicit rate to be
3.5% plus RPI; 2017-18: RPI was 2.45% (2016-17: RPI was 2.55%) giving
an implicit rate of 5.95% (2016-17: 6.05%).
Category
2017-18
Discounted
assets
2017-18
Undiscounted
assets
2017-18
Impact of
discounting
2016-17
Discounted
assets
2016-17
Undiscounted
assets
2016-17
Impact of
discounting
£m
£m
£m
£m
£m
£m
Repayable launch
investments
1,047
1,540
(493)
1,205
1,836
(631)
Coal pensions
1,033
1,207
(174)
331
377
(46)
Impact on provisions
Both the Nuclear Decommissioning Authority and the Coal Authority have
long-term provisions relating to the expected future cost of managing the
energy legacy. The negative discount rates have increased the present
value of future cash flows significantly.
Category
2017-18
Discounted
liability
2017-18
Undiscounted
liability
2017-18
Impact of
discounting
2016-17
Discounted
liability
2016-17
Undiscounted
liability
2016-17
Impact of
discounting
£m
£m
£m
£m
£m
£m
NDA nuclear
provision
233,282
120,165
113,117
163,135
118,128
45,008
Coal Authority
provision
4,328
1,902
2,426
2,818
1,884
934
Impact on financial instruments
The fair value of the Contracts for Difference (CfD) obligation disclosed in
the accounts is adjusted using the 0.7% real term discount rate. Each year,
the fair value of the CfD is reassessed to reflect changes in the expected
cash payments that will be made over the life of the contracts, and then the
updated expected cash payments are discounted.
Category
2017-18
Discounted
liability
2017-18
Undiscounted
liability
2017-18
Impact of
discounting
2016-17
Discounted
liability
2016-17
Undiscounted
liability
2016-17
Impact of
discounting
£m
£m
£m
£m
£m
£m
CfD liability
39,201
41,603
(2,402)
31,413
33,388
(1,975)

Annual report and accounts 2017-18
48
(b) Nuclear Decommissioning
Authority provisions
NDA is responsible for 17 nuclear licensed sites
across the country, with a range of facilities
including former nuclear power stations,
research facilities and nuclear fuel fabrication and
reprocessing facilities. Some of these sites date
from the earliest days of nuclear power. Unlike
modern nuclear facilities, decommissioning of
these sites was not built into plans or designs.
Decommissioning of sites will take many
decades. In part, this is because plans often
include periods of ‘care and maintenance’,
where sites are made safe and put into an interim
state, allowing residual amounts of radioactive
material to decay over time. By doing this,
the final stages of decommissioning will be easier
and safer to complete.
NDA’s best estimate of the future costs of
the estate over the next 100+ years on an
undiscounted basis is £120.2 billion.
This figure is based on dealing with an assumed
inventory of materials with varied radiological
characteristics, and using the extant strategy for
retrieval and disposal of the resulting materials
over several decades. Each of these elements is
uncertain in its own right – the cost of developing
the necessary technology and plants to deal
with these activities is also uncertain. The quality
of the forecast becomes less certain the longer
the projection.
NDA has reviewed the methodologies used in
the calculation, taking into account HM Treasury
Green Book guidance and the need to remove
optimism bias. Projects like these could typically
have a range of estimates from -50% to +300%.
In light of uncertainties in the estimate, NDA
considers it prudent to present a credible range
of outcomes. The range presented for the current
year is for undiscounted costs of £97 billion to
£222 billion.
NDA provision: forecast undiscounted expenditure
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2017
2027
2037
2047
2057
2067
2077
2087
2097
2107
2117
2127
2137
Sellafield
Rest of programme
£ million

Accountability report
49
(c) Contracts for Difference
CfD are designed to incentivise investment
in a mix of low carbon electricity generation
technologies which will help the UK meet its
renewable and decarbonisation targets. CfDs do
this by agreeing with a generator a strike price for
electricity supplied, thereby providing certainty
needed for private investment, while protecting
consumers from having to continue to pay higher
support costs when electricity prices are high.
The support payments paid (or repaid) in future
will be calculated from the difference between
the strike price and the market reference price
prevailing at the time.
Low Carbon Contracts Company (LCCC)
Difference payments under the CfDs are funded
through a levy paid by licensed energy suppliers.
The LCCC is the company established by
Government to collect this levy, manage the CfDs
and pay or receive the contracted difference
payments. Currently the LCCC is managing all 56
recognised CfD contracts, following the novation
of the last biomass contract from the core
Department in December 2016.
Accounting for fair value (FV)
In order to comply with the relevant accounting
standards, the Department is required to
estimate the ‘fair value’ of future CfD payments.
Difference payments under CfDs can be positive
(an asset) or negative (a liability) and are currently
recognised as a liability. The matching asset
arising from the statutory obligation on suppliers
is not recognised under accounting standards.
The CfD liability figure is calculated using a model
that forecasts the rate of generation, expected
demand for electricity and electricity prices
over the term of the contract. The figures in the
financial statements represent management’s
best current estimate within a range of scenarios
and will be subject to change over time.
In accordance with accounting standards the
initial fair value of any contract is deferred i.e. not
recognised in the accounts. The total deferred
fair value of CfDs disclosed in the accounts was
£23.3 billion on 31 March 2018.
The CfD contract for Hinkley Point C was
signed in September 2016, but it has not been
recognised in the accounts for reasons explained
in note 9 to the accounts. The Department’s
best estimate of fair value at 31 March 2018 was
£36.6 billion.
The Department recognises all subsequent
movements of fair value on CfD contract
recognised in the accounts, whose cumulative
value was £39.2 billion by 31 March 2018,
through the Statement of Comprehensive Net
Expenditure; and recognises a liability, which
was £15.9 billion as at 31 March 2018, on the
Statement of Financial Position. The movements
in year are presented in the tables below.
Further details on the CfDs can be found in note
9 on page 156.
Movements in fair value of CfDs
recognised in the Accounts
2017-18
2016-17
£ bn
£ bn
1 April
31.4
30.6
Changes in FV on
existing contracts
3.7
(0.8)
Additions
4.6
–
CfD reinstated
–
1.7
Payments made for generation
(0.5)
(0.1)
31 March
39.2
31.4
Effect on the Statement of Financial Position
2017-18
2016-17
£ bn
£ bn
1 April
12.3
12.6
Changes in FV on existing
recognised contracts
3.7
(0.8)
Reinstatement of CfDs
–
0.6
Payments made for
generations
(0.5)
(0.1)
Deferred difference
recognised
0.4
–
31 March
15.9
12.3

Annual report and accounts 2017-18
50
Biographies: Ministers
The Rt Hon Greg Clark MP
Secretary of State for Business,
Energy & Industrial Strategy
Greg Clark was appointed Secretary of State
for Business, Energy and Industrial Strategy
on 14 July 2016. Prior to this Greg served as
Secretary of State for Communities and Local
Government from May 2015. He was elected
Conservative MP for Royal Tunbridge Wells in
2005. Before entering politics, Greg worked for
the Boston Consulting Group, one of the world’s
top business strategy firms. He was posted to
the USA, Mexico, South America and Iceland,
as well as working for clients in the UK. He was
also Head of Commercial Policy at the BBC.
The Rt Hon Claire Perry MP
Minister of State for Energy and Clean Growth
Claire Perry was appointed Minister of State at the
Department for Business, Energy and Industrial
Strategy on 12 June 2017. She was elected
Conservative MP for Devizes in 2010. During her
political career Claire has been a member of the
Justice Select Committee, a Government Whip
and Parliamentary Under Secretary of State for
Transport from 2014 to 2016. Claire was educated
at Nailsea Comprehensive School, Oxford
University, and Harvard Business School where
she received a MBA. She has worked for Bank
of America, McKinsey and Company, and Credit
Suisse before starting her own small business
offering online financial advice to women.
Richard Harrington MP
Parliamentary Under Secretary of State,
Minister for Business and Industry
Richard Harrington was appointed Parliamentary
Under Secretary of State at the Department
for Business, Energy and Industrial Strategy
on 14 June 2017. He served as Parliamentary
Under Secretary of State at the Department for
Work and Pensions from 17 July 2016 to 14 June
2017. He was elected as Conservative MP for
Watford in May 2010. Richard attended Leeds
Grammar school and was awarded a scholarship
to Oxford University, studying law at Keble
College. His business career started with the
John Lewis Partnership and he eventually ran a
business, which at its peak had 2,000 employees
in 7 countries.
Sam Gyimah MP
Minister of State for Universities, Science,
Research and Innovation
Sam Gyimah was appointed as a joint Minister
at the Department for Business, Energy and
Industrial Strategy and the Department for
Education on 9 January 2018. He was elected
as Conservative MP for East Surrey in 2010.
Sam studied philosophy, politics and economics
at Somerville College, Oxford. Sam spent 5
years working for Goldman Sachs and then
went on to help build and develop a number of
small businesses in the training, recruitment and
internet sectors.
Andrew Griffiths MP
Parliamentary Under Secretary of State,
Minister for Small Business, Consumers
and Corporate Responsibility
Andrew Griffiths was appointed as a
Parliamentary Under Secretary of State at
the Department for Business, Energy and
Industrial Strategy on 9 January 2018. He was
a Government Whip (Lord Commissioner of
HM Treasury) from 17 July 2016 to 8 January
2018. He was elected Conservative MP for
Burton in May 2010.
The Rt Hon Lord Henley
Parliamentary Under Secretary of State
Lord Henley was appointed as a Parliamentary
Under Secretary of State at the Department
for Business, Energy and Industrial Strategy
on 27 October 2017. He was a Parliamentary
Under Secretary of State at the Department for
Work and Pensions from 21 December 2016 to
15 June 2017, and a Lord in Waiting (Government
Whip) from 21 November 2016 to 15 June 2017.
He is a Conservative member of the House
of Lords. He was educated at Clifton College,
Bristol and Durham University. He was called to
the Bar in 1977.
Directors’ report: departmental board
and our leadership team

Accountability report
51
Biographies: Executives
Alex Chisholm
Permanent Secretary
Alex Chisholm became Permanent Secretary
for the Department of Business, Energy and
Industrial Strategy in September 2016, having
previously served as Permanent Secretary for
DECC. Prior to this Alex was the Chief Executive
for the Competition and Markets Authority,
and before that, Commissioner and Chair at
ComReg, Ireland’s Communications Regulator.
Alex has held senior executive positions in the
media and technology sectors, including Pearson
plc, The Financial Times Group, and eCountries
Inc. He has an MA from Oxford and an MBA
from INSEAD.
Sam Beckett
Director General, EU Exit and Analysis
Sam has been Director General, EU Exit and
Analysis since April 2017. Prior to this she was
Director General for International, Growth and
Analysis. She has over 25 years’ experience
in BIS, the Cabinet Office and HM Treasury,
in roles spanning micro- and macro-economics,
strategy, policy and corporate services delivery.
Gareth Davies
Director General, Business and Science
Gareth Davies has been Director General,
Business and Science since December 2016.
Prior to this he was a Director General in BIS.
Over the last decade Gareth has worked in
Downing Street as the Prime Minister’s lead
adviser on welfare reform, been Head of the
Prime Minister’s Strategy Unit and was an
Executive Board member of both the Cabinet
Office and the Department for Innovation
Universities and Skills.
Sarah Harrison MBE
Director General, Corporate Services
Sarah Harrison became Director General,
Corporate Services in February 2018. Sarah
was the Chief Executive of the Gambling
Commission from October 2015. Prior to joining
the Commission, Sarah was at the UK energy
regulator, Ofgem, where she was an Executive
Board member and held a number of senior roles.
Before that Sarah was the first Chief Executive
of ICSTIS, the premium phone services regulator.
Sarah’s earlier career was in government and
public relations consultancy.
Jeremy Pocklington
Director General, Energy and Security
Jeremy Pocklington has been Director General,
Energy and Security since December 2016. Prior
to this he was Director General of Markets and
Infrastructure at DECC. Jeremy spent many years
at HM Treasury, culminating in his role as Director
of the Enterprise and Growth Unit. From 2009 to
2012 he also served as Director of the Economic
and Domestic Secretariat at the Cabinet Office.
From September 2018, Jeremy Pocklington will
be taking up the position of Director General,
Housing at the Ministry of Housing, Communities
and Local Government.
Jaee Samant
Director General, Market Frameworks
Jaee Samant has been Director General,
Market Frameworks since March 2017.
Prior to this she was Director General for Skills,
Deregulation and Local Growth at BIS. Jaee has
been a civil servant for almost 25 years and has
worked at the Department of Employment, the
Department for Education and Employment and
the Cabinet Office before joining the Home Office
in 2004. She has also worked on secondment to
the Big Lottery Fund and the BBC.

Annual report and accounts 2017-18
52
Professor John Loughhead
CB OBE FReng FTSE
BEIS Chief Scientific Adviser
Professor Loughhead was previously the Chief
Scientific Adviser at DECC. Before joining DECC,
John was Executive Director at the UK Energy
Research Centre. Prior to that, he was Corporate
Vice-President of Technology and Intellectual
Property at Alstom’s head office in Paris. John is
a Chartered Engineer, graduating in Mechanical
Engineering from Imperial College, London,
where he also spent 5 years in computational
fluid dynamics research. He is Past-President of
the UK’s Institution of Engineering and Technology,
Fellow of both the UK and Australian national
Academies of Engineering, Professor of
Engineering at Cardiff University and Fellow of
Queen Mary University of London.
Julian Critchlow
Director General, Energy Transformation
& Clean Growth
Julian Critchlow is Director General, Energy
Transformation and Clean Growth. Julian
was a Director at Bain & Company, strategy
consultants, based in their London office. He led
Bain’s Global Utilities and Alternative Energy
Practice, working with senior executives in
leading utilities around the world on their key
strategic, operational and organisational issues.
Julian has 30 years of consulting experience in
the UK and internationally.
Nick Chism
Director General, Enterprise
Nick Chism is Director General, Enterprise.
Nick was previously Global Chair of
Infrastructure, Government and Healthcare
at KPMG. As Deputy Head of Global Clients
and Markets, he was also responsible for
KPMG’s sectors programme. Throughout his
career, Nick has promoted better collaboration
between the public and private sectors around
the world. His professional background is in
corporate finance. He is a Fellow of the Institute
of Chartered Accountants in England and Wales,
and an Associate Member of the Institution of
Civil Engineers.
Tom Taylor
Chief Financial Officer
Tom Taylor is Director of Finance and Portfolio,
and Chief Financial Officer, of the Department
for Business, Energy and Industrial Strategy,
which he joined in January 2017. Tom has
worked in several government departments in a
career spanning economics, policy, operations
and finance roles. Tom is a CIPFA qualified
accountant.
Caleb Deeks
Director, Policy, Delivery & Private Office
Caleb Deeks joined the Department as Director
for Policy, Delivery and Private Office in April
2017. Prior to that he held senior roles in the
Treasury and the Cabinet Office, spanning
economic and social policy and public spending.

Accountability report
53
Biographies: Non-Executives
Archie Norman
Lead Non-Executive Director and
Deputy Chair of the Departmental Board
Archie Norman was appointed lead non-
executive board member at the Department
for Business, Energy and Industrial Strategy in
October 2016. Archie is Chairman of Lazards
and Marks & Spencer, as well as a former
Asda Chief Executive and ITV Chairman.
He was previously a management consultant
at McKinsey, and director at GEEST, Railtrack,
and Kingfisher. In 1997 he became Conservative
MP for Tunbridge Wells and in 2000 he was
appointed Shadow Secretary of State for
Environment, Transport and the Regions.
Professor Dame Ann Dowling DBE
Non-Executive Director and Chair of the
Nominations Committee
Ann Dowling is President of the Royal Academy
of Engineering and Professor of Mechanical
Engineering at the University of Cambridge,
where she was Head of the Department of
Engineering from 2009 to 2014. She ran the
University Gas Turbine Partnership with Rolls-
Royce from 2001 to 2014. Ann is a non-executive
director of BP. She has served on a number of
industry and government advisory committees
and chaired the Royal Society/Royal Academy
of Engineering study on nanotechnology.
She was appointed CBE by the Queen for
services to mechanical engineering in 2002,
and DBE for services to science in 2007.
Charles Randell CBE
Non-Executive Director and Chair of
the Audit and Risk Assurance Committee
Charles Randell was an independent member
of the Bank of England’s Prudential Regulation
Committee, which has responsibilities for the
prudential supervision of UK banks, insurance
companies and large investment firms,
until the end of March 2018. He became Chair
of the Financial Conduct Authority on 1 April
2018. Prior to joining the Prudential Regulation
Authority he was a senior partner in the law
firm Slaughter and May, where he specialised
in corporate finance law, with much of his work
involving the energy and public sectors. Charles
was also a Non-Executive Director of DECC from
October 2014.
Stephen Carter
Non-Executive Director
Stephen Carter has a unique combination of
skills and insights gained through a career
equally divided between the public and private
sector. Now the CEO of Informa, a FTSE100
company, he brings previous business
experience at Alcatel Lucent, NTL (now Virgin
Media) and JWT UK and Ireland. His public
sector experience includes being the founding
CEO of Ofcom, and time as the Minister for
Communications, Technology and Broadcasting,
when he produced the Digital Britain Blueprint.

Annual report and accounts 2017-18
54
Dame Carolyn McCall DBE
Non-Executive Director
Carolyn McCall is CEO of ITV and has extensive
experience in business with a wealth of
understanding of the transportation and media
industries. Prior to ITV, she was Chief Executive
of EasyJet and the Guardian Media Group.
She has been a great champion of diversity,
demonstrated through EasyJet’s commitment
to increase the number of female pilots it trains
and employs.
Kathryn Parsons
Non-Executive Director
Kathryn Parsons is the co-founder and CEO of
DeCoded. She brings with her valuable expertise
from the digital enterprise community sitting on
the London Mayor’s Business Advisory Board
and the Government’s Cyber Security Board.
She also chairs the Digital Skills and Innovation
Fund. She has helped over 500 organisations
– from FTSE100 companies to Government
departments and start-ups – to think and act
differently in the digital world.
Stuart Quickenden
Non-Executive Director
Stuart Quickenden has had a 20-year career
at Boston Consulting Group, a leading global
management consultancy, culminating in
becoming Managing Partner. He is a leading
expert on organisational change, advising large
organisations to help drive better performance
at lower cost.
Rachel Campbell
Non-Executive Member
– Nominations Committee
Rachel Campbell is the Global Head of People,
Performance and Culture for KPMG International.
She is responsible for the firm’s global people
strategy and communications. Previously she
was Head of People and a board member for
both KPMG and Europe LLP firms. Rachel is a
chartered accountant and has operated as an
audit partner for the firm, working predominantly
with global fast-moving consumer goods clients.
She is a Fellow of the Chartered Institute of
Personnel and Development. Rachel previously
served as Non-Executive Director for DECC from
September 2014.
Claire Davies
Non-Executive Member
– Audit and Risk Assurance Committee
Claire Davies is an experienced solicitor,
company secretary and compliance professional
with more than 30 years’ experience in the
retail banking and financial services sectors
acquired from senior roles with Legal and
General Group, Ernst & Young, Lloyds Banking
Group, the Co‑Operative Group, and Barclays.
Bryan Ingleby
Non-Executive Member
– Audit and Risk Assurance Committee
Bryan Ingleby is a highly experienced chartered
accountant. Following a career as an external
auditor in the public sector, Bryan now has a
portfolio of non-executive and independent roles
in several sectors including the NHS, education,
housing, and local government. Bryan brings
experience in sound financial management, risk
management, and strong corporate governance.

Accountability report
55
Myriam Madden
Non-Executive Member
– Audit and Risk Assurance Committee
Myriam Madden is a leader in the field of
accountancy and is a Board member of the
international standards-setting body, IESBA,
which is responsible for Ethics and Conduct
standards for professional accountants
globally. She is an experienced Executive
Director specialising in business transformation,
operational re-structuring and finance, in the
UK, US and Europe. She previously served
as the Chairman of the Chartered Institute of
Management Accountants and Board member
of the American Institute of Certified Public
Accountants, both global accounting bodies.
Lucy Shannon
Non-Executive Member
– Audit and Risk Assurance Committee
Lucy Shannon is a creative IT professional with
experience in cyber security, IT outsourcing,
pursuit management, service delivery leadership,
and business process automation. As a senior
account director with MWR InfoSecurity she has
helped many organisations to address cyber
security and protect their networks and services.
She has also co-founded the Women’s Network
at Xerox with the aims of inspiring and developing
women, connecting externally with clients and
internally to support diversity.

Annual report and accounts 2017-18
56
Our ministers
Our management: executives
Our leadership team
The Rt Greg
Clark MP
DB chair
The Rt Hon
Lord Henley
The Rt Claire
Perry MP
12 June 2017
DB
Richard
Harrington MP
14 June 2017
DB
Sam Gyimah MP
Andrew Griffiths
MP
Alex Chisholm
DB, NC, EC
Professor John
Loughhead CB
OBE FReng
FTSE
EC, SPRC
Jaee Samant
DB, EC, POC,
TPB
Sam Beckett
EC, PFRC
Julian Critchlow
May 2018
EC
Gareth Davies
EC, PIC
Nick Chism
June 2018
EC
Sarah Harrison
February 2018
DB, ARAC, EC,
POC, PFRC, TPB
Tom Taylor
DB, EC, PFRC,
PIC, ARAC
Caleb Deeks
SPRC
Jeremy
Pocklington
EC, PIC
Key to committee membership
DB
Departmental Board
NC
Nominations Committee
ARAC Audit and Risk Assurance Committee
EC
Executive Committee
POC
People and Operations Committee
PFRC Performance Finance and Risk Committee
PIC
Projects and Investment Committee
SPRC Strategic Policy Review Committee
TPB
Transition Programme Board

Accountability report
57
Our management: non-executives
Left the department
Margot James
Left 8 Jan 2018
DB
Lord Prior
of Brampton
Left 26 October
2017 DB
Nick Hurd
Left 12 June 2017
DB
Jessie
Norman MP
Left 14 June 2017
Jo Johnson MP
Left 8 Jan 2018
Archie Norman
DB
Stuart
Quickenden
DB
Lucy Shannon
ARAC
Kathryn Parsons
DB
Myriam Madden
ARAC
Professor Dame
Ann Dowling
DBE
DB,NC
Rachel Campbell
NC
Angie Ridgwell
Left Dec 2017
DB, EC, PFRC,
POC, TPB
Charles Randell
CBE
DB, ARAC
Claire Davies
ARAC
Professor
Tim Dafforn
Left October 2017
EC, SPRC
Clive Maxwell
Left Nov 2017
EC, SPRC
Stephen Carter
DB
Nigel Johnson
Left June 2017
ARAC
Dame Carolyn
McCall DBE
DB
Bryan Ingleby
ARAC

Annual report and accounts 2017-18
58
Governance statement
Introduction
This Governance Statement sets out the
governance, risk management and internal
control arrangements for the Department,
in accordance with HM Treasury guidance.
It applies to the financial year 1 April 2017 to
31 March 2018 and up to the date of approval
of the Annual Report and Accounts. It integrates
information about the Department’s non-
departmental public bodies (NDPBs) included
in the consolidated group accounts. Evidence
is provided throughout the statement on how
governance has been aligned with Departmental
vision and objectives.
Report of the lead non-executive director
Archie Norman
Lead Non-
Executive Director
The BEIS Board aims to
be amongst the best
in Government, fully engaged
with both the officials and
ministerial team in both the
project to transform the
Department and where
appropriate on policy issues.
The last year has seen another
very full programme as a result.
We have focused our time on
the major challenges facing BEIS. Our objective
is to help forge a Department, closely engaged
with the enterprise community and fully
committed to implementing Industrial Strategy
and its regulatory responsibilities in a post Brexit
world. Amongst other subjects the Board has
contributed importantly to:
• supporting the development of the Industrial
Strategy and the launch of the White Paper
• considering the varied needs of business in
relation to the UK’s exit from the EU
• assessing the readiness of the Clean Growth
Strategy for launch
• challenging BEIS to go further and faster in its
transformation programme and ambition to be
a top Whitehall Department
Beyond the four objectives for the Department
it is pleasing to see that BEIS has moved from a
Limited assurance rating last year to a Moderate
rating for 2017-18. This is significantly a result
of the good work from the Audit and Risk
Assurance Committee, under the leadership of
Charles Randell.
BEIS also seeks to be a leader in corporate
governance and has made great steps in
applying the policy and best practices of
private companies to itself. My thanks to the
Nominations and Governance Committee under
the leadership of Ann Dowling for ensuring BEIS
will soon have a shadow Executive Committee
with a wide range of employee representation
and a direct link to the Board itself.
Charles and Ann stepped down from the Board
in June and we have appointed two new top
flight Non-Executive Members who will also take
on the Chairs for Audit and Risk Assurance,
and Nominations and Governance Committees.
Enormous thanks are due to Charles and Ann
for their excellent contributions to both BEIS and
to BIS and DECC respectively. I am delighted
to welcome in their place Nigel Boardman and
Leena Nair. I am certain our new members will
add to a very high calibre and diverse Board and
strengthen the experience and challenge we can
offer to BEIS.
Looking to the future my challenge for the Board
is to ensure that BEIS moves forward rapidly in its
intent to be truly business-facing and supporting
and to build on the work we have done so far
to address the objectives of the Department.
Ministers and officials give their full commitment
to the Board and I am confident that we will
continue to offer the right mix of challenge and
support to help BEIS deliver its best for business,
consumers and workers.
Archie Norman
Lead Non-Executive Director

Accountability report
59
Our governance structure
Departmental Board
Provides direction on
strategy, performance
and risk management
Audit and Risk
Assurance Committee
Quality of audit and risk
control functions
Nominations and
Governance Committee
Senior remuneration
and appointments
Executive Committee
Implements strategy and ensures, with the committees, the effective management of BEIS
Transformation Programme Board
Monitoring and overseeing progress in delivering transformation activity (until 2020)
People and
Operations
Committee
Effective
management of
human resources,
estates and digital
Performance,
Finance and Risk
Committee
Monitoring frameworks
for BEIS performance
against targets,
budgets and risks
Projects and
Investment
Committee
Assurance of key
investment proposals
and projects
Strategic
Policy Review
Committee
Review of strategic
priorities and cross
cutting issues
Departmental Board and its committees
The Rt Hon
Greg Clark MP
Chair of
Departmental
Board
Departmental Board is
chaired by the Secretary of
State, supported by our lead
non-executive Board member
Archie Norman, and includes
ministers, non-executive Board
members and senior officials.
It provides collective strategic
leadership and challenge, with
responsibilities for performance,
risk and delivery, including
appropriate oversight of partner
organisations.
All Board members are
required to declare any personal or business
interests which may influence their judgement
in discharging their obligations, or which
may be perceived to do so by a reasonable
member of the public. These interests include,
without limitation, personal direct and indirect
pecuniary interests and any such interests of
close family members or of people living in
the same household as the Board member.
We collect this information yearly from executive
and non-executive Board members and on
the appointment of new members. We also
ask Board members to update the department
on any changes in their circumstances which
could be or be perceived as a conflict of interest.
Where a Board member has a specific conflict
of interest, additional mitigations are put in
place. Typically, this means not taking part
in related discussions at the Board or other
meetings. Three conflicts of interest were raised
this year and were managed in line with the
relevant procedures.
The Board held 5 meetings in 2017-18 and aims
to hold 6 meetings a year as standard. The board
is committed to assessing and improving
performance and has implemented a full review
for 2017-18, with a view to having an independent
review in 2020.

Annual report and accounts 2017-18
60
Discussion
Action
Progress
Strategy
Industrial
Strategy
The Board has provided the Department with challenge
and advice on the development and implementation of
the Industrial Strategy. The Board also considered how
we should measure the effectiveness and impact of the
Industrial Strategy.
The Board provided a range
of steers, including how to
engage the business community
further with the Strategy’s grand
challenges.
EU Exit
EU Exit is a standing item at the Board. The Board has
considered how the Department can best represent the
views of business in the negotiations, the impact of EU Exit
on customs and the movement of people and approaches
to regulatory divergence.
BEIS is undertaking more detailed
planning on how to ensure
businesses are prepared for
EU Exit.
Clean Growth
Strategy
The Board provided advice on support on how to make the
vision of the Clean Growth Strategy into reality.
The Board asked for some further
work to understand the costs and
trade-offs and where might be best
to invest in a world of finite
resources.
Smart
Metering
Implementation
Programme
The Board considered the challenges of the Smart
Metering Implementation Programme and how the
Department could encourage consumers to take up
the offer of a smart meter.
Board members followed up on
this area outside of the Board
meeting and the item will come
back to the Board in 2018/19.
Better
Regulation
The Board considered how we should implement our
better regulation strategy to best realise our objectives;
and where we should focus next in relation to EU Exit
and regulation.
The Board provided steers on how
BEIS should implement regulation
effectively, with a focus on ensuring
productivity.
Taylor Review
of Modern
Employment
The Board encouraged the Taylor Review to start a
conversation around what ‘good work’ entails.
The Board will come back to this
item at a later stage to consider
progress and next steps.
Governance and risk
Objectives
and priorities
for the
Department
The Board provided challenge on BEIS’ forward work
programme for 2018 and asked the Department to
consider what it should achieve over a longer timeframe.
The work programme for 2018 has
been revised in line with the steers
from the Board.
Single
Departmental
Plan (SDP)
The Board’s broader discussion of objectives and priorities
for the Department has supported the development of the
SDP. The Departmental Board had sight of the SDP and
the opportunity to provide additional challenge.
The Lead Non-Executive Board
member has worked to feed into
the development of the SDP.
Departmental
risk appetite
and
management
The Board directed the Audit and Risk Assurance
Committee to ensure that the proposed Departmental
Risk Framework was robust, with the right levels of
senior ownership and effectively implemented within the
Department.
The Departmental risk framework
has been implemented with the
support of the Audit and Risk
Assurance Committee.
Operations
People Survey
The Board pushed the Department for further progress in
making BEIS the most attractive Department to work for and
for more opportunities for staff to engage with ministers.
The Board welcomed the progress made on staff pay and
advocated for more progress to be made on this issue over
the coming year.
A programme of ministerial
assemblies for staff has been set
up from March 2018.
Transformation
Programme
The Board set out a vision for the Department to work even
more closely with the businesses it serves. The Board also
provided input on a range of areas of the transformation
programme.
A strategy for BEIS to become
more business focused has been
set and is being implemented.

Accountability report
61
Charles Randell
CBE
Chair, Audit and
Risk Assurance
Committee
Audit and Risk Assurance
Committee (ARAC) is chaired
by Charles Randell, Non-
Executive Board Member.
Charles stepped down as Chair
in June 2018. This follows his
appointment as Chair of the
Financial Conduct Authority
that was announced in January
2018. His successor will be
Nigel Boardman.
The role of ARAC is to support
the Departmental Board and Accounting
Officer in their responsibility to ensure that the
Department is a financially sound and efficient
organisation which makes effective use of its
resources in pursuit of its strategic objectives.
Specifically, ARAC reviews the effectiveness of
the risk management framework established by
management to identify, assess and manage
risk, thereby playing an important role in
supporting our ambition to excel in financial
and risk management.
ARAC met 8 times last year. This included 2 sessions
which provided dedicated challenge and assurance
on the EU Exit Programme. Furthermore, the Chair
held a conference of audit and risk assurance
committee chairs from the Department’s partner
organisations to share knowledge and best practice,
and enhance engagement across the BEIS Group.
In addition, ARAC has focused on:
i. supporting and challenging the development
of a long-term strategy for renewable heat
ii. examining and challenging the overall control
environment including the risk and governance
arrangements to support the Accounting Officer
in his stewardship of departmental resources
iii. scrutinising the Annual Report and Accounts
to ensure the Department’s performance and
financial status are appropriately reflected
iv. shaping the approach to a new assurance
framework so that the systems and processes
are best fit for the Department
v. reviewing and improving the risk management
framework, and testing the embedding of the
framework in Directorates within the Department
vi. assuring the cyber and information security,
and counter fraud and whistleblowing practices
Professor Dame
Ann Dowling DBE
Chair, Nominations
and Governance
Committee
Nominations and
Governance Committee
is chaired by Ann Dowling,
Non-Executive Board Member.
Ann stepped down as Chair in
May 2018. Her successor will
be Leena Nair.
Its role is to support the
Departmental Board, by
providing assurance and
input to key decisions and
processes. Its purpose is to
scrutinise the Department’s strategies and plans
for talent management; succession planning;
capability building; Board appointments; senior
performance management; incentives and
rewards; and the implementation of corporate
governance policy.
It met 2 times in the year, in May and October
2017. Over the course of these 2 meetings it has
focused on:
i. scrutinising systems for identifying and
developing talented senior civil servants
ii. reviewing plans for orderly succession of
appointments to the Board and Director
General roles, in order to maintain an
appropriate balance of skills and experience
iii. assessing incentives and rewards for executive
Board members and Directors General,
and advising on the extent to which these
arrangements are effective at improving
performance
iv. working in conjunction with ARAC to bring an
emphasis on effective risk management into
the BEIS performance management processes
v. ensuring that BEIS has taken a leading role in
implementing its own corporate governance
policy and improving employee engagement
on Boards

Annual report and accounts 2017-18
62
Executive Committee and its delegated committees
Alex Chisholm
Chair, Executive
Committee
Executive Committee
(ExCo) is chaired by our
Permanent Secretary,
Alex Chisholm. ExCo brings
together the senior leadership
team to support the Permanent
Secretary in leading the
Department, and as
Accounting Officer.
It sets out the Department’s
vision, oversees the delivery of
strategy with particular emphasis on corporate
delivery and cross-cutting issues, as well as
overseeing the monthly performance report
review (with advice from the Performance,
Finance and Risk Committee), regular risk review,
and discussion of emerging priority issues.
It met 40 times last year. Its focus has been
the Department’s Transformation programme,
business planning, Single Departmental Plan,
Diversity and Inclusion Strategy, the People
Survey, performance management, and business
continuity planning. There has been attendance
from senior officials in other Government
departments and external organisations
for discussions on the EU Exit programme,
performance and risk, cyber security, public
enquiries, and crisis management. Areas of
focus on policy have included the Industrial
Strategy, the Cities and Local Growth agenda,
and EU Exit.
Over the last year, ExCo has held regular
dedicated meetings on the Department’s EU Exit
Programme and related issues. The Executive
Committee holds additional meetings each
fortnight to focus on EU Exit Programme
business due to the scale and importance of
this programme. These meetings ensure that
BEIS is effectively managing the EU Exit related
issues that it has identified. It makes decisions
on issues ranging from negotiation preparedness
measures to delivery plans. A key tool of the
Committee is the EU Exit Programme dashboard
which brings together reporting on the progress
of priority issues, business intelligence and risk
assessment.
The Committee receives additional assurance on
its EU Exit work from a range of external partners
including the National Audit Office, the Cabinet
Office, the Infrastructure and Projects Authority
and the Government Internal Audit Agency.
These independent reviews of the Department’s
preparations for EU Exit ensure that BEIS
continues to build and strengthen its capacity
and capability to deliver all 72 issues.
Jaee Samant
Co-Chair, People
and Operations
Committee
Sarah Harrison
Co-Chair, People
and Operations
Committee

People and Operations Committee (POC)
is chaired by Jaee Samant and Sarah Harrison
(Sarah Harrison took over from Angie Ridgwell
in February 2018). Its role is to decide
on matters relating to departmental staff
capability, management and engagement.
The Committee also oversees and monitors
staff diversity and is responsible for overseeing
delivery of accommodation and IT. As BEIS is
undergoing a Transformation Programme the
Committee also aligns its work with that of the
transformation programme. The chairs are the
same for both governance bodies, helping to
ensure effective alignment.
The Committee is supported in its role by a
shadow committee. This initiative has been
in place throughout the year and has a pool
membership drawn from a mix of grades and
roles across the Department. The shadow
committee discusses the majority of papers and
the chair attends the People and Operations
Committee to inform them of the outputs from its
meeting. This has proven to be both an effective
way to gain wider staff views and to strengthen
the overall decision making from the Committee.

Accountability report
63
It met 10 times last year and focused on:
i. establishing a new Performance Management
system informed by BEIS staff for
implementation in 2018-19
ii. reviewing pay policy to address the gender pay
gap and ensure equality
iii. setting attendance management policy
iv. reviewing the health and safety policy
v. overseeing and approving both the leadership
and management and learning and talent offer
in the Department
Sam Beckett
Co-Chair,
Performance,
Finance and Risk
Committee
Sarah Harrison
Co-Chair,
Performance,
Finance and Risk
Committee
Performance, Finance and Risk Committee
(PFR) is chaired by Sam Beckett and
Sarah Harrison (Sarah Harrison took over
from Angie Ridgwell in February 2018).
The Committee has responsibility for providing
high-level oversight of business planning,
budgets and financial management, performance
reporting and risk monitoring. The Committee
also leads on planning for major fiscal events,
the development of the annual report and
accounts, and the planning and response to
GIAA led internal audits.
It is supported in its work by a Challenge Panel
that focuses on the monthly performance and
risk report. The panel provides an initial review
of the data and sets out recommendations on
next steps and where the Committee should
focus its attention. The role of the Challenge
Panel is under review to further strengthen the
value it could add beyond the assessment of
the monthly report.
It met 10 times last year, and focussed on:
i. the transition to a new IT system in order
to monitor the progress of planning and
implementation
ii. agreeing the monthly Performance and
Risk Report
iii. overseeing the financial management of
the Department and allocating resources
as appropriate
iv. reviewing and agreeing the Departmental Risk
Framework and Risk Register; monitoring the
Department’s diversity and inclusion data
v. reviewing and considering any business cases
that fell outside of the Projects and Investment
Committee remit
Given the size and scale of the EU Exit
programme, its programme board escalates risks
directly to the Executive Committee instead of
using the usual Performance, Finance and Risk
route. It maintains a separate risk register and
has governance boards on corporate services,
trade and negotiations as well as engagement
fora for SROs and sectors.
Gareth Davies
Co-Chair, Projects
and Investment
Committee
Jeremy Pocklington
Co-Chair, Projects
and Investment
Committee
Projects and Investment Committee (PIC)
is co-chaired by Gareth Davies and Jeremy
Pocklington. PIC has responsibility for deciding
whether planned investments with a whole-
life cost of £20 million or above, or that are
considered risky, novel or contentious, are ready
to pass each of the relevant business case
stages: Strategic Outline; Outline; and Final.
For each case the Committee focuses on five key
areas of evidence: strategic; economic; financial;
commercial; and management, supported by a
keyholder review process.

Annual report and accounts 2017-18
64
The Committee acts in accordance with HM
Treasury guidance on Managing Public Money.
It met 19 times and focused on the following
areas:
i. refining the business case process so that
these are expedited through the pipeline with
no remedial action required
ii. supporting the development of business cases
so that these are robust and receive approval
at the first review in order for the Department
to meet its strategic objectives with minimal
disruption
iii. expediting EU Exit related business cases
to ensure prompt approval
iv. aligning the UK Research and Innovation‘s
investment approval process with BEIS’ own
governance guidance
John Loughhead
Chair, Strategic
Policy Review
Committee
Strategic Policy Review
Committee is chaired by
John Loughhead (John
took over from Clive Maxwell
in November 2017). Its role
is to consider strategic
policy issues that would
benefit from wider
perspectives across the
Department and add
value to policy development
and implementation.
The Committee cross-cutting issues where
several parts of the Department have a role to
play and/or where other areas of Government
may be involved. It is an advisory group and does
not have specific decision-making powers. It met
6 times and its focus has been on:
i.
economic indicators and readiness for
different scenarios
ii. the BEIS offer to local English regions and
devolved administrations
iii. considering the Department’s approach to
the Industrial Strategy including the places
pillar and the Clean Growth Grand Challenge
Jaee Samant
Co-Chair,
Transformation
Programme Board
Sarah Harrison
Co-Chair,
Transformation
Programme Board
Transformation Programme Board is
co‑chaired by Sarah Harrison and Jaee Samant
(Sarah Harrison took over from Angie Ridgwell
in December 2017). Its aim is to turn BEIS into
a high performing and high impact Department
– delivering real world outcomes for business
and consumers.
It is responsible for:
i. shaping and overseeing the transformation
strategy
ii. Ensuring objectives, milestones and benefits of
the Transformation Programme are delivered,
as detailed in the Project Initiation Documents
(PIDs)
iii. ensuring the Transformation Programme
supports the delivery of the BEIS vision and
remains aligned to future drivers of change
iv. effective Programme budget management
v. effective risk management.
It has focused on shaping plans for year 2 of
the programme across the 6 transformation
workstreams: vision and values; understanding
business; partner organisations; skills and
capabilities; technology and ways of working
and improving processes.

Accountability report
65
Board and committee attendance
The table below sets out attendance for the key governance forums
within the department. Where members were unable to attend meetings
in person, they have been able to share their views in advance to the
chair person.
Departmental
board
Audit and risk
assurance
committee
Nominations
and governance
committee
Executive
committee
Number of meetings held
5
6
2
40
Ministers
Greg Clark
5/5

Claire Perry
4/5

Richard Harrington
2/3

Lord Prior of Brampton
(Left October 2017)
1/2

Margot James (Left January 2018)
3/3

Nick Hurd (Left June 2017)
0/0

Management
Alex Chisholm
5/5
3/6
2/2
36/40
Sarah Harrison
(Appointed March 2018)

1/1

3/3
Gareth Davies

34/40
Jeremy Pocklington

32/40
Sam Beckett

36/40
Jaee Samant
5/5

36/40
Tom Taylor
2/2
6/6

11/11
Caleb Deeks
30/35
Angie Ridgwell (Left December 2017)
3/3
4/4

29/30
Clive Maxwell (Left November 2017)

21/25
Professor John Loughhead

29/40
Professor Tim Dafforn
(Left October 2017)

3/30
Archie Norman
5/5

Professor Dame Ann Dowling
4/5

2/2

Charles Randell
5/5
6/6

Stephen Carter
3/5

Carolyn McCall
4/5

Kathryn Parsons
4/5

Stuart Quickenden
5/5

Rachel Campbell

1/2

Claire Davies

6/6

Bryan Ingleby

6/6

Myriam Madden

6/6

Lucy Shannon

5/6

Nigel Johnson (Left June 2017)

3/3

Annual report and accounts 2017-18
66
Compliance with the corporate governance code
16
Moderate assurance means some improvements are required to enhance the adequacy and effectiveness
of the framework of governance, risk management and control.
17
Limited assurance means there are significant weaknesses in the framework of governance, risk management
and control such that it could be or could become inadequate and ineffective.
During the course of 2017-18 the governance
arrangements for the Department were audited
by the Government Internal Audit Agency. This
audit concluded that the governance structure
and layouts are in line with the Cabinet Office’s
Corporate Governance in Central Government
Departments: Code of Good Practice. The audit
did highlight three areas of divergence from
the code: the balance of representatives on the
Board; the absence of risk appetite/tolerance
levels from the Board; and the absence of a
formal Board Operating Framework.
The Code advises on having an even split
in Board membership between ministers,
non‑executives and executives. Based on the
number of ministers, and executive members,
there are a disproportionate number of non-
executives within BEIS. This is because the
Department has actively sought this balance
to ensure that it has access to the right level
of skills and experience in alignment with its
strategic priorities and the diverse nature of
UK businesses.
The BEIS Departmental Board agreed when it was
formed in 2016 that risk appetite and tolerance
levels would emerge through the early decisions
on major strategic issues, and the areas it chose
to focus on, rather than an explicit exercise to
define risk appetite in itself. As a result the Board
has primarily focused its views in relation to risk
over the last 12 months on the Industrial Strategy,
the UK’s exit from the EU, achieving clean growth
and transforming BEIS as a Department.
The Board Operating Framework for the
Departmental Board has not been titled as such.
Instead there has been a terms of reference for
the Board that was agreed at its formation in
2016. This has been reviewed in light of the audit
report and alongside the first full evaluation the
Board, to set out a new operating framework that
will be introduced in July 2018.
In addition, the Audit and Risk Assurance
Committee only has one Non-Executive Board
Member. It has 4 Non-Executive members,
providing the appropriate level of skills
and experience.
Board’s evaluation of its own effectiveness
All Departments are requested by Cabinet Office
to carry out an annual Board Effectiveness
Evaluation. BEIS did not do this for the period
2016-17 due to the newness of the Department
and its Board. 2017-18 saw the first full evaluation
of the Board.
Overall the Board has proven to be successful
with clear agreement that having strong
engagement with ministers has helped to
ensure that the Board and its members could
make a meaningful contribution throughout
the year. The quality of inputs to the Board
were highlighted as being of a good standard,
in particular: the Performance Report; the
Permanent Secretary’s update; and wherever
a substantial challenge has been presented to
the Board for debate. The non-executive Board
members further highlighted that the positive one-
to-one engagement with ministers and Directors
General outside of the Board setting had ensured
that they were able to make a continuous impact
throughout the year.
As part of the evaluation process, the Board
also considered the work of its two supporting
committees: Audit and Risk Assurance (ARAC);
and Nominations and Governance (NGC).
The Board highlighted ARAC’s considerable
support to BEIS in achieving a Moderate
assurance rating,16 up from last year’s Limited
rating,17 and NGC’s leadership on the way that
BEIS will implement its own policy of improving
employee engagement on Boards. Alongside the
Board’s own evaluation BEIS has two additional
sources of evaluation evidence to consider:
• the Government Internal Audit Agency (GIAA)
reported on BEIS Corporate Governance and
Departmental Structures offering a Moderate

Accountability report
67
assurance. The report noted that overall
there was a good level of compliance to the
Cabinet Office’s recently re-issued guidance
‘Corporate Governance in Central Government
Departments: Code of Good Practice’.
The report noted that the BEIS Corporate
Governance team is working proactively to
meet and, where possible, exceed the overall
requirements of the Code as an exemplar of
good practice. The GIAA report also described
how there are divergences to the Code that,
if retained, should be explained within the
BEIS Governance Statement. These issues
relating to the Code have been addressed in
the Compliance section of this Governance
Statement
• the UCL study of non-executives on Whitehall
Boards conducted in 2017 praised the BEIS
Board and its non-executives as a particularly
effective example of a Whitehall Board.
The study noted that ministerial and wider
Departmental buy-in enabled BEIS non-
executives to ‘make challenge a reality, and take
the trouble to assess and record their impact’
As a result of this process the Board has agreed
to address the following points for improving
its effectiveness:
• increase the amount of Board time spent
considering the efficiency, performance and
effectiveness of BEIS as a whole
• ensure non-executives can deepen their
knowledge of key strategic areas that BEIS is
working on
• move to a digital solution for sharing papers with
both Board Members and between the Board,
ARAC and NGC
• improve links between non-executives and
other senior officials in BEIS who are not Board
members, especially Directors General
• consider the balance of focus on risk between
ARAC and the Board to ensure this is effective
• strengthen the membership of NGC with
additional non-executive representation
The governance team will support the Board in
implementing these improvements and the impact
will be considered as part of the 2018-19 Board
Effectiveness Evaluation.
Board appointments and diversity
In January 2018, two of BEIS non-executive
board members, Ann Dowling and Charles
Randell confirmed that they would stand down
from the Board by July 2018. Ann and Charles
were BEIS’ longest-serving non-executives and
had previously been on the boards for BIS and
DECC respectively. Ann was the Chair for the
Nominations and Governance Committee (NGC),
while Charles was the Chair for the Audit and Risk
Assurance Committee (ARAC).
In order to find two new non-executives to replace
them, the Department conducted an open
recruitment process leading to 50 applications.
The Department sought applicants who could offer
the following skills and experience:

• proven leadership in large and complex
organisations in the private (FTSE 250),
public or voluntary sectors
• risk, performance and financial management
expertise
• leadership of major projects from initiation,
through development and to delivery
• an understanding of the key challenges faced
by the public sector
• the ability to contribute and inspire confidence
with a wide range of internal and external partners
• sound judgement with a high level of integrity
Following this exercise, the Secretary of State
was pleased to confirm the appointment of Nigel
Boardman to the role of ARAC chair and Leena Nair
to the role of NGC Chair. Both will have attended
their first formal Board meeting in July 2018.
As a result of these appointments the Board
exceeds the 33% target for women on boards,
set by Lord Davies, with 6 out of the 14 standing
members being women (43%). The Board also has
two members from a black, Asian and minority
ethnic (BAME) background, exceeding the target
of one member set for the private sector in the
Sir John Parker review.

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68
All new Board members have received an
induction to the Department, including briefing
on the Board itself, the role of Board members,
propriety matters, the work of the Department,
and more specific information to support their
understanding of issues brought before them.
Ministerial directions
Ministerial directions are formal, technical
instructions from the Secretary of State which
allow the Department to proceed with a spending
proposal in a situation where the Accounting
Officer has raised an objection. The Accounting
Officer is accountable to parliament for ensuring
that all expenditure meets he standards under
Managing Public Money (MPM) and has a duty
to seek a direction if they believe one of the four
criteria (regularity, propriety, value for money
or feasibility) will not be met. If a direction is
given, the Accounting Officer will no longer be
challenged by the Public Accounts Committee
on why they took forward the policy. However,
they might still need to explain the course of
action and the minister’s reasoning.
During the financial year 2017-18, a Ministerial
Direction was given in relation to the market
surveillance (product safety) database.
Under the rules set out in MPM, departments are
not able to incur expenditure on new services
without specific statutory authority. This presents
a challenge to a small number of BEIS EU Exit
projects that need to incur spend in advance of
Royal Assent of the EU Withdrawal Bill. Any delay
to these projects could have serious implications
and result in disruption. Following the advice
from the Chief Secretary to the Treasury in her
Written Ministerial Statement of 12 October 2017,
a Ministerial Direction was sought to enable
urgent spend on this database to proceed.
The Ministerial Direction was given on 19 March
2018 authorising the spending and allowing
the planned work to proceed in advance of
Royal Assent.
Cyber security
Denial of service attacks and attacks via
malicious software are continuing risks to the
Department. These risks are reviewed by our
security team and our commercial partners and
appropriate mitigations put in place. As part of
the drive to improve security as services are
bought in-house, the Department is undertaking
work to ensure all internal services comply with
the ISO27001 security standard. No significant
cyber security breaches were reported
in 2017‑18.
Information security
No data protection incidents have been reported to
the Information Commissioners Office in the year.
General Data Protection Regulation (GDPR)
On 25 May 2018 when new General Data
Protection Regulation came into effect, BEIS
was compliant in 11 of the `12 steps to take now’
published by the Information Commissioner’s
Office. The one outstanding issue relates to `right
to be forgotten’ and our ability to delete large
volumes of information on the Department’s HR
systems. Work continues in this area and we
expect to be fully compliant by Autumn 2018.
We continue to work closely with our partner
organisations. An assurance model is being
developed to ensure BEIS continue to be
compliant post May. This will include executive
agencies for whom BEIS is data controller.

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69
Risk management and internal controls
Considerable progress has been made
over the last twelve months in relation to
both risk management and strengthening
the Department’s internal controls. On risk
management BEIS has: established a single
departmental risk register and group-level
risk registers; established a risk framework;
and started embedding risk management
at directorate level. This represents a solid
beginning to providing a greater degree of
control over risk and is supported by the recent
internal audit report on Risk Management in
BEIS that has provided a moderate rating. As a
result, BEIS now has a clearer view of the risks
to the Department and is starting to move from a
culture of reporting to one of active management
and ownership, as well as a greater focus on
risk aggregation and on how risks impact on the
delivery of outcomes. This improved approach
will be driven by continued implementation of
the risk framework and supported by Directors
General, within their respective spans of
control. Our principal risks are described in the
Performance Report.
The intelligence from BEIS’ risk management
framework and registers informs the monthly
performance and risk report that is integral to the
governance of the Department. Key changes to
the risks, including any new or escalated threats,
are reviewed each month by the Performance,
Finance and Risk (PFR) Committee. The PFR
Committee updates the Executive Committee
each month on any significant changes to the
Departmental risks as part of a broader report
also covering Departmental performance,
financial management and human resources.
The Department’s approach is to make
a distinction between strategic risks and
operational or delivery risks. The PFR and the
Departmental Board drive the identification of
high-level strategic risks that are directly aligned
to Departmental objectives as formulated through
the Single Departmental Plan (SDP). Underneath
the strategic risks sit operational and delivery
risks relating to the Department’s objectives,
which take the top risks from group or directorate
risk registers. These risks are escalated to the
PFR Committee when it appears that they are
outside tolerance and threaten the delivery of
the objectives in the SDP. This structure allows
for movement of risks between levels so that the
level of decision-making reflects the impact on
the objectives.
In relation to internal controls, following the
previous year’s machinery of government
change BEIS faced a considerable challenge
in setting a consistent, core internal control
environment. BEIS’s Corporate Services
team have been working on harmonising and
updating these policies, aligning this work with
the Department’s Transformation Programme.
As these administrative policies have been
updated, new associated controls are being
put in place alongside them, as well as improved
management information and reporting.
The majority of policies had been set and
harmonised by the end of March 2018, with all
expected to be in place by the end of June.
The planned transition from two shared service
providers to one over the course of 2018-19 will
further support the Department to operate within
the correct control environment and have better
quality management information.
To ensure that this work has the best chance
of success, senior leaders in the Department
are committed to putting in place the required
culture change, supported by clear, accessible
information to ensure controls are adhered to
and are effective. The relevant functional leads
will seek to drive the cultural change and will
be supported by senior leaders across the
Department to ensure that it happens. For this
reason, both culture change and management
capability are themes of the Transformation
Programme going forward.

Annual report and accounts 2017-18
70
Partner organisation governance
Our work with our partner organisations
over 2017-18
The Transformation Programme started in May
2017 and comprised workstreams from right
across the department. One aspect of the
programme was to improve on our partnership
working with our partner organisations in
line with the Cabinet Office Code of Practice.
The programme of work is based on
improving engagement, promoting assurance,
strengthening alignment and fostering talent
(E-A-S-T) and was shaped by contributions from
across the whole BEIS group. We are moving
forward on the basis of a common, consistent
and collective approach that is transparent,
fair and well understood.
Our new sponsorship model
Our network of partner organisations is one of
the largest in government, with a diverse array
of bodies and people with a very wide span of
policy and operational responsibilities. Over the
financial year 2017-18 BEIS had 40 partner
organisations (following some Cabinet Office
reclassification). Our daily dialogue across the
group can cover a vast array of topics – from
upcoming appointments, parliamentary business
and media notices to emerging policies and
operational issues. Getting these conversations
right – and by extension, our relationships – is
something we need to do well to a clear and
consistent standard.
We have been working on this over the last
12 months as a part of our wider Transformation
Programme. The appetite for change is shared
with our partners who have fed back with
support and constructive challenge. We have
been working with chairs and chief executives
– alongside our policy sponsors, sponsor
teams and corporate services teams – to
build a consensus on what and how we ‘do’
sponsorship in BEIS. The challenge was to
identify a model that works consistently for every
partner organisation – regardless of function,
size, type, spend and degree of autonomy
– whilst been flexible enough to meet their
individual needs.
We identified 3 key needs:
• a transparent, fair, rational and well-understood
sponsorship model
• tailored support that recognises individual
complexities
• effective and efficient processes and systems
For each partner organisation we identified key
individuals and their roles, the overall aim of
which is to help us engage with each other in a
consistent and co-ordinated way:
• Ministerial Champion – providing ministerial
oversight and support for key priorities
• Policy Champion – accountable for our overall
relationship with partner organisations
• Policy Sponsor – day to day liaison and
management of our relationship with partners
• Corporate Governance Sponsor – introducing
some additional corporate governance support
for each of our policy groups. This includes
supporting public appointments; tailored
reviews; performance management; risk and
assurance; classifications and delegations;
wider public bodies reform work with
Cabinet Office; and oversight of the ongoing
transformation of BEIS/partner organisation
ways of working

Accountability report
71
Counter-fraud and error
The Department and our partner organisations
have refreshed our fraud risk register and are
rolling out an updated action plan building
on best practice on counter-fraud. We have
collectively been assessed as ‘green’ in
complying with HM Government’s counter-fraud
standards and continue to work closely through
the BEIS Group Counter-Fraud Network to
leverage our collective capacity, expertise and
data to manage the risks specific to internal and
external fraud and error.
We have delivered a fraud awareness
programme to BEIS staff and will build on that
in the coming year. We have also looked again
at how we can support whistle-blowers who
report fraud and abuse of BEIS funds. As in
previous years, cyber-enabled fraud remains a
key cross-cutting threat but we and our partner
organisations have successfully prevented a
number of fraud losses during the year. We are
also working with colleagues across government
and in law enforcement on several on-going
fraud investigations and supporting the wider
fight against economic crime.
Tailored Reviews
We have worked closely with the Cabinet Office
on its programme of Tailored Reviews. In June,
BEIS launched our programme to review 24 of
in-scope partner organisations. The emphasis
will be on assessing the status, form and function
of our partner organisations, exploring potential
efficiencies and whether the right governance is
in place. The reports on two of the reviews have
been published on www.GOV.UK; a further two
reports are expected to be published by June
2018. This programme will help to strengthen our
sponsorship and governance processes as the
new sponsorship model is implemented.
Significant issues
A number of common themes have been
identified as significant issues across several
individual governance statements.
• Research Councils’ transition to UK Research
and Innovation (UKRI): The transition has
caused some initial uncertainty around
governance and operating arrangements.
The challenges include ensuring balanced
representation of each council within UKRI,
and managing change and resources.
• General Data Protection Regulation (GDPR)
– its introduction on 25 May 2018 brings about
substantial changes. The emphasis is on
striving for compliance, rather than achieving
full compliance on day one.
• Cyber security threat remains severe and thus
requires constant monitoring and vigilance.
• EU Exit – Long-term uncertainty around future
availability of EU funding and wider research.
Also, risks in recruitment and retention of
international staff because of uncertainty
surrounding immigration arrangements.
We are engaging with partner organisations
to help them understand and respond to
impacts and opportunities arising from EU Exit.
• A BEIS announcement on 17 April noted that
Sir John Kingman has been commissioned
to conduct an independent review of the
Financial Reporting Council (FRC). The review’s
scope will include the FRC’s governance and
transparency; the avoidance of conflicts of
interest, as well as its independence, oversight
and accountability; and its impact, resources
and capacity. The review will include public
consultation and stakeholder engagement.
It will conclude at the end of 2018.

Annual report and accounts 2017-18
72
Review of the effectiveness of governance,
risk management and internal controls
An annual review of the effectiveness of the
system of governance, risk management and
internal control has been informed by officials,
internal audit and comments made by the NAO.
The Audit and Risk Assurance Committee also
provided further assurance.
The governance controls have improved over
the last year as the Department has evidently
tackled the issues identified during the last review
of effectiveness, covering 2016-17. These issues
were: the need to develop a risk management
framework; provide a suite of unified and defined
priority internal policies; and implement a new
methodology to engage and work with our
partner organisations.
The risk management framework has been set,
with support from the Audit and Risk Assurance
Committee, and communicated through the
Department. Directors General have introduced
group-level risk registers as a result, though
more can be done to improve the consistency
with which the framework is applied. Risk
management was subject to an internal audit
and achieved a moderate level of assurance.
Internal control corporate policies have been
prioritised, mapped and harmonised, removing
the inconsistencies that arose from the
Machinery of Government change. As these
administrative policies have been updated,
new associated controls are being put in place
alongside them.
Further work is required to ensure that policies
are being followed and a new Control Assurance
Record is planned for implementation in 2018‑19,
requiring action and ownership at Deputy
Director level. This will improve the ‘first line
of defence’ and inform the directors general
bi‑annual internal control statements.
The Department has introduced a new
approach to working with partner organisations
through a sponsorship model. Roles have been
established to allow for consistent and co-
ordinated engagement including a Ministerial
Champion, Policy Champion, Policy Sponsor and
Corporate Governance Sponsor for each partner
organisation. In addition the Department has
provided further clarification of the classification
of partner organisations and the concurrent
controls they are subject to. Organisational
remits are set out in a framework document
or similar agreements and these are being
reviewed and revised as appropriate. The internal
audit on partner organisation Governance and
Sponsorship Arrangements was completed in
March 2018 and this area achieved a moderate
level of assurance. Work has begun and will
be continued over 2018/19 to strengthen the
process and the quality of partner organisations’
risk assessments and to ensure partner
organisations can realise the benefits of the
sponsorship model.
The leadership of the Department responded
well to the challenges set in 2016-17 and took
action to ensure that risk management, clearance
of audit actions and the implementation of
internal control policies, all showed improvement.
There was also strong evidence of staff
engagement focused on creating groups that
have an identity and that are part of BEIS,
rather than the legacy departments. Many
important questions within the annual people
survey showed significant levels of improvement.
To add context, recruitment and retention of staff
has been a challenge throughout the year as the
Department has brought in additional resource
to deliver its priorities, especially supporting the
UK’s withdrawal from the European Union.
Over the coming year the leadership team will
focus on a greater degree of consistency across:
risk management; internal controls; and partner
organisation relations. This is clearly in line with
the recognised need to embed newly introduced
systems, improve the line of sight into partner
organisations and strengthen the ‘second line
of defence’.
In addition, over the course of the year, the NAO
have conducted a number of value for money
reports and there have been several subsequent
PAC hearings. The Department considers it has
implemented appropriate actions against all
recommendations that it could reasonably be
expected to during 2017-18.

Accountability report
73
Internal audit review
In his Annual Report and Opinion, the Group
Chief Internal Auditor (GCIA) has provided an
overall ‘moderate’ opinion on the framework of
governance, risk management and control within
the Department for 2017-18. This represents a step
up from the ‘limited’ level of assurance received by
the Department for 2016-17.
The strengthened assurance rating recognises the
good progress made and initiatives taken across
the Department to further develop the governance,
risk management and control environment.
This has included continuing the transformation
to a single department and the introduction of
new risk management and contract management
frameworks. The GCIA recognised this has been
achieved alongside a challenging scale of policy
and programme work that the Department has
been able to deliver concurrently.
The GCIA highlighted some areas where further
effort and focus could be expected to strengthen
the Department’s position:
• the second line of defence would benefit from
further clarification of roles, responsibilities and
accountabilities alongside greater monitoring
of compliance with policies
• the good work done to introduce new IT systems
or the intention to move to shared single shared
service provider will need to maintain momentum
and engagement with staff if longer-term,
positive culture change is to be achieved
• taking steps to ensure corporate knowledge is
retained will be necessary as the Department
continues to increase the capacity and capability
of it staff
Overall, the Department has improved on its
previous rating, with no audits in 2017-18 receiving
an unsatisfactory rating. The Department has been
able to achieve this while: increasing headcount
and the proportion of new starters; introducing a
new IT platform for all staff; responding successfully
to emerging challenges such as the Grenfell fire
disaster; and introducing new control measures
supported by a new internal controls team. This
has been a credit to all staff and to the senior
leadership team in BEIS.
Other governance activity
Group statements on governance, risk
management and internal control
Directors general provide a statement on the
effectiveness of the system in-year and at the
year-end for their group, and an action plan for
improvements. The Head of Internal Audit and
non-executive members of the Audit and Risk
Assurance Committee review each statement
with the relevant Director General and discuss the
key findings with the Permanent Secretary.
These discussions have highlighted:
• good progress in group People Survey results
from the previous year supported by leadership
actions to build a sense of identity and purpose
to being in BEIS
• an increased focus on risk management, in line
with the new departmental framework, leading to
robust group level views on risk
• increased evidence of wider application of
internal controls as more internal policies have
been set for the Department
• strong levels of governance and stakeholder
management, with evidence of lessons learned
and applied through the year
Looking to the future there is recognition of:
• the continued challenge to ensure that the skills
and capability required to deliver can be met
within existing headcount controls and can be
properly supported by recruitment systems
• the work required to embed systems and
controls that have been introduced in the
2017‑18, ensuring consistency and compliance
• the need to make the most of the opportunity
offered to the Department by the new Cirrus IT
platform, especially for improving knowledge
management
• the need to ensure that actions resulting from
internal audit reports are integral to group internal
control management and action planning
Work has started in 2017-18 to further improve
the internal control process for the Department
and will be implemented in 2018-19.

Annual report and accounts 2017-18
74
Effectiveness of our whistleblowing
arrangements
Internal whistleblowing arrangements
We have a well-established policy and
procedures to support internal whistle-blowers
in the core Department. Our procedures offer 6
different routes for employees to raise concerns,
including via an external whistleblowing hotline.
We have a low number of whistleblowing
concerns raised each year. There are no
common themes nor specific risks identified
across the cases. In the 2017 BEIS People
Survey, a clear majority of staff responded that
they had confidence that any concerns they
raised under the Civil Service Code would be
properly investigated.
External whistleblowing arrangements
We are developing a suite of measures to improve
the end-to-end management of external whistle-
blowers, taking account of good practice across
government. We will be using behavioural insights
to prompt more whistle-blowers to come forward.
We will also support them through a better triage
referral process, while also managing expectations
about timescales and reporting arrangements.
All the concerns raised during the year have
been and are being investigated by working in
collaboration with partners inside and outside
the Department.
Shared service assurance
We used 2 shared service centres in 2017-18.
UK Shared Business Services Ltd (UK SBS),
one of our partner organisations, provides
services to former-BIS parts of our core
Department and to UKRI. We receive quarterly
assurance reports from UK SBS on the design
and effectiveness of their internal control
framework. Overall, while noting a need to
invest in a new system solution, UK SBS has
reported that its HR, payroll and finance services
are operating effectively. Further narrative is
available in the Governance Statement for UK
SBS, which is published separately as part of
its Annual Report and Accounts.
Our second shared service provider, Shared
Services Connect Ltd (SSCL), provides services
to former-DECC parts of our core Department.
We have received assurance from the Cabinet
Office over the processes and controls operated
by SSCL, including the results of the annual
ISAE3402 report. This report confirmed the
majority of key controls are operating effectively
and meet the control objectives. Since last year’s
report, SSCL has addressed key findings and
reduced the exceptions significantly. Having
reviewed these exceptions, we are satisfied that
none are likely to be fundamental to our financial
statements or governance statement.
Project management
Over the last year BEIS has made considerable
effort to increase both the Department’s
capacity and capability for managing projects.
We have doubled the number of project
delivery professionals to meet the emerging
challenges of exiting the EU and to support
the implementation of the Industrial Strategy.
We have sought to assess our capability and an
external benchmarking exercise has shown our
portfolio function to be above average. We have
also taken direct action to improve by:
• implementing recommendations from both the
Infrastructure and Projects Authority and GIAA
• introducing a risk management framework with
an active champions network
• piloted a new keyholder and sponsor approach
to support the effective preparation and
assessment of business cases for clearance
through the Project and Investment Committee
All projects with a lifetime cost in excess of
£20 million or those carrying substantial risk are
assessed at the three key business case stages,
and lessons learned are assessed, shared and
utilised to strengthen future delivery.

Accountability report
75
Single Departmental Plan
Internally, the Department will monitor its
progress against its objectives through the
Single Departmental Plan. This is a document
establishing an internal accounting framework,
based on policy milestones and indicators,
to enable on-going monitoring of policy delivery.18
Local government
The Department has provided grants to local
authorities totalling £8.9 million during the year
under Section 31 of the Local Government
Act 2003.
Quality assurance modelling
BEIS has had a single modelling quality
assurance (QA) process since 4 April 2017.
This process complies with the AQuA book.
18 https://www.gov.uk/government/publications/department-for-business-energy-and-industrial-strategy-single-depart-
mental-plan/department-for-business-energy-and-industrial-strategy-single-departmental-plan
The Modelling Integrity Team co-ordinates a
network of analysts within groups who maintain
quality assurance logs for their models, plans
to bring these to the appropriate level of quality
and provide independent assurance for each
other’s models. The Modelling Integrity Team
has trained over 100 analysts in the process and
made the tools widely available via BEIS intranet
and GOV.UK. Groups in BEIS identified 77
analytical models in use to support their business
in the Modelling Integrity Team model tracking
log. This records the progress made in quality
assuring the models. 60% reached appropriate
QA compliance scores and the remainder have
plans to achieve these in 2018-19. Our partner
organisations that undertake modelling give
assurance that they have AQuA compliant
QA processes in place via their respective
Accounting Officer’s statements.
Accounting Officer’s conclusion
In the 2016-17 Annual Report and Accounts my
conclusion accepted that the Department had a
‘limited’ level of assurance and that more work
was required to strengthen the Department’s levels
of control. I highlighted three actions to support
this: develop the risk management framework;
provide a suite of unified and defined priority internal
policies; and implement a new methodology to
engage and work with our partner organisations.
Over the course of 2017-18, each of these three
commitments has been delivered with new systems
and processes introduced to the Department with
the clear support of the senior leadership team.
I have considered the evidence provided regarding
the production of the annual Governance
Statement and the independent advice and
assurance provided by the Audit and Risk
Assurance Committee. I conclude that the
Department has now achieved a ‘moderate’ level
of assurance and that this assessment is strongly
supported by the wide range of internal audits
undertaken throughout the year.
During the course of 2018-19, we will:
• embed the new systems introduced in the last
year, focusing on risk management, assurance
mapping, performance management, IT and
internal controls
• improve the line of sight into partner
organisations commensurate to their respective
levels of risk
• strengthen the clarity and consistency provided
through the Department’s second line of defence
Delivering against these in 2018-19 will enable
the Department to build on the good progress
made over the last year and keep the Department
moving towards its aspiration of achieving a
‘substantial’ level of assurance in the future.
Alex Chisholm
Permanent Secretary
and Principal Accounting Officer
3 July 2018

Annual report and accounts 2017-18
76
Sickness and absence data
Average working days lost to sickness absence
for the core Department, UK Space Agency, and
Insolvency Service for the 12 months to 31 March
2018 was 2.7, 5.3 and 8.1 respectively. BEIS is
committed to supporting the physical and mental
health of its people and fostering employee
wellbeing is a key element of our focus. We have
in place an employee assistance provider to offer
additional support to our people.
Staff with disabilities
The Department is committed to ensuring
equality of opportunity for all disabled employees.
As we make clear in our job application process,
disabled candidates who apply for a post in
BEIS (under the Guaranteed Interview Scheme)
automatically go forward to the interview stage,
provided they satisfy the minimum criteria.
We also promote external vacancies in a range of
diversity media. All staff are encouraged to take
additional training on disability awareness and
are expected to undertake unconscious bias to
increase overall awareness. In recent months,
we have achieved Disability Confident Leader
Level 3.
Recruitment practices
Recruitment into BEIS, and the Civil Service,
is regulated by the Civil Service Commission.
We continue to abide by the principles of the
external recruitment freeze announced in May
2010. Within that context, the Department’s
Executive Committee agrees limits for each
group, and respective Directors General are
responsible for headcount control.
To meet the significant challenges of the
Department’s delivery, including EU Exit and
Industrial Strategy, we review deployment of
our people and our strategies on recruitment
and resourcing. In line with the Civil Service
more widely, in April 2017 we adopted the new
Civil Service Recruitment Framework to enable
effective business delivery and build capability
in key areas. Diversity and inclusion remains a
high priority for BEIS, so our recruitment and
attraction strategy include a range of actions
to develop an ever-increasing level of diversity
within BEIS.
Staff report

Accountability report
77
Building capability
Policy making capability has been a priority for
BEIS. We successfully piloted our internal ‘Policy
Excellence’ programme in 2017, which will be
rolled out throughout 2018. The programme uses
a mixture of case studies, interactive learning,
practical application, and expert support to bring
the policy making process to life and the role of
policy professionals. All new BEIS joiners to the
policy profession are invited to attend this course,
and around 200 have attended to date. It is also
open to existing policy professionals. We are
developing a higher level programme aimed at
Grades 7 and 6 who lead and manage policy
teams. At the highest level, we have sponsored
an additional 4 senior policymakers to take the
2-year Executive Master of Public Policy.
On project delivery, our senior project leaders
have again participated in the centrally-run
programmes that do much to strengthen
project delivery capability: Major Projects
Leadership Academy (MPLA); Project Leadership
Programme (PLP); and Orchestrating Major
Projects (OMP). These programmes have been
supported throughout 2017-18 by internal
expert-led sessions from our portfolio office,
and the bespoke Policy to Delivery programme
established by BEIS to ensure that policy
intent has the best possible chance of being
delivered successfully. The latter intervention was
successfully transferred to the Cabinet Office and
is now accessible to the wider Civil Service.
With BEIS playing a central role in Britain’s
exit from the EU, the need to raise EU-specific
knowledge and skills has been, and remains,
important. An offer comprising online resources,
e-learning, classroom learning, and internal
expert-led sessions provides introductory and
intermediate level development. 2018 will see
trials of a negotiations course and expert-led
practical session, and more work to identify
existing capability gaps and addressing them.
We recognise the importance of developing
managers at all levels. Our ambition is to nurture
coaching culture in the department and to equip
all our managers with the confidence, knowledge
and tools to get the best from their people
through personal development planning, support
for professional development and career and
talent discussions. In-house workshops covering
coaching skills and setting expectations have run
alongside new programmes for new managers,
aspiring managers and experienced managers.
As part of our commitment to invest in our talent
and enable everyone to reach their potential,
we participate in the Civil Service High Potential
Talent Schemes. This includes: Individual
Development Programme (IDP) for Directors
Generals; the High Potential Development
Scheme (HPDS) for Directors; Senior Leaders
Scheme (SLS) for Deputy Directors; and Future
Leaders Scheme (FLS) for Grades 6 and 7.
It also includes the Civil Service positive action
programmes: Crossing Thresholds for women
and Positive Action Pathways for women,
BAME, disabled and LGBT+ staff.
To complement the Civil Service-wide talent
programmes, in 2017-18, we launched our
internal leadership programmes for SEOs,
HEOs and Grades 6 and 7. An additional
internal programme for Deputy Directors is in
development. We also offer apprenticeships
across grades in a range of professions,
including finance, digital, project delivery,
HR, policy, and leadership and management.

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78
People survey 2017
The second Departmental People Survey was
undertaken in October 2017. The response rate
of 90% was well above the Civil Service average
of 67%. The survey returned an engagement
index of 56%, an increase of 3% on the previous
year’s results.
The survey showed progress in 2 of our 3 priority
areas for improvement. ‘Organisational objectives
and purpose’ scored 75%, an increase of 23%
and ‘leadership and managing change’ scored
51%, an increase of 10% from the previous year.
The result for ‘pay and benefits’, our third priority
area, was static at 25%. This is not something
the Department is content with and remains a
high priority for BEIS.
For the ‘diversity and inclusion’ indicator, the
survey returned a score of 80%, and for ‘learning
and development’, 59%. For both indicators,
BEIS is amongst high performers of survey
participants.
The questions with the highest positive scores
included, I am interested in my work (90%),
I am trusted to carry out my job effectively (88%),
and I am treated with respect by the people
I work with (88%).
Our transformation programme has continued
to deliver changes in response to the survey.
In September, BEIS Story was launched bringing
together our vision, objectives and values.
Our values – brilliant, enterprising, inclusive,
skilled were developed with staff and were
positively received.
Diversity and inclusion
As the department responsible for creating an
‘economy that works for everyone’, BEIS focuses
heavily on diversity and inclusion (D&I).
In recent months we have:
• undergone our first Stonewall Workplace
Equality Index assessment
• worked with SCS women to identify key
challenges for progression
• hosted the first Civil Service wide EU Nationals
staff conference
• worked in partnership with Business in the
Community on the creation of the Best
Employers for Race accreditation
Since the launch of our first diversity and
inclusion strategy in February 2017, we have
maintained the aim of becoming a role model for
business and the rest of the Civil Service. We are
in a positive position, but there is still work to do.
Areas of priority moving into 2018-19 are:
• increasing representation of women at SCS2
and above; BAME representation at Grade 7
and above; and disabled people at all grades
• performance management outcomes for
disabled staff and older workers
• ‘inclusive by design’ equality analysis in all
our key decision-making processes.
We continue to have targets for diversity of
representation, unconscious bias training, and
diversity data return. Every year, we undertake
the Summer Diversity Internship Programme to
encourage greater diversity of staff. We have also
achieved a high success rate across diversity
groups for Senior Leaders Scheme and Future
Leaders Scheme.
We have 12 diversity networks, and nearly
60 chairs and champions supporting them.
The diversity and inclusion strategy is monitored
quarterly by the Executive Committee and
is sponsored by 2 directors general and the
Permanent Secretary. The aim of the strategy
is to ensure D&I is embedded within our
objectives and delivered to benefit staff as well
as the public. Thus, all directorates in BEIS
have pledged actions to improve diversity and
inclusion outcomes which reflect their local
aspirations.
During the year 40 employees took advantage
of the Government’s Shared Parental Leave
Scheme.
Details of the Department’s Gender Pay Gap
at 31 March 2017 together with the actions it is
committed to take can be found at: https://www.
gov.uk/government/publications/beis-gender-
pay-gap-report-and-data-2017. A report for 2018
will be published later this year.

Accountability report
79
Staff composition as at 31 March 201816
Gender
Directors17
All BEIS
senior
civil
servants
All BEIS
employees
All BEIS
employees
(%)
Male
6
114
1,737
52%
Female
3
100
1,570
48%
Total
9
214
3,307
100%
16
The data on this page is compiled using ONS methodology with the exception of the ‘Gender’ table, which is FTE on payroll.
17
The term ‘Directors’ refers to the BEIS executive board members, not the grade.
The Department is a proud member
of the following schemes:
Ethnicity
8%
BAME
38%
White
2%
Prefer not
to say
51%
Unknown
Disability
6%
Yes
50%
No
2%
Prefer not
to say
42%
Unknown
Sexual orientation
4%
LGB
48%
Straight
5%
Prefer not
to say
43%
Unknown

Annual report and accounts 2017-18
80
Employee consultation
We conducted an organisation-wide consultation
to develop the new approach to performance
management at BEIS, to take effect from April
2018. We had 1,250 survey responses and over
300 colleagues attended face-to-face sessions.
Our aims are to use the new process as a vehicle
to improve our people management and build
our skills capability. This involves empowering
managers to have regular, future-focused
one-to‑ones using coaching for development.
We have developed a full range of support
materials to assist managers in this area.
We have opened-up the governance activity
within BEIS to allow for a greater representation
of views from different levels of the organisation,
on issues that impact all of our people.
The shadow People and Operations Committee
has been running successfully all year providing
valuable insight and support to senior decision
makers. As a result we have taken steps to
expand this initiative and will have a shadow
Executive Committee in place during 2018-
19 with a direct link to the Departmental
Board. We continue to communicate with our
employees using a range of channels including:
workshops, town-hall style meetings, intranet
blogs and webchats.
Over the year we have also focused on
strengthening our relationship with Departmental
Trade Union Side (DTUS). This includes engaging
in timely and meaningful consultation and
facilitating regular discussions on areas that
notably have the biggest effect on staff: HR,
finance and estates. This has created positive
employee relations environment.
Health, safety and wellbeing
We consider the wellbeing of staff to
be paramount. We have a strong record
in providing a safe and supportive work
environment. There have been no reported
accidents in accordance with the Reporting of
Injuries, Diseases and Dangerous Occurrences
Regulations 2013. Health, safety and wellbeing
is monitored quarterly by the Health and
Safety Committee.
An audit was carried out by Government Internal
Audit Agency in November 2017, which received
an overall ‘moderate’ rating. The auditors also
found BEIS actively promoted the 5 priorities
from the Civil Service Health and Well-Being
Strategy. We work within the framework of
the Civil Service Health and Wellbeing Strategy.
The focus is mental health, musculoskeletal
health and a healthy lifestyle. In recent months,
we have invested significantly in mental health
training for all staff.
Health service
Our occupational health services are
independent and confidential. Individuals are
asked for their consent for a referral to the
Department’s medical advisers. They offer an
assessment on fitness for work, and help the
department consider reasonable adjustments in
accordance with our duty under the Equality Act
2010. To ensure staff have the best opportunity
to continue in employment, we provide dedicated
information and counselling support service
through our employee assistance programmes.

Accountability report
81
Number of SCS staff by pay band
The following table shows the number of senior
civil servants in the core Department by pay
range as at 31 March 2018. Bonuses are not
included and salary ranges represent full‑time
equivalent rates. These pay ranges cover
those staff employed on open-ended and fixed
term contracts.
The remuneration of the senior civil servants who
are not members of the Departmental Board or
Executive Committee is based on a combination
of the performance ratings determined by
Permanent Secretary and Director Generals,
and the award amounts determined by the
Executive Committee. The members of Executive
Committee for 2017-18 are presented in the box.
Pay range
No. of SCS
staff within
range as at
31 March
2018
No. of SCS
staff within
range as at
31 March
2017
Below £59,999
–
–
£60,000 - £64,999
2
3
£65,000 - £69,999
77
73
£70,000 - £74,999
43
36
£75,000 - £79,999
18
22
£80,000 - £84,999
6
5
£85,000 - £89,999
18
22
£90,000 - £94,999
16
6
£95,000 - £99,999
6
4
£100,000 - £104,999
5
7
£105,000 - £109,999
-
1
£110,000 - £114,999
2
5
£115,000 - £119,999
2
2
£120,000 - £124,999
7
4
£125,000 - £129,999
2
3
£130,000 - £134,999
2
2
£135,000 - £139,999
1
–
£140,000 - £144,999
2
5
£145,000 - £149,999
2
2
£150,000 - £154,999
–
–
£155,000 - £159,999
–
–
£160,000 - £164,999
–
–
£165,000 - £169,999
–
–
£170,000 - £174,999
–
–
£175,000 - £179,999
–
–
£180,000 - £184,999
1
2
£185,000 - £189,999
–
–
£190,000 - £194,999
–
–
£195,000 - £199,999
1
–
Total
213
204
Executive Committee members
1 April 2017 to 31 March 2018
Alex Chisholm
BEIS Permanent Secretary
Sam Beckett
Director General, EU Exit and Analysis
Gareth Davies
Director General, Business and Science
Caleb Deeks
Director, Policy, Delivery and
Private Office (from 23 May 2017)
Prof John Loughhead
Chief Scientific Advisor
(fixed term contract to 30 April 2020)
Clive Maxwell
Director General, Energy Transformation
(to 20 November 2017)
Jeremy Pocklington
Director General, Energy and Security
Angie Ridgwell
Director General, Corporate Services
(to 31 December 2017)
Sarah Harrison
Director General, Corporate Services
(from 28 February 2018)
Jaee Samant
Director General, Market Frameworks
Tom Taylor
Director, Finance and Portfolio & Chief
Financial Officer (from 15 January 2018)

Annual report and accounts 2017-18
82
Staff numbers
Audited information.
The average number of full time equivalent
persons employed during the year is shown in
the table below.
2017-18
2016-17
restated
Number of staff
by category
Permanent
employed staff
Others
Ministers
Special
advisers
Total
Total
Core
3,131
239
6
2
3,378
3,162
Agency
1,558
54
–
–
1,612
1,589
Non departmental
public bodies
(NDPBs)
12,522
1,264
–
–
13,786
14,544
Total
17,211
1,557
6
2
18,776
19,295
Of which:
Core Department
and agencies
4,689
293
6
2
4,990
4,751
NDPBs and other
designated bodies
12,522
1,264
–
–
13,786
14,544
Total
17,211
1,557
6
2
18,776
19,295
Staff costs
Audited information.
During the year, £13,932,358 of staff costs
were capitalised (2016-17: £13,459,098) and
294 employees (2016-17: 233 employees) in the
Departmental Group were engaged on capital
projects during the reporting period.
Staff severance costs for current and prior year
are included in wages and salaries. Further detail
on exit packages is included on page 84.
Included within the total net costs of other staff
shown below are ministers’ total net costs of
£344,959 (2016-17: £340,369) and special
advisors’ total net cost of £181,693 (2016-17:
£354,978).
2017-18
2016-17 restated
Permanently
employed staff
£m
Others
£m
Total
£m
Total
£m
Wages and salaries
719
60
779
784
Social security costs
81
–
81
71
Other pension costs
168
–
168
145
Sub total
968
60
1,028
1,000
Less recoveries in respect
of outward secondments
(3)
–
(3)
(4)
Total net costs
965
60
1,025
996
Of which:
Core Department and agencies
255
18
273
282
NDPBs and other designated bodies
710
42
752
714
Total net costs
965
60
1,025
996

Accountability report
83
Principal Civil Service Pension Scheme (PCSPS)
The Principal Civil Service Pension Scheme
(PCSPS) and the Civil Servant and Other
Pension Scheme (CSOPS) – known as ‘Alpha’
– are an unfunded multi-employer defined
benefit Scheme in which the Department is
unable to identify its share of the underlying
assets and liabilities. The scheme actuary
valued the PCSPS as at 31 March 2012.
You can find details in the Cabinet Office
resource accounts:
www.civilservicepensionscheme.org.uk/.
For 2017-18, employer contributions of
£55,532,213 were payable to the PCSPS (2016-
17: £48,603,369) at one of four rates in the range
20.0% to 24.5% (2016-17: 20.0% to 24.5%) of
pensionable pay, based on salary bands.
The Scheme’s actuary reviews employer
contributions, usually every four years, following
a full scheme valuation. The contribution rates
are set to meet the cost of the benefits accruing
during 2017-18 to be paid when the member
retires and not the benefits paid during this
period to existing pensioners.
Employees can opt to open a partnership
pension account, a stakeholder pension with an
employer contribution. Employers’ contributions
of £1,023,802 (2016-17: £896,929) were paid
to one or more of the panel of three appointed
stakeholder pension providers. Employer
contributions are age-related and range from
8% to 14.75%. Employers also match employee
contributions up to 3% of pensionable earnings.
In addition, employer contributions of £15,704
(2016-17: £6,638), 0.5% (2016-17: 0.5%) were
payable to the PCSPS to cover the cost of the
future provision of lump sum benefits on death
in service and ill health retirement of these
employees.
Contributions due to the partnership pension
providers at 31 March 2018 were £27,666
(2016‑17: £11,440). Contributions prepaid at that
date were nil (2016-17: nil)
In 2017-18, 28 people (2016-17: 34 people) across
the Departmental Group retired early on ill-health
grounds; the total additional accrued pension
liabilities in the year amounted to £1,749,313
(2016-17 restated: £1,418,078).
Other pension schemes
Employer contributions to other pension
schemes in the year amounted to £234,198,424
(2016-17 restated: £246,753,334). Employer
contributions include employers’ contributions,
current service costs and, where appropriate,
past service costs of funded pension schemes.
Further details can be found in the accounts of
the Department’s NDPBs and other designated
bodies. A list of these bodies is provided in
note 27.
Nuclear site companies: staff numbers and costs
Nuclear site licence staff costs are disclosed
separately as they are included in the
amounts shown for utilisation in the Nuclear
Decommissioning provision in note 19 rather than
being reported as staff costs in the Statement of
Comprehensive Net Expenditure.
2017-18
2016-17
Permanently
employed
staff
Others
Total
Total
Number of staff (full-time equivalent)
14,816
1,347
16,163
16,522
Wages and salaries (£m)
789
46
835
883
Social security costs (£m)
90
–
90
90
Other pension costs (£m)
135
–
135
130
Less recoveries in respect of outward secondments (£m)
–
–
–
–
Total (£m)
1,014
46
1,060
1,103

Annual report and accounts 2017-18
84
Exit packages
Audited information
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 in the
year that the departure is agreed and are based
on the expected cost in relation to that financial
year. 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.
Number of compulsory
redundancies
Number of other
departures agreed
Total number of exit
packages by cost band
Exit package cost band
2017-18
2016-17
2017-18
2016-17
2017-18
2016-17
Less than £10,000
6
23
41
102
47
125
£10,000 - £25,000
17
23
77
105
94
128
£25,000 - £50,000
21
8
89
83
110
91
£50,000 - £100,000
–
3
124
112
124
115
£100,000 - £150,000
–
–
39
6
39
6
£150,000 - £200,000
–
–
11
5
11
5
More than £200,000
–
–
11
10
11
10
Total number of exit packages
44
57
392
423
436
480
Of which:
Core Department and agencies
–
–
10
91
10
91
NDPBs and other designated bodies
44
57
382
332
426
389
Total number of exit packages
44
57
392
423
436
480
Total cost (£)
1,046,881
1,040,737
23,457,006
17,273,787
24,503,887
18,314,524
Of which:
Core Department and agencies
–
–
594,655
5,152,252
594,655
5,152,252
NDPBs and other designated bodies
1,046,881
1,040,737
22,862,351
12,121,535
23,909,232
13,162,272
Total
1,046,881
1,040,737
23,457,006
17,273,787
24,503,887
18,314,524
In November 2016, an amendment to the Civil
Service Compensation Scheme introduced
a new lower tariff for all exit schemes
(Voluntary Exit, Voluntary Redundancy and
Compulsory Redundancy). This amendment
was subsequently challenged under a Judicial
Review, which resulted in the quashing of the
amendment in 2017-18, and adjustments were
required to some awards made under the
November 2016 terms. The Department had
no exit packages paid in 2016-17 that were
impacted by the Judicial Review, and had three
exit packages paid in 2017-18 that required an
additional payment.
Any organisations that are covered by the Civil
Service Pension Scheme are subject to the
£95,000 cap on exit payments. As the cap is only
a guideline rather than legislation, organisations
can apply to pay over the cap subject to Cabinet
Office approval. During 2017-18, there was
one exit package above £95,000 awarded by
organisations subject to the cap. The value of this
exit package was £108,054 and it was awarded
by the core Department.

Accountability report
85
Consultancy expenditure
Expenditure on consultancy in 2017-18 was
£63.0 million (2016-17: £50.4 million), of which
£41.4 million (2016-17: £37.3 million) was related
to Site Licence Companies. Consultants are
hired to work on projects in a number of specific
situations: where the Department does not
have the skills set required; where the particular
requirement falls outside the core business of
civil servants; or where an external, independent
perspective is required. When used appropriately,
consultancy can be a cost effective and efficient
way of getting the temporary and skilled external
input that the Department needs. We are
committed to the consistent application of the
Cabinet Office’s 2010 controls on consultancy
and other spending.
Trade union facility time
The following disclosure for 2017-18 is required
for the Department and executive agencies
under The Trade Union (Facility Time Publication
Requirements) Regulations 2017.
(a) Relevant union officials
Core Department and agencies
Number of employees who were relevant union officials
42
Full-time equivalent employee number
40.3
(b) Percentage of time spent on facility time
Core Department and agencies
Percentage of time
Number of employees
0%
14
1-50%
28
51-99%
0
100%
0
(c) Percentage of pay bill spent on facility time
Core Department and agencies
Total cost of facility time (£)
101,413
Total pay bill (£)
272,242,543
Percentage of total pay bill spent on facility time calculated
as: (total cost of facility time ÷ total pay bill) x 100
0.04%
(d) Paid trade union activities
Core Department and agencies
Time spent on paid trade union activities as
a percentage of total paid facility time hours
calculated as: (total hours spent on paid trade
union activities by relevant union officials during the
relevant period ÷ total paid facility time hours) x 100
0%

Annual report and accounts 2017-18
86
Remuneration policy
Senior salaries review body
The remuneration arrangements for senior civil
servants are set by the Prime Minister following
independent advice from the Senior Salaries
Review Body.
The Review Body provides independent advice
to the Prime Minister, the Lord Chancellor, the
Secretary of State for Defence, the Secretary
of State for Health and the Home Secretary
on the pay of senior civil servants, the judiciary.
Senior officers of the armed forces, certain
senior managers in the NHS, Police and Crime
Commissioners and chief police officers.
In reaching its recommendations, the Review
Body is to have regard to the following
considerations:
• the need to recruit, retain and motivate suitably
able and qualified people to exercise their
different responsibilities
• regional/local variations in labour markets
and their effects on the recruitment and
retention of staff
• Government policies for improving the
public services including the requirement
on departments to meet the output targets
for the delivery of departmental services
• the funds available to departments as
set out in the Government’s departmental
expenditure limits
• the Government’s inflation target
The Review Body takes account of the evidence
it receives about wider economic considerations
and the affordability of its recommendations.
Further information about the work of the Review
Body can be found at: https://www.gov.uk/
government/organisations/review-body-on-
senior-salaries.
Performance and reward
The Senior Civil Service (SCS) pay system
consists of relative performance assessments.
The highest performing individuals were awarded
a non-consolidated performance reward for their
performance against objectives in 2016-17 which
was paid in 2017-18. These awards varied in
amount within an overall cost envelope set by the
Senior Salaries Review Body and approved by
the Government. Consolidated base pay awards
are limited to a 1% increase to the Department’s
SCS pay bill. No base pay increases were
paid to those assessed to be the lowest 10%
of performers. Further information about the
performance and reward arrangement for
senior civil servants can be found at www.gov.
uk/government/collections/senior-civil-service-
performance-management-and-reward
Service contracts
The Constitutional Reform and Governance
Act 2010 requires Civil Service appointments
to be made on merit on the basis of fair and
open competition. The Recruitment Principles
published by the Civil Service Commission
specify the circumstances when appointments
may be made otherwise.
Unless otherwise stated below, the officials
covered by this report hold appointments
which are open-ended. Early termination,
other than for misconduct, would result in the
individual receiving compensation as set out
in the Civil Service Compensation Scheme.
Further information about the work of the
Civil Service Commissioners can be found at
civilservicecommission.independent.gov.uk
Remuneration report

Accountability report
87
Ministers: salary and pension entitlements
Audited information.
The remuneration of ministers is determined in
accordance with the provisions of the Ministerial
and Other Salaries Act 1975 (as amended by
the Ministerial and Other Salaries Order 1996)
and the Ministerial and Other Pensions and
Salaries Act 1991. None of the ministers of
the Department received any benefits-in-
kind during the year. The salary and pension
entitlements of the ministers of the Department
for the year ending 31 March 2018 were
as follows:
Single total figure of remuneration
Salary (£)
Pension benefits
(to nearest
£1,000)1
Total
(to nearest
£1,000)
Ministers
2017-18 2016-17
2017-18
2016-17
2017-18
2016-17
Secretary of State
Rt Hon Greg Clark MP (from 14 July 2016)2
67,505
45,003
16,000
13,000
84,000
58,000
Ministers of State
Rt Hon Claire Perry MP (from 12 June 2017)3
25,432
–
7,000
–
32,000
–
Sam Gyimah MP (from 10 January 2018)4
5,830
–
2,000
–
8,000
–
Jo Johnson MP (until 9 January 2018)5
26,400
31,680
5,000
8,000
31,000
40,000
Rt Hon Nick Hurd MP
(from 15 July 2016 until 11 June 2017)6
7,920
22,312
1,000
6,000
9,000
28,000
Parliamentary Under-Secretaries of State
Richard Harrington MP (from 14 June 2017)7
16,781
–
5,000
–
22,000
–
Rt Hon Lord Henley (from 27 October 2017)8
45,194
–
7,000
–
52,000
–
Andrew Griffiths MP (from 10 January 2018)9
3,993
–
1,000
–
5,000
–
Margot James MP
(from 16 July 2016 until 9 January 2018)10
18,646
14,917
4,000
4,000
23,000
19,000
Lord Prior of Brampton
(from 9 January 2017 until 27 October 2017)11
68,474
11,452
10,000
4,000
78,000
15,000
Jesse Norman MP
(from 16 July 2016 until 14 June 2017)12
5,594
14,917
–
4,000
6,000
19,000
Note:
Salary information above excludes employers’ national insurance contributions. None of the ministers of the Department
received any benefits-in-kind during the year.
Ministers who transfer from another department continue being paid at the appropriate rate of pay with effect from the first
day of the month following the date of appointment. Former ministers who transfer to other departments are paid at their
current rate of pay up to the end of the month. Any increase in ministers’ salaries on transfer from the date of appointment
is paid by their new department.
1.
The value of 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.
2.
The full year equivalent salary for 2016-17 is £67,505.
3.
The full year equivalent salary for 2017-18 is £31,680.
4.
The full year equivalent salary for 2017-18 is £31,680. Joint Minister with the Department for Education from 10 January
2018. Formerly was Parliamentary Under Secretary of State at the Ministry of Justice. Salary from 1 April to 31 January
was paid by the Ministry of Justice.
5.
The full year equivalent salary for 2017-18 is £31,680. Joint Minister with the Department for Education. Salary from
1 February to 31 March was paid by the Department for Transport.
6.
The full year equivalent salary for 2017-18 is £31,680 (2016-17: £31,680). Salary from 1 July to 31 March was paid
by the Home Office.
7.
The full year equivalent salary for 2017-18 is £22,375. Formerly was Parliamentary Under Secretary of State at the
Department for Work and Pensions. Salary from 1 April to 30 June was paid by the Department for Work and Pensions.

Annual report and accounts 2017-18
88
8.
The full year equivalent salary for 2017-18 is £68,710. Formerly was Parliamentary Under Secretary of State at the
Department for Work and Pensions and a Lord in Waiting (Government Whip). Salary from 1 April to 31 October was
paid by HM Treasury.
9.
The full year equivalent salary for 2017-18 is £22,375. Formerly was Government Whip (Lord Commissioner of HM
Treasury). Salary from 1 April to 31 January was paid by HM Treasury.
10. The full year equivalent salary for 2017-18 is £22,375 (2016-17: £22,375). Salary from 1 February to 31 March was paid
by Department for Digital, Culture, Media and Sport.
11. The full year equivalent salary for 2017-18 is £68,710 (£2016-17: £68,710). Includes Lords Office-Holders
Allowance. £17,177 was paid as contractual severance pay in addition to the amount shown for 2017-18 above.
12. The full year equivalent salary for 2017-18 is £22,375 (2016-17: £22,375). Salary from 1 July to 31 March was paid
by the Department for Transport.
Pension benefits
Ministers1
Accrued
pension
at age
65 at 31
March
2018
Real
Increase
in
pension
at age
65
CETV1
at 31
March
2018
CETV
at 31
March
2017
Real
increase
in CETV
£000
£000
£000
£000
£000
Secretary of State
Rt Hon Greg Clark MP (from 14 July 2016)
5-10
0-2.5
111
93
6
Ministers of State
Rt Hon Claire Perry (from 12 June 2017)
0-5
0-2.5
30
24
3
Sam Gyimah MP (from 10 January 2018)2
0-5
0-2.5
20
19
–
Jo Johnson MP (until 9 January 2018)3
0-5
0-2.5
39
33
2
Rt Hon Nick Hurd (from 15 July 2016 until 12 June 2017)4
0-5
0-2.5
58
55
–
Parliamentary Under-Secretaries of State
Richard Harrington MP (from 14 June 2017)5
0-5
0-2.5
17
11
3
Rt Hon Lord Henley (from 27 October 2017)6
0-5
0-2.5
21
11
7
Andrew Griffiths MP (from 10 January 2018)7
0-5
0-2.5
3
2
1
Margot James MP (from 16 July 2016 until 9 January 2018)8
0-5
0-2.5
10
5
3
Lord Prior of Brampton (from 9 January 2017 until 27 October 2018)
0-5
0-2.5
53
40
8
Jesse Norman MP (from 16 July 2016 until 14 June 2017)9
0-5
0-2.5
10
8
(1)
Note
None of the ministers of the Department received any benefits-in-kind during the year.
1.
See Notes to the Remuneration Report for further explanations as to how the CETV value is calculated.
2.
1 April - 31 January Salary and Pension details can be found in the Ministry of Justice Annual Report and Accounts.
3.
1 February - 31 March Salary and Pension details can be found in the Department for Transport Annual Report
and Accounts.
4.
1 July - 31 March Salary and Pension details can be found in the Annual Report and Accounts for the Home Office.
5.
1 April - 30 June Salary and Pension details can be found in the Department for Works and Pensions Annual Report
and Accounts.
6.
1 April - 31 October Salary and Pension details can be found in the HM Treasury Annual Report and Accounts.
7.
1 April - 31 January Salary and Pension details can be found in HM Treasury Annual Report and Accounts.
8.
1 February - 31 March Salary and Pension details can be found in the Department for Digital, Culture, Media
and Sports Annual Report and Accounts.
9.
1 July - 31 March Salary and Pension details can be found in the Department for Transport Annual Report and
Accounts.

Accountability report
89
Senior managers: salary and pension entitlements
Audited information.
The salary and pension entitlements of the most
senior managers of the Department are set out in
the table below which includes all those who held
membership of the Departmental or Executive
Boards during 2017-18. None of the officials of
the Department received any benefits-in-kind
during the year.
Single total figure of remuneration1
Salary (£’000)
Bonus payments
(£’000)
Pension benefits
(to nearest £1,000)2
Total
(to nearest £’000)
Officials
2017-18
2016-17
2017-18
2016-17
2017-18
2016-17
restated
2017-18
2016-17
restated
Alex Chisholm
(from 4 July 2016)3
180-185
120-125
–
–
69,000
51,000
245-250
170-175
Angie Ridgwell
(until 31 December 2017)4
105-110
140-145
–
10-15
–
–
105-110
155-160
Caleb Deeks
(from 23 May 2017)5
75-80
–
–
–
68,000
–
140-145
–
Clive Maxwell
(until 19 November 2017)6
105-110
145-150
–
–
30,000
56,000
135-140
200-205
Gareth Davies7
125-130
125-130
10-15
10-15
38,000
69,000
175-180
205-210
Jaee Samant
(from 4 April 2016)8
125-130
95-100
–
10-15
160,000
98,000
285-290
205-210
Jeremy Pocklington
120-125
115-120
10-15
–
43,000
79,000
170-175
195-200
John Loughhead
130-135
130-135
–
–
57,000
52,000
185-190
180-185
Sam Beckett
125-130
125-130
10-15
0-5
32,000
90,000
165-170
220-225
Sarah Harrison
(from 28 February 2018)9
10-15
–
–
–
3,000
–
10-15
–
Tom Taylor
(from 15 January 2018)10
25-30
–
–
–
7,000
–
30-35
–
1.
Salary information above excludes employers’ national insurance contributions.
2.
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 decreases due to transfers of pension rights.
3.
2016-17 full year equivalent salary is 180-185.
4.
2017-18 full year equivalent salary is 145-150.
5.
2017-18 full year equivalent salary is 85-90.
6.
2017-18 full year equivalent salary is 145-150.
7.
2016-17 pension benefits revised due to retrospective update to service history
8.
2017-18 full year equivalent salary is 120-125 (2016-17: full year equivalent salary: 105-110).
2017-18 pay includes a pay adjustment relating to 2016-17 service.
9.
2017-18 full year equivalent salary is 140-145.
10. 2017-18 full year equivalent salary is 120-125.

Annual report and accounts 2017-18
90
Pension benefits
Officials
Accrued
pension
at pension
age as at 31
March 2018
and related
lump sum
Real
increase
in pension
and related
lump sum at
pension age
CETV at 31
March 2018
CETV at 31
March 2017
Restated
Real
increase in
CETV
Employer
contribution
to
partnership
pension
account
£’000
£’000
£’000
£’000
£’000
Nearest
£100
Alex Chisholm
(from 04 July 2016)
20-25
2.5-5
246
193
32
–
Angie Ridgwell
(until 31 December 2017)1
–
–
–
–
0
–
Caleb Deeks
(from 23 May 2017)
20-25
2.5-5
239
194
29
–
Clive Maxwell
(until 19 November 2017)
50-55 plus
lump sum of
120-125
0-2.5 plus
lump sum
of 0
771
721
8
–
Gareth Davies2
40-45
0-2.5
504
459
11
–
Jaee Samant
(from 4 April 2016)
40-45 plus
lump sum of
100-105
7.5-10 plus
lump sum of
12.5-15
719
564
114
–
Jeremy Pocklington
40-45 plus
lump sum of
20-25
2.5-5 plus
lump sum
of 0
536
486
15
–
John Loughhead
10-15
2.5-5
169
119
42
–
Sam Beckett
45-50 plus
lump sum of
115-120
0-2.5 plus
lump sum
of 0
818
756
10
–
Sarah Harrison
(from 28 February 2018)
45-50
0-2.5
773
733
37
–
Tom Taylor
(from 15 January 2018)
40-45 plus
lump sum of
90-95
0-2.5 plus
lump sum 0
605
599
2
–
Note
Where senior managers left during the course of the year, their CETV closing balance will be as at their leaving date.
1.
Chose not to be covered by the Civil Service Pension arrangements for the reporting year.
2.
2016-17 pension benefits revised due to retrospective update to service history.

Accountability report
91
Notes to the Remuneration Report
Salary and pension entitlement for
minsters of the core Department
The information relates only to the core
Department. Similar information relating to the
Chief Executives and most senior managers of
the executive agencies and other bodies of the
BEIS family is given in the separate accounts of
those bodies.
• ‘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 (£67,060 from 1 April 2014; £74,000
from 8 May 2015) and various allowances
to which they are entitled are borne centrally.
However, the arrangement for ministers
in the House of Lords is different in that
they do not receive a salary but rather an
additional remuneration, which cannot be
quantified separately from their ministerial
salaries. This total remuneration, as well as the
allowances to which they are entitled, is paid
by the Department and is therefore shown in
full in the figures above
• Bonuses are based on performance levels
attained and are made as part of the appraisal
process. Bonuses relate to the performance
in the year in which they become payable
to the individual. The bonuses reported in
2017‑18 relate to performance in 2016-17 and
the comparative bonuses reported for 2016-17
relate to the performance in 2015-16
• None of the most senior managers of the
core Department received any benefits-in-kind
during the year
Ministerial pensions
Pension benefits for ministers are provided by the
Parliamentary Contributory Pension Fund (PCPF).
The scheme is made under statute and the rules
are set out in the Ministers’ etc. Pension Scheme
2015, available at http://qna.files.parliament.
uk/ws-attachments/170890/original/PCPF
MINISTERIAL SCHEME FINAL RULES.doc
Those ministers who are Members of Parliament
may also accrue an MP’s pension under the
PCPF (details of which are not included in this
report). A new MP’s pension scheme was
introduced from May 2015, although members
who were 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)
for ministerial pensions
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)

Annual report and accounts 2017-18
92
(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.
Civil Service pensions
Pension benefits are provided through the Civil
Service pension arrangements. From 1 April
2015 a new pension scheme for civil servants
was introduced – the Civil Servants and Others
Pension Scheme or Alpha, which provides
benefits on a career average basis with a normal
pension age equal to the member’s State
Pension Age (or 65 if higher). From that date all
newly appointed civil servants, and the majority
of those already in service, joined Alpha. Prior
to that date, civil servants participated in the
Principal Civil Service Pension Scheme (PCSPS).
The PCSPS has 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 will switch into alpha sometime between
1 June 2015 and 1 February 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 3% and 8.05% of pensionable
earnings for members of classic (and members
of alpha who were members of classic
immediately before joining alpha) and between
4.6% and 8.05% for members of premium,
classic plus, nuvos and all other members of
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 a
stakeholder pension arrangement. The employer
makes a basic contribution of between 3%
and 12.5% up to 30 September 2015 and 8%
and 14.75% from 1 October 2015 (depending
on the age of the member) into a stakeholder
pension product chosen by the employee from
a panel of providers. The employee does not
have to contribute, but where they do make
contributions, the employer will match these up

Accountability report
93
to a limit of 3% of pensionable salary (in addition
to the employer’s basic contribution). Employers
also contribute a further 0.8% of pensionable
salary up to 30 September 2015 and 0.5% of
pensionable salary from 1 October 2015 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 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
civilservicepensionscheme.org.uk
CETV for Civil Service pensions
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. CETVs are
worked out in accordance with The Occupational
Pension Schemes (Transfer Values) (Amendment)
Regulations 2008 and do not take account of any
actual or potential reduction to benefits resulting
from Lifetime Allowance Tax which may be due
when pension benefits are taken.
Real increase in CETV
This reflects the increase in CETV that is funded
by the employer. It does not include the increase
in accrued pension due to inflation, contributions
paid by the employee (including the value of
any benefits transferred from another pension
scheme or arrangement) and uses common
market valuation factors for the start and end of
the period.
Compensation for loss of office
No senior managers have received
compensation for loss of office.

Annual report and accounts 2017-18
94
Fair pay disclosure
Audited information.
The pay multiples disclosure is 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 director, including any bonuses, in the
Department for Business, Energy and Industrial
Strategy in the financial year 2017-18 was
£180,000 to £185,000 (2016-17: £180,000 to
£185,000). This was 4.91 times (2016-17: 4.92)
the median remuneration of the workforce,
which was £37,200 (2016-17: £37,092).
In 2017-18: one (2016-17: 2) person received
remuneration in excess of the highest paid
director. Remuneration ranged from £18,200
to £204,992 (2016-17: £11,670 to £185,111).
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.
Fees entitlements for non-executive board members
Audited information.
Below are the banded fee entitlements of non-
executive members of the Departmental Board
in 2017-18.
Non-executive member
Fee entitlement for 2017-18
Fee entitlement for 2016-17
£000
£000
Archie Norman (from 3 October 2016)1
20-25
10-15
Professor Dame Ann Dowling
20-25
20-25
Carolyn McCall (from 1 February 2017)2
15-20
0-5
Charles Randell3
20-25
20-25
Kathryn Parsons (from 1 February 2017)4
15-20
0-5
Stephen Carter (from 1 February 2017)5
15-20
0-5
Stuart Quickenden (from 1 February 2017)6
15-20
0-5
1.
Full year equivalent fee entitlement for 2016-17 is 20-25.
2.
Full year equivalent fee entitlement for 2016-17 is 15-20.
3.
Waived fee entitlement with effect from 1 March 2017. Fee paid in 2016-17 was in range of 15-20
4.
Full year equivalent fee entitlement for 2016-17 is 15-20.
5.
Full year equivalent fee entitlement for 2016-17 is 15-20; fee for 2017-18 and 2016-17 paid to nominated charity
at member’s request.
6.
Full year equivalent fee entitlement for 2016-17 is 15-10; waived fee for 2017-18 and 2016-17.

Accountability report
95
Off-payroll engagements
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 have been asked to report on
their off-payroll engagements and related tax
arrangements for the periods and scope outlined
by HM Treasury. This data is shown in tables (a)
to (c) below.
The Government’s review of the tax arrangements
of public sector appointees highlighted the
possibility for artificial arrangements to enable
tax avoidance. BEIS continues to take a robust
approach and its tax assurance policy has been
promulgated and implemented across the BEIS
family. Tax assurance evidence is sought and
scrutinised to ensure it is sufficient from all off-
payroll appointees. Assurance of compliance with
this tax policy has also been sought from our
partner organisations. Monitoring has shown we
are broadly compliant across BEIS and action has
been taken to address any slight deviations from
this policy.
(a) Off-payroll engagements as of 31 March 2018, for more than
£245 per day and that last longer than 6 months by organisation
Organisation
Total
number
At time of reporting, number that have existed for:
Less than
one year
Between
one and
two years
Between
two and
three years
Between
three and
four years
Four or
more
years
Core Department and agencies
Core Department
78
41
34
1
2
0
Insolvency Service
4
3
1
0
0
0
UK Space Agency
5
3
2
0
0
0
Consolidated Departmental group
Advisory Conciliation and Arbitration
Service
7
7
0
0
0
0
British Business Bank plc
18
9
6
3
0
0

The Start-Up Loans Company
2
2
0
0
0
0
Coal Authority
1
0
1
0
0
0
Civil Nuclear Police Authority
8
7
1
0
0
0
Competition Service
1
0
0
0
0
1
Diamond Light Source Limited
9
1
2
1
0
5
Medical Research Council
4
1
2
1
0
0
The Natural Environment Research Council
2
2
0
0
0
0
Nuclear Decommissioning Authority
19
9
6
0
3
1

Radioactive Waste Management
13
10
0
0
3
0
Oil and Gas Authority
2
1
1
0
0
0
The Science and Technology Facilities
Council
22
4
8
5
5
0
United Kingdom Atomic Energy Authority
38
9
10
1
3
15
UK Shared Business Services Limited
19
15
4
0
0
0
Bodies not consolidated in Departmental Group accounts
British Hallmarking Council
2
2
0
0
0
0
Groceries Code Adjudicator
1
0
1
0
0
0
Pubs Code Adjudicator
2
1
1
0
0
0

Annual report and accounts 2017-18
96
(b) New off-payroll engagements, or those that reached 6 months in duration,
between 1 April 2017 and 31 March 2018, for more than £245 per day and that last
longer than 6 months by organisation
Organisation
Total number
Number assessed as
caught by IR35
Number assessed as
not caught be IR35
Number engaged directly
(via PSC contracted to
BEIS) and are on the
BEIS payroll
No. of engagements
reassessed for
consistency/assurance
purposes during the year
No. of engagements
that saw a change to
IR35 status following
the consistency review
Core Department and agencies
Core Department
69
8
61
0
13
0
Insolvency Service
23
21
2
0
23
0
UK Space Agency
5
3
2
0
4
1
Consolidated Departmental group
Advisory Conciliation and Arbitration Service
24
0
24
0
0
0
The Arts and Humanities Research Council
2
2
0
0
0
0
British Business Bank plc
10
1
9
0
0
0

The Start-Up Loans Company
2
1
1
0
0
0
Civil Nuclear Police Authority
4
0
4
0
4
0
Diamond Light Source Limited
2
0
2
0
2
0
Low Carbon Contracts Company Limited
6
4
2
0
0
0
Medical Research Council
2
1
1
0
3
3
The Natural Environment Research Council
2
0
2
0
0
0
Nuclear Decommissioning Authority
7
3
4
0
0
0

Radioactive Waste Management
10
0
10
0
0
0
Oil and Gas Authority
2
1
1
0
0
0
The Science and Technology Facilities
Council
27
27
0
0
0
0
South Tees Site Company Limited
1
1
0
0
0
0
United Kingdom Atomic Energy Authority
15
14
1
0
1
0
UK Shared Business Services Limited
22
0
22
0
0
0
Bodies not consolidated in Departmental Group accounts
Aerospace Technology Institute
2
0
2
0
0
0
British Hallmarking Council
3
1
2
0
3
0
Pubs Code Adjudicator
2
1
1
0
0
0

Accountability report
97
(c) Off-payroll engagements of board members, and/or, senior officials with significant
financial responsibility, between 1 April 2017 and 31 March 2018 by organisation
Number of off-payroll
engagements of board
members, and/or, senior
officials with significant
financial responsibility,
during financial year
Total number of individuals on
payroll and off-payroll that have
been deemed ‘board members,
and/or others with significant
financial responsibility’ during
the financial year
Core Department and agencies
Core Department
0
16
Insolvency Service
0
9
UK Space Agency
0
5
Consolidated Departmental group
Advisory Conciliation and Arbitration Service (ACAS)
1
7

Central Arbitration Committee
0
1

Certification Office for Trade Union

and Employers’ Associations
0
2
The Arts and Humanities Research Council
0
3
British Business Bank plc
0
15

British Business Bank Investments Ltd
0
4

British Business Finance Ltd
0
11

British Business Financial Services Ltd
0
11

British Business Aspire Holdco Ltd
0
2

Capital for Enterprise Fund Managers Limited
0
3

Capital for Enterprise (GP) Limited
0
2

Capital for Enterprise Limited
0
3

The Start-Up Loans Company (SULC)
1
3
The Biotechnology and Biological Sciences
Research Council
0
21
Coal Authority
0
10
Competition and Markets Authority
0
2
Civil Nuclear Police Authority
0
9
Competition Service
0
5
Diamond Light Source Limited
0
7
The Engineering and Physical Sciences Research
Council
0
4
The Economic and Social Research Council
0
4
The Financial Reporting Council Limited
0
3
Innovate UK
0
8
Low Carbon Contracts Company Limited (LCCC)
1
10
Medical Research Council (MRC)
1
17
The Natural Environment Research Council
0
7
Nuclear Decommissioning Authority
0
16

Radioactive Waste Management
1
3
Oil and Gas Authority
0
1
The Science and Technology Facilities Council
0
21
South Tees Site Company Limited
0
9
UK Green Infrastructure Platform Limited
0
5

Annual report and accounts 2017-18
98
Number of off-payroll
engagements of board
members, and/or, senior
officials with significant
financial responsibility,
during financial year
Total number of individuals on
payroll and off-payroll that have
been deemed ‘board members,
and/or others with significant
financial responsibility’ during
the financial year
UK Green Investment Bank Limited
0
2

UK Green Investment Bank Financial

Services Limited
0
2
United Kingdom Atomic Energy Authority (UKAEA)
1
12

AEA Insurance Ltd (AEAIL)
2
3
UK Shared Business Services Limited (UKSBS)
2
3
Bodies not consolidated in Departmental Group accounts
Aerospace Technology Institute
0
4
British Hallmarking Council (BHC)
1
1
Committee on Climate Change
0
17
Groceries Code Adjudicator
0
1
Pubs Code Adjudicator
0
1
Small Business Commissioner
0
1
The remaining organisations within the reporting
boundaries of the Department have neither
employees nor staff costs.
Details of the exceptional circumstances that led
to the above off-payroll engagements and the
length of time each of these engagements lasted:
ACAS: From February 2017 to July 2017 –
the post holder was appointed to cover the
period when a permanent replacement was
being recruited.
AEAIL: AEAIL is a captive insurance company
that is registered in the Isle of Man (IoM) and
subject to IoM tax and NI legislation. It has no
employees and three directors, two of which are
paid a small fee by AEAIL. The remaining director
is a director of UKAEA and on UKAEA pay roll.
BHC: From April 2017 to present – The post
holder is exempt from National Insurance.
Assurance has been received by BHC that the
appropriate tax liabilities for the post holder have
been met. The remuneration arrangement for the
post holder is currently under review.
LCCC: From December 2016 to May 2017 –
The post holder was appointed to cover the
period when a permanent replacement was
being recruited.
MRC: From January 2017 to March 2018
– The post holder was a secondment from a
university which was a temporary role to support
and lead on key strategic areas for the CEO until
the formation of UK Research and Innovation.
RWM: From April 2014 to present – The post
holder has unique capabilities and expertise that
are relevant to the business. The Cabinet Office
was consulted and approved the off-payroll
arrangement. The original contract was for a
three-year period, which has been extended
annually thereafter.
SULC: From February 2018 to April 2018
– The post holder was appointed for the Start
Up Loans Company. BBB are looking to recruit
a permanent post holder to fill the current
temporary position as soon as possible.
UKAEA: From January 2018 to April 2018 –
This is a short-term engagement of a retiring
Board member at the end of his tenure to
cover the period up to the appointment of a
replacement.
UKSBS: From October 2015 to September 2018
for the first post holder, and from December 2014
to October 2017 for the second post holder –
UKSBS has recruited a new post holder since
April 2018 and are currently exploring various
payroll options with the post holder.

Accountability report
99
Nuclear site companies: off-payroll engagements
The Nuclear Decommissioning Authority (NDA)
delivers work through Site Licence Companies.
These operate with a high degree of autonomy,
but are included within the departmental
accounting boundary. Due to the specialised,
project-driven nature of this work there is a need
to bring in unique skills and experience which
cannot be found in-house, and sometimes
to operate these arrangements for extended
periods. Workers contracted under these
arrangements represent a small proportion of
the overall workforce.
The number of off-payroll engagements
of nuclear site licence companies are
disclosed below:
(a) Off-payroll engagements by organisation, as at 31 March 2018,
for more than £245 per day and that last longer than 6 months
Organisation
Total
number
At time of reporting, number that have existed for:
Less than
one year
Between
one and
two years
Between
two and
three years
Between
three and
four years
Four or
more years
Dounreay Site
Restoration Limited
50
11
3
15
9
12
LLW repository
Limited
50
16
12
22
0
0
Magnox Limited
261
92
58
15
16
80
Sellafield Limited
238
57
27
48
22
84
Total
599
176
100
100
47
176
Magnox Limited
Magnox Limited currently engages a large
number of contingent labour. However,
the staff number will be reducing over the
decommissioning programme.
Sellafield Limited
Agency Supplied Workers (ASWs) are provided
to Sellafield Limited via Capita. The longest
contract is for a duration of 12 months.
However, as many of the projects are driven by
time-bound deliverables that flex in duration and
schedule due to funding, safety or technological
issues, some ASWs are engaged for repeated
12 month contracts.
Many ASWs are rotated onto different projects
in different roles utilising their unique nuclear
industry and Sellafield specific skill-set. So whilst
the year-on-year contracts may infer length
of service in one role, it is in fact a number of
different assignments being undertaken across
the vast Sellafield portfolio. There is a predicted
downturn in the employed headcount within
Sellafield Limited as projects are accelerated
and delivered ahead of schedule. Utilising ASWs
enables Sellafield Limited to have the flexibility
to achieve this, and ASWs will be released not
only when projects are delivered by also when
Sellafield Limited’s employed resources become
available through efficiencies to be redeployed
into roles previously undertaken by ASWs.
There are a small number of case-by-case
justifications made where ASWs are made offers
of employment with Sellafield Limited. These are
not based on the length of service, but are skills
and capability related, and are offered at the
competitive ‘new’ terms and conditions which
were implemented in 2016. These new terms
and conditions demonstrate value for money for
the taxpayer.

Annual report and accounts 2017-18
100
(b) New off-payroll engagements by, or those that reached 6 months
in duration, between 1 April 2017 and 31 March 2018, for more than
£245 per day and that last longer than 6 months by organisation
Organisation
Total
number
Number
assessed as
caught by
IR35
Number
assessed as
not caught be
IR35
Number
engaged
directly
(via PSC
contracted to
BEIS) and are
on the BEIS
payroll
No. of
engagements
reassessed
for
consistency/
assurance
purposes
during the
year
No. of
engagements
that saw a
change to
IR35 status
following the
consistency
review
Dounreay Site
Restoration
Limited (DSRL)
3
n/a
n/a
0
0
0
LLW repository
Limited ‘(LLWR)
23
n/a
n/a
0
0
0
Magnox Limited
53
n/a
n/a
0
0
0
Sellafield Limited
207
0
182
0
82
64
Total
286
0
182
0
82
64
DSRL, LLWR, Magnox Limited
The entities are not in scope of the IR35 tax
legislation for public sector.
Sellafield Limited
The total number of 207 includes 25 new off-
payroll engagements that started before 1 April
2017 and reached 6 months in duration between
1 April 2017 and 31 March 2018. They are out of
scope of the IR35 tax legislation that came into
effect from 1 April 2017 and were only applicable
to these ASWs engaged from 1 April 2017.

Accountability report
101
(c) Off-payroll engagements of board members, and/or, senior officials with significant
financial responsibility, between 1 April 2017 and 31 March 2018 by organisation
Number of off-payroll
engagements of board members,
and/or, senior officials with
significant financial responsibility,
during financial year
Total number of individuals on
payroll and off-payroll that have
been deemed ‘board members,
and/or others with significant
financial responsibility’ during the
financial year
Dounreay Site Restoration Limited
0
19
LLW repository Limited
2
6
Magnox Limited
0
2
Sellafield Limited
0
1
Total
2
28
LLW Repository Limited
From April 2013 to March 2018 – The post
holders were supplied by the parent body
organization with advance agreement approved
by Nuclear Decommissioning Authority. They
have been appointed for a second term.
Magnox Limited
Magnox Limited is owned by Cavendish Fluor
Partnership (CFP) who manage Magnox Ltd on
behalf of the Nuclear Decommissioning Authority
(NDA). As such, the Magnox Limited board is
made up of CFP board members and three
non-executive directors.

Annual report and accounts 2017-18
102
Statement of Parliamentary Supply and related
notes are subject to audit.
In addition to the primary statements prepared
under IFRS, the Government Financial Reporting
Manual (FReM) requires the Department to
prepare a Statement of Parliamentary Supply
(SoPS) and supporting notes to show resource
and capital outturn against the supply estimate
presented to Parliament, in respect of each
budgetary control limit.
Summary of resource and capital outturn in 2017-18
2017-18
2016-17
SoPS
note
Estimate
Outturn
Voted
outturn
compared
with
estimate:
saving/
(excess)
Outturn
restated
Voted
Non-
voted
Total
Voted
Non-
voted
Total
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Departmental expenditure limit
Resource 1.1
3,195,828
(1,194,000)
2,001,828
2,895,368
(1,175,606)
1,719,762
300,460
1,945,274
Capital
1.2
10,856,477
–
10,856,477
10,464,492
–
10,464,492
391,985
10,849,120
Annually managed expenditure
Resource 1.1
85,376,541
369,000
85,745,541
74,864,231
259,815
75,124,046
10,512,310
3,563,950
Capital
1.2
771,549
(1,621,095)
(849,546)
424,306
(1,621,078)
(1,196,772)
347,243
(14,507)
Total
Budget
100,200,395
(2,446,095)
97,754,300
88,648,397
(2,536,869)
86,111,528
11,551,998
16,343,837
Total
100,200,395 (2,446,095)
97,754,300 88,648,397 (2,536,869)
86,111,528
11,551,998 16,343,837
Total
Resource 1.1
88,572,369
(825,000)
87,747,369
77,759,599
(915,791)
76,843,808
10,812,770
5,509,224
Total
Capital
1.2
11,628,026
(1,621,095)
10,006,931
10,888,798
(1,621,078)
9,267,720
739,228
10,834,613
Total
100,200,395 (2,446,095)
97,754,300 88,648,397 (2,536,869)
86,111,528
11,551,998 16,343,837
Voted Budgets are those approved by
Parliament through the Supply Estimates
process. Non‑voted Budgets generally comprise
CFERs (Consolidated Fund Extra Receipts)
that represent operating income or expenditure
financed directly from the Consolidated Fund as
a standing service or from the National Insurance
Fund. Non-voted expenditure does not require
additional Parliamentary authority, but is included
within Budgets set by HMT for completeness.
Statement of Parliamentary Supply

Accountability report
103
Net cash requirement 2017-18
2017-18
2016-17
SoPS
Note
Estimate
Outturn
Voted outturn
compared with
estimate:
saving /(excess)
Outturn
£’000
£’000
£’000
£’000
Net cash requirement
3
15,689,414
13,694,514
1,994,900
13,504,477
Administration costs 2017-18
2017-18
2016-17
Estimate
Outturn
Outturn
£’000
£’000
£’000
Total administration costs
429,238
383,295
392,033
• Figures in the areas outlined in bold are
voted totals subject to Parliamentary control.
In addition, although not a separate voted limit,
any breach of the administration budget will
also result in an excess vote
• Explanations of the significant variances
between Estimate and outturn are given
in the Financial Review of the Directors’
Report on pages 42 to 49
• Prior year outturn is restated to reflect
the changes as result of the Machinery
of Government changes in 2016-17
• The notes on pages 104 to 110 form part
of these Accounts
• Consolidated Fund income shown in SoPS
note 4.1 does not include any amounts
collected by the Department where it was
acting as agent for 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
published separately from but alongside these
financial statements

Annual report and accounts 2017-18
104
SoPS 1.1. Analysis of net resource outturn by section
2017-18
2016-17
restated
Outturn
Estimate
Outturn
Administration
Programme
Gross
Income
Net
Gross
Income
Net
Total
Net Total
Net total
compared
with
estimate
Net total
compared
with
estimate,
adjusted
for
virements
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Spending in Departmental Expenditure Limit by section
Voted
A
Deliver an ambitious industrial strategy
–
–
–
389,316
(6,430)
382,886
382,886
363,846
(19,040)
–
425,590
B
Maximise investment opportunities
and bolster UK interests
–
–
–
40,218
–
40,218
40,218
44,000
3,782
3,782
25,651
C
Promote competitive markets and
responsible business practices
814
–
814
98,285
(12,869)
85,416
86,230
89,140
2,910
2,910
73,792
D
Delivering affordable energy for
households and businesses
–
–
–
32,529
(148)
32,381
32,381
49,415
17,034
17,034
36,365
E
Ensuring that our energy system
is reliable and secure
–
–
–
10,652
(6,451)
4,201
4,201
16,876
12,675
12,675
5,823
F
Taking action on climate change and
decarbonisation
–
–
–
91,076
–
91,076
91,076
34,779
(56,297)
–
27,236
G
Managing our energy legacy safely
and responsibly
–
–
–
266,349
(597)
265,752
265,752
270,275
4,523
–
291,203
H
Science and Research
2
–
2
5,090
(4)
5,086
5,088
3,950
(1,138)
–
(1,985)
I
Capability
324,979
(44,757)
280,222
46,892
(6,813)
40,079
320,301
488,395
168,094
55,884
307,082
J
Government as Shareholder
4,077
(201)
3,876
207,796
(98,772)
109,024
112,900
156,965
44,065
44,065
156,140
K
Deliver an ambitious industrial strategy
(ALB)1 net
2,296
–
2,296
19,009
–
19,009
21,305
20,596
(709)
–
5,489
L
Promote competitive markets and
responsible business practices (ALB) net
8,735
–
8,735
42,913
–
42,913
51,648
53,398
1,750
1,750
48,127
1.
Arm’s length body

Accountability report
105
M
Ensuring that our energy system is
reliable and secure (ALB) net
–
–
–
(1,628)
–
(1,628)
(1,628)
1
1,629
1,629
1,707
N
Taking action on climate change
and decarbonisation (ALB) net
3,447
–
3,447
1,387
–
1,387
4,834
3,476
(1,358)
–
2,399
O
Managing our energy legacy safely and
responsibly (ALB) net
7,044
–
7,044
27,667
–
27,667
34,711
23,804
(10,907)
527
39,234
P
Science and Research (ALB) net
1,075
–
1,075
227,075
–
227,075
228,150
287,750
59,600
57,104
257,357
Q
Capability (ALB) net
33,635
–
33,635
–
–
–
33,635
4,382
(29,253)
–
39,818
R
Government as Shareholder (ALB) net
27
–
27
(73,099)
–
(73,099)
(73,072)
(15,220)
57,852
57,852
(56,431)
S
NDA and SLC expenditure
42,121
–
42,121
1,212,631
–
1,212,631
1,254,752
1,300,000
45,248
45,248
1,287,445
Total voted
428,252
(44,958)
383,294
2,644,158
(132,084)
2,512,074
2,895,368
3,195,828
300,460
300,460
2,972,042
Non-voted
T
Nuclear Decommissioning Authority
income (CFER)2
–
–
–
– (1,176,795)
(1,176,795)
(1,176,795)
(1,194,000)
(17,205)
(17,205) (1,026,768)
Nuclear Safeguards Development
–
–
–
1,189
–
1,189
1,189
–
(1,189)
(1,189)
–
Total non-voted
–
–
–
1,189 (1,176,795) (1,175,606) (1,175,606) (1,194,000)
(18,394)
(18,394) (1,026,768)
Total spending in Departmental
Expenditure Limit
428,252
(44,958)
383,294
2,645,347 (1,308,879)
1,336,468
1,719,762
2,001,828
282,066
282,066
1,945,274
Annually Managed Expenditure by section
Voted
U
Deliver an ambitious industrial strategy
–
–
–
56,046
(38,598)
17,448
17,448
256,556
239,108
220,241
215,413
V
Maximise investment opportunities
and bolster UK interests
–
–
–
1,586
–
1,586
1,586
17,000
15,414
15,414
1,844
W
Promote competitive markets and
responsible business practices
–
–
–
7,000
–
7,000
7,000
7,000
–
–
133,000
X
Ensuring that our energy system
is reliable and secure
–
–
–
–
(415)
(415)
(415)
7,123
7,538
7,538
(3,204)
Y
Managing our energy legacy safely
and responsibly
–
–
–
(132,129)
(753,135)
(885,264)
(885,264)
(189,849)
695,415
673,398
(258,615)
Z
Science and Research
–
–
–
45,578
–
45,578
45,578
67,179
21,601
21,601
41,888
AA
Capability
–
–
–
13,557
–
13,557
13,557
(8,460)
(22,017)
–
(6,012)
AB
Government as Shareholder
–
–
–
(67,435)
(6,279)
(73,714)
(73,714)
(43,952)
29,762
29,762
(12,313)
AC
Renewable Heat Incentive
–
–
–
687,275
–
687,275
687,275
780,000
92,725
92,725
545,426
AD
Deliver an ambitious industrial strategy
(ALB) net
–
–
–
4,867
–
4,867
4,867
(14,000)
(18,867)
–
(10,378)
2.
Consolidated fund extra receipt

Annual report and accounts 2017-18
106
AE
Promote competitive markets and
responsible business practices (ALB) net
–
–
–
87
–
87
87
1
(86)
–
(59)
AF
Taking action on climate change
and decarbonisation (ALB) net
–
–
–
3,558,227
–
3,558,227
3,558,227
8,900,000
5,341,773
5,239,857
1,065,496
AG
Managing our energy legacy safely and
responsibly (ALB) net
–
–
–
1,507,140
–
1,507,140
1,507,140
2,559,156
1,052,016
1,052,016
2,025
AH
Science and Research (ALB) net
–
–
–
94,631
–
94,631
94,631
(7,199)
(101,830)
–
90,936
AI
Government as Shareholder (ALB) net
–
–
–
(25,628)
–
(25,628)
(25,628)
45,986
71,614
71,614
14,081
AJ
Nuclear Decommissioning Authority
–
–
– 69,911,856
– 69,911,856 69,911,856 73,000,000
3,088,144
3,088,144
2,850,516
Taking action on climate change and
decarbonisation (ALB) net
–
–
–
–
–
–
–
–
–
– (1,337,205)
Capability (ALB) net
–
–
–
–
–
–
–
–
–
–
(400)
Total voted
–
–
– 75,662,658
(798,427) 74,864,231 74,864,231 85,376,541 10,512,310 10,512,310
3,332,439
Non voted
AK
Government as Shareholder
–
–
–
259,815
–
259,815
259,815
369,000
109,185
109,185
231,511
AL
Government as Shareholder (CFER)
–
–
–
–
–
–
–
–
–
–
–
Total non-voted
–
–
–
259,815
–
259,815
259,815
369,000
109,185
109,185
231,511
Total spending in Annually Managed
Expenditure
–
–
– 75,922,473
(798,427) 75,124,046 75,124,046 85,745,541 10,621,495 10,621,495
3,563,950
Total DEL and AME resource
428,252
(44,958)
383,294 78,567,820 (2,107,306) 76,460,514 76,843,808 87,747,369 10,903,561 10,903,561
5,509,224
Explanations of the significant variances between the outturn and estimate are included in the Financial Review of the Directors’ Report on pages 42 to 49.

Accountability report
107
SoPS 1.2. Analysis of net capital outturn by section
2017-18
2016-17
restated
Outturn
Estimate
Outturn
Gross
Income
Net
Net
Net total
compared
with
estimate
Net total
compared
with
estimate,
adjusted
for
virements
Net
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Spending in Departmental Expenditure Limit by section
Voted
A
Deliver an ambitious
industrial strategy
343,705
(128,769)
214,936
206,347
(8,589)
–
371,491
B
Maximise investment
opportunities and bolster
UK interests
289,791
–
289,791
294,994
5,203
5,203
303,527
C
Promote competitive
markets and responsible
business practices
2,375
–
2,375
2,770
395
395
376
D
Delivering affordable
energy for households
and businesses
43,976
(343)
43,633
43,651
18
18
42,201
E
Ensuring that our energy
system is reliable and
secure
60
–
60
24
(36)
–
(548)
F
Taking action on
climate change and
decarbonisation
55,806
(4,228)
51,578
66,741
15,163
15,163
39,569
G
Managing our energy
legacy safely and
responsibly
8,475
(531)
7,944
8,160
216
–
7,747
H
Science and research
2,640,719
(5,907)
2,634,812
2,686,432
51,620
13,178
2,596,657
I
Capability
30,965
(12,188)
18,777
44,910
26,133
23,006
10,181
J
Government as shareholder
98,186
(59,485)
38,701
225,756
187,055
150,905
8,535
K
Deliver an ambitious
industrial strategy (ALB) net
957,626
–
957,626
1,008,280
50,654
42,065
803,985
L
Promote competitive
markets and responsible
business practices (ALB) net
1,377
–
1,377
1,559
182
182
1,027
M
Ensuring that our energy
system is reliable and
secure (ALB) net
–
–
–
–
–
–
1,005
N
Taking action on
climate change and
decarbonisation (ALB) net
39
–
39
179
140
140
601
O
Managing our energy
legacy safely and
responsibly (ALB) net
13,559
–
13,559
10,295
(3,264)
–
8,778
P
Science and research
(ALB) net
3,803,928
– 3,803,928
3,765,486
(38,442)
–
3,453,704

Annual report and accounts 2017-18
108
Q
Capability (ALB) net
43
–
43
–
(43)
–
480
R
Government as
Shareholder (ALB) net
334,300
–
334,300
432,893
98,593
134,743
1,229,109
S
NDA and SLC expenditure
2,051,013
–
2,051,013
2,058,000
6,987
6,987
1,970,695
Total voted
10,675,943
(211,451) 10,464,492 10,856,477
391,985
391,985 10,849,120
Non-voted
T
Nuclear Decommissioning
Authority Income (CFER)
–
–
–
–
–
–
–
Total non-voted
–
–
–
–
–
–
–
Total spending in Departmental
Expenditure Limit
10,675,943
(211,451) 10,464,492 10,856,477
391,985
391,985 10,849,120
Annually Managed Expenditure by section
Voted
U
Deliver an ambitious
industrial strategy
–
–
–
–
–
–
–
V
Maximise investment
opportunities and bolster
UK interests
–
–
–
–
–
–
–
W
Promote competitive
markets and responsible
business practices
–
–
–
–
–
–
–
X
Ensuring that our energy
system is reliable and
secure
–
–
–
–
–
–
–
Y
Managing our energy
legacy safely and
responsibly
662,792
(51,000)
611,792
600,311
(11,481)
–
(38,273)
Z
Science and research
864
–
864
–
(864)
–
834
AA
Capability
–
–
–
–
–
–
–
AB
Government as shareholder
7,106,463
(7,108,372)
(1,909)
349,000
350,909
280,788
129,181
AC
Renewable Heat Incentive
–
–
–
–
–
–
–
AD
Deliver an ambitious
industrial strategy (ALB) net
(3,474)
–
(3,474)
–
3,474
3,474
84,962
AE
Promote competitive
markets and responsible
business practices (ALB) net
–
–
–
–
–
–
–
AF
Taking action on
climate change and
decarbonisation (ALB) net
–
–
–
–
–
–
–
AG
Managing our energy
legacy safely and
responsibly (ALB) net
–
–
–
–
–
–
–
AH
Science and research
(ALB) net
(63,845)
–
(63,845)
–
63,845
62,981
(61,276)
AI
Government as shareholder
(ALB) net
(119,122)
–
(119,122)
(177,762)
(58,640)
–
(129,935)
AJ
Nuclear Decommissioning
Authority
–
–
–
–
–
–
–
Total Voted
7,583,678 (7,159,372)
424,306
771,549
347,243
347,243
(14,507)

Accountability report
109
Non-voted
AK
Government as shareholder
–
–
–
–
–
–
–
AL
Government as shareholder
(CFER)
– (1,621,078)
(1,621,078) (1,621,095)
(17)
(17)
–
Total non-voted
– (1,621,078) (1,621,078) (1,621,095)
(17)
(17)
–
Total spending in Annually
Managed Expenditure
7,583,678 (8,780,450) (1,196,772)
(849,546)
347,226
347,226
(14,507)
Total
18,259,621 (8,991,901)
9,267,720 10,006,931
739,211
739,211 10,834,613
Explanations of the significant variances between the outturn and estimate are included in the
Financial Review of the Directors’ Report on pages 42 to 49.
SoPS 2: reconciliation of net resource outturn
to net operating expenditure
2017-18
2016-17
restated
Note
Outturn
Outturn
Total resource outturn in Statement of Parliamentary Supply
SoPS
1.1
76,843,808
5,509,223
Add:
NDA remedial decommissioning costs which are capital in budgets
but taken through the SoCNE
2,051,013
1,970,695
Capital grants
1,351,725
1,695,299
Share of profit/loss of joint ventures and associates
(951)
242
Other non-budget
72,174
28,090
Share of minority interest
5,263
4,604
Research and development costs
6,903,841
6,190,998
Less:
Non-budgetary income
(103,858)
(35,559)
Profit on disposal of shares
(190,915)
–
Non-budget, non voted items in respect of BIS (Postal Services Act 2011)
Company Limited
(74,305)
(88,164)
Expected return on pension scheme assets
(36,510)
(42,266)
Gains/(losses) on defined benefit scheme
(5,219)
(14,260)
NDA income scored in SOPS only
114,345
61,348
Capital income in SoCNE
(10,765)
(73,115)
Amortisation of financial guarantees
–
(7,768)
Research and development income
(411,290)
(342,822)
Other:
Impact of intra group transactions
(26,135)
(65,772)
Other differences
6,313
16,423
Net Expenditure for the period in Consolidated Statement
of Comprehensive Net Expenditure
86,488,534
14,807,196

Annual report and accounts 2017-18
110
SoPS 3: reconciliation of net resource outturn
of net cash requirement
2017-18
Estimate
Outturn
Net total outturn
compared with estimate:
saving/(excess)
£’000
£’000
£’000
Resource Outturn
87,747,369
76,843,808
10,903,561
Capital Outturn
10,006,931
9,267,720
739,211
97,754,300
86,111,528
11,642,772
Accruals to cash adjustments:
Adjustments to remove non-cash items:

Depreciation
(215,611)
(20,547)
(195,064)

New provisions and adjustments

to previous provisions
(155,081)
(156,157)
1,076

Other non-cash items
1,049
(254,513)
255,562
Adjustments for ALBs:

Remove voted resource and capital
(93,261,061)
(82,458,826)
(10,802,235)

Add cash in grant-in-aid
8,447,578
8,179,472
268,106

Add share additions and loans
–
350,368
(350,368)

Add asset held for sale purchase
–
50,000
(50,000)

Less share capital repayment
–
(6,876)
6,876
Adjustments to reflect movements in working balances:

Increase/(decrease) in receivables
1,000,000
739,343
260,657

(Increase)/decrease in payables
(640,000)
(160,843)
(479,157)

Use of provisions
312,145
284,330
27,815

Financial guarantees called in
–
11,359
(11,359)
Removal of non-voted budget items
–
(1,079)
1,079
Other adjustments:
2,446,095
–
2,446,095

Net amounts regarding proceeds
from disposal of assets held for sale
and other assets that were paid to the
Consolidated Fund as CFERs
–
1,638,747
(1,638,747)
Mineworkers’ Pension scheme receivable
–
(611,792)
611,792
Net cash requirement
15,689,414
13,694,514
1,994,900
SoPS 4: Income payable to the consolidated fund
SoPS 4.1: Analysis of income payable to the Consolidated Fund
In addition to income retained, the following income was payable to the Consolidated Fund.
Cash receipts are shown in italics.
2017-18
2016-17
Outturn
Outturn
Income
Receipts
Income
Receipts
£000
£000
£000
£000
Operating income of the NDA within the Ambit
851,538
863,000
756,394
762,000
Operating income outside the Ambit of the Estimate
1,821,194
1,821,194
242,526
242,851
Total income payable to the Consolidated Fund
2,672,732
2,684,194
998,920
1,004,851

Accountability report
111
Parliamentary accountability disclosures
Losses and special payments
Audited information.
The disclosures in this note are in accordance
with Managing Public Money, the official
guidance on handling public funds.
Losses Statement
2017-18
2016-17
Core and
agencies
Departmental
group
Core and
agencies
Departmental
group
Total number of losses
6,396
8,521
7,460
7,827
RPS receivable impairment (£m)
267
267
249
249
Other losses (£m)
15
19
39
40
Total value of losses (£m)
282
286
288
289
Details of cases over £300,000:
claims abandoned: core Department
Redundancy Payment Service (RPS) receivable
impairment: most of the redundancy payments
made from the National Insurance Fund (NIF) are
in respect of employees of insolvent companies.
Repayment of debt is recovered from the sale of
the assets of the insolvent company. A small part
of the debt is preferential but most ranks with
ordinary creditors. Therefore, most of the debt
is irrecoverable. HMRC record the impairment
of the RPS receivable in NIF accounts. The RPS
receivable impairment for 2017-18 is £267 million
(2016-17: £249 million).
Details of cases over £300,000:
constructive losses: core Department
The core Department holds onerous leases
for properties on the Department’s estate, for
which we have provided £126 million (2016-17
£113 million). The payments made during the
course of 2017-18 in respect of these leases
amounted to £15.2 million (2016-17: £18.8 million).
Special payments
Special payments include extra-contractual,
ex gratia, compensation and special
severance payments.
2017-18
2016-17
Core and
agencies
Departmental
group
Core and
agencies
Departmental
group
Total number of special payments
17
21
29
53
Total value of special payments (£m).
60
60
1
99
Details of cases over £300,000: compensation
payments: core Department
The core Department has for several years
been facing large claims for damages from solar
energy and construction companies affected
by changes to Feed-in-Tariffs in 2011. A number
of companies from the solar industry initiated
legal proceedings in 2012, claiming damages
for interference with property rights. Full trial
on the facts of the case was scheduled for the
first available date after 21 January 2018. The
Government always carefully considers whether
it is appropriate to settle cases like these. In this
case we determined that settling the claims on
the terms we secured was in the best interest
of taxpayers. Accordingly all claims were settled

Annual report and accounts 2017-18
112
before trial, without admission of liability or
wrongdoing, for a combined total of £60 million
(including the Department’s liability to pay a
proportion of the claimants’ costs from previous
hearings).
Remote contingent liabilities
Audited information.
The Departmental Group has entered into
the following contingent liabilities by offering
guarantees, indemnities or letters of comfort.
None of these is a contingent liability within the
meaning of IAS 37, as the likelihood of a transfer
of economic benefit in settlement is too remote.
However, they are required to be disclosed under
the requirements of the Government Financial
Reporting Manual and Managing Public Money.
Detail of quantifiable and unquantifiable
remote contingent liabilities is presented in
the sections below.
Quantifiable
Measurement of quantifiable contingent liabilities
is carried out following the requirements of IAS
39. Managing Public Money requires that the full
potential costs of such contracts be reported to
Parliament.
1 April
2017
Increase/
(decrease)
in year
Liabilities
crystallised
in year
Obligations
expired in
year
31 March
2018
Amount
reported to
Parliament by
Departmental
minute
£m
£m
£m
£m
£m
£m
Green Investment Bank has
provided indemnities relating to
costs of decommissioning and
restoring sites once they are no
longer in use.
33
(33)
–
–
–
–
BEIS has indemnified Cornwall
Council for European Regional
Development Fund (ERDF)-
related liability, arising from the
transfer of Wave Hub.
18
–
–
–
18
18
Total
51
(33)
–
–
18
18
Unquantifiable: core Department
Statutory guarantees
• In the event of BAE Systems plc (BAES)
being wound up, other than for the purpose
of reconstruction or amalgamation, the
Government is liable to discharge any
outstanding liability of BAES which vested in
them on 01 January 1981 under section 9,
British Aerospace Act 1980
Statutory indemnities
• Indemnities have been given to UK Atomic
Energy Authority by the Secretary of State
to cover indemnities given to carriers against
certain claims for damage caused by nuclear
matter in the course of carriage
• Indemnities have been given to bankers of the
Insolvency Service against certain liabilities
arising in respect of non-transferable ‘account
payee’ cheques due to insolvent estates and
paid into the Insolvency Service’s account
• Indemnities have been given to the police
at The Police Information Technology
Organisation (Home Office) by The Insolvency
Service and BEIS to cover any liabilities which
they might incur in providing the Criminal
Enforcement Team (formerly part of BEIS)
with access to data from the Police National
Computer (PNC)
• Indemnity have been given to National Grid’s
liabilities with regards to the interconnector
linking the UK and France

Accountability report
113
Intellectual property
• A potential liability to European Patent Office
may arise under Article 40 of the European
Patent Convention of 1973, as the UK is one of
the contracting states
• A potential liability to World Intellectual
Property Organisation may arise under Article
57 of the Patent Co-operation Treaty, as the
UK is one of the contracting states
Data usage indemnities
• An indemnity has been provided to Pöyry PLC
relating to the use of their yield curve data for
the sale of Green Investment Bank. The data
was an important component of a bidder’s
due diligence, risk assessment and ultimately
the price they were willing to pay. BEIS has
indemnified Pöyry PLC for any liability that
occurs as a result of using their information
in the sale process that may be brought by
bidders in relation to the transaction
• An indemnity has been provided to the
International Energy Agency (IEA) for any
losses arising from the use of its data in the
Department’s Global Climate Change 2050
Pathways Calculator, limited to a maximum
of £100,000
Legal costs
• A contingent liability exists in relation to
ongoing legal cases. The cost is dependent on
the outcome of cases which currently cannot
be reliably estimated
• A contingent liability arises from the agreement
to make a grant payment to the Financial
Reporting Council (FRC), in the event that
FRC’s legal cost fund falls below £1 million
in any year, to cover legal costs subsequently
incurred in that year
Indemnities against personal liability
• Indemnities have been given to the directors
appointed by the Department to wholly owned
subsidiaries. These indemnities are against
personal liability following any legal action
against the Company
• Indemnities have been given to the directors
appointed to the Low Carbon Contracts
Company Ltd (formerly CFD Counterparty
Company Limited) and to Electricity
Settlements Company Ltd. The indemnities
are against personal liability following any legal
action against the companies. The indemnities
make clear that they are the last resort for the
companies after all other means have been
excluded i.e. company and directors insurance
(cover limit of £100 million); and the recovery
of costs through the levy. This reduces the
Department’s potential exposure
• Indemnity provided to Low Carbon Contracts
Company Ltd and Electricity Settlements
Company Ltd in respect of their officers.
The indemnities make clear that they are the
last resort for the companies after all other
means have been excluded i.e. Company and
Directors insurance (cover limit of £100 million);
and the recovery of costs through the levy
• Nuclear Liabilities Fund – Indemnities have
been given to the trustees of the Fund
appointed by the Secretary of State. These
indemnities are for personal liability due of
potential legal action against the Fund
• Nuclear Liabilities Fund – Indemnities have
been given to the British Energy (now EDF
Energy) appointed trustees of the Fund.
These indemnities are for personal liability
due to potential legal action against the Fund.
These indemnities can only be benefited
following a failed recourse to an indemnity
from EDF Energy
• Indemnities have been provided to the Official
Receiver relating to their actions as the
administrator of SSI Redcar with respect to
the administration of the site
Insurance claims
• A statutory liability will arise in the event of
a nuclear accident in the UK for third-party
claims in excess of the operator’s liability
• A contingent liability exists in relation to
incidents and accidents insurance claims for
exposure to ionising radiation pursued outside
the existing UK Atomic Energy Authority
insurance scheme
• The Department has indemnified Elexon
Ltd against third-party claims relating to the
design and or implementation of contracts for

Annual report and accounts 2017-18
114
Difference (CfD) and Capacity Markets (CM)
settlement systems which are not covered
by insurance and/or guarantees by their
sub‑contractors.
Losses or damages under agreements
• An indemnity has been given for any losses
or damages caused to other Parties to the
Energy Research Partnership consortium
agreement
• Under the EU Emissions Trading Scheme,
member states are required to appoint a Single
Auction Monitor to oversee the auctioning of
allowances in Phase III. The Joint Procurement
Agreement for the Single Auction Monitor (JPA)
provides for member states to indemnify the
commission should the commission be required
to compensate a third party or another member
state for damages which arise in connection
with the JPA. The contingent liability shall
remain in place until such time as the JPA no
longer exists in its current form. The JPA will
remain in place for as long as the obligation to
jointly appoint an auction monitor remains under
the EU Auctioning Regulation. This period is
not specified
Environmental clean-up
• A contingent liability exists in relation to the
costs of retrieving and disposing of sealed
radioactive sources in the event that a
company keeping such sources becomes
insolvent under the High Activity Sealed
Sources (HASS) Directive: Council Directive
2003/122/EURATOM
• A contingent liability arises in relation to
the remediation of land contaminated by a
nuclear occurrence as the Secretary of State
is deemed to be the appropriate person to
bear responsibility under section 9 of The
Radioactive Contaminated Land (Modification
of Enactments) (England) (Amendment)
Regulations 2007 SI 2007/3245
• A constructive obligation was created in 2002
when the Government undertook to underwrite
the Nuclear Liabilities Fund in respect of
uncontracted and decommissioning liabilities
of British Energy (now EDF Energy Nuclear
Generation Limited) to the extent that the
assets of the Fund fall short. The undiscounted
estimated liabilities of £20.5 billion (2016‑17:
£19.9 billion) have a present value of
£57.8 billion (2016-17: £32.8 billion) using the
prescribed discount rate from HM Treasury
of negative 1.56% (2016-17: negative 0.8%).
The value of the Fund is £9.3 billion (2016-
17: £9.4 billion) and is likely to increase in the
future from investment returns. It is hard to
quantify the extent to which the net position of
the Fund might represent a contingent liability
or asset given the high level of uncertainty
relating to estimation of cash outflows and
investment returns over a future period
exceeding 100 years. The trustees continue
to work with the Department, HM Treasury
and UK Government Investments to review
the Fund’s asset allocation to help ensure
sufficient funding to meet expected liabilities.
On this basis, the Department believes it would
not be appropriate to consider this as either a
contingent liability or asset at the current time
• The Department is responsible, under the
United Nations Convention on the Law of the
Sea (UNCLOS) 1982, OSPAR decision 98/3,
the Energy Act 2004 and the Petroleum act
1998, for decommissioning most oil, gas
and renewable energy installations in the
event that operators are unable to fulfil their
decommissioning commitments. The potential
cost of these liabilities will vary by site and
cannot be reliably forecast
EU Exit
• In 2016, the UK Government announced that
it would guarantee the following EU-funded
projects after the UK has left the EU:
a. all structural and investment fund projects
signed before the Autumn Statement 2016
b. structural and investment fund projects
signed after the Autumn Statement and before
we leave the EU, so long as they are good
value for money and in line with domestic
strategic priorities
c. the payment of awards where UK
organisations successfully bid directly to
the European Commission on a competitive
basis for EU funding projects while we remain
in the EU
d. the current level of agricultural funding under
CAP Pillar 1 until 2020

Accountability report
115
• The financial settlement has now been
signed off by both UK and EU Commission
negotiators in a draft Withdrawal Agreement
and welcomed by the EU-27 at March
European Council. The guarantee will therefore
only be called in the event that the Withdrawal
Agreement is not ratified. As a result, and
due to the EU funding the Department is
expected to replace in future, an unquantifiable
contingent liability is disclosed
• On 29 March 2017, the UK Government
submitted its notification to leave the EU and
Euratom in accordance with Article 50 of
the Treaty on the European Union and the
corresponding provision of the Euratom Treaty.
The triggering of Article 50 starts a two-year
negotiation process between the UK and the
EU. Any subsequent changes in legislation,
regulation and funding arrangements are
subject to the outcome of the negotiations.
As a result, an unquantifiable contingent
liability is disclosed. In accordance with
accounting standards, no contingent assets
can be recognised
Others
• A contingent liability may arise as a non-
compliance with the Cogeneration Directive
(2004/8/EC) when contractors of the
Department incorrectly certify combined heat
and power plants
• A contingent liability exists in respect of the
risks associated with the core Department
assuming responsibility for uplifts in pension
contributions for the UK Atomic Energy
Authority’s non-active pension scheme
members
• The Secretary of State Investor Agreement
(SOSIA) provides protections in certain
scenarios where the Hinkley Point C
nuclear plant is shut down for reasons that
are political, or due to certain changes in
insurance arrangements or certain changes
in law. Payments under the SOSIA would
be expected in the first instance to be made
using funds from the Supplier Obligation
but in certain circumstances they could also
come direct from the Secretary of State
relying on spending powers granted under
the relevant Appropriation Act or, if payments
were to be made over a period longer than
2 years, seeking a new spending power at the
time. The payments could be up to around
£22 billion excluding non-decommissioning
operational costs that may be incurred after
any shutdown. However, the liability to make
payments under the SOSIA is almost entirely
within the control of HM Government
Unquantifiable: departmental ALBs
• The Science and Technology Facilities Council
(STFC) collaborates with several international
partners in the funding, management and
operation of technical facilities which it does
not own. For each of these facilities STFC may
be obliged to contribute to decommissioning
costs arising from a decision to discontinue
operations. The most significant of these
potential liabilities is in respect of CERN and
the European Southern Observatory (ESO).
These liabilities are unquantifiable due to the
nature of the liability and the uncertainties
surrounding them
• The NDA has unquantifiable contingent
liabilities arising from indemnities given as
part of the contracts for the management of
the nuclear site license companies. These
indemnities are in respect of the uninsurable
residual risk that courts in a country which
is not party to the Paris and Brussels
Conventions on third party liability in the field
of nuclear energy may accept jurisdiction to
determine liability in the event of a nuclear
incident. Indemnities are in place in respect of
Magnox, LLWR and Dounreay as set out in the
relevant Parent Body Agreements. In addition,
indemnities are provided to the previous PBO’s
of Magnox and Sellafield covering the periods
of their ownership

Annual report and accounts 2017-18
116
Other potential or expected liabilities
19
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/42629/3798-waste-transfer-pric-
ing-methodology.pdf
The Department has also entered into the
following arrangements, none of which are a
contingent liability requiring disclosure under
either IAS 37 or Government Financial Reporting
Manual or Managing Public Money, as the
obligating events did not exist at the reporting
date. However, the following information has
been provided in the interests of transparency.
Microgeneration Certification Scheme
(MCS)
The MCS was set up as an industry-led scheme
to bring about improvement in industry standards
and increase consumer protection in the field
of microgeneration products. The government
sought to transfer the scheme to an independent
body. To that end, an MCS company and charity
were established. The transfer agreement was
signed in April 2018 transferring the assets, along
with oversight of the scheme, to the company
and the charity.
The transfer agreement includes an uncapped
indemnity to the company and the charity, for
liabilities arising as a result of certain actions
taken and decisions made prior to transfer, i.e.
when government was ultimately responsible for
those actions and decisions. The extent of claims
is unquantifiable.
As the agreement was signed in 2018-19, a
present obligation to the company or charity did
not exist at 31 March 2018. A contingent liability
was submitted to the Parliament on 19 July 2017
and will be recognised for 2018-19.
Hinkley Point C Funded Decommissioning
Programme (FDP) and Waste Transfer
Contracts (WTCs)
The contract with NNB Generation Company
Limited (NNB) to build Hinkley Point C (HPC)
nuclear power plant includes: a Contract for
Difference between NNB and the Low Carbon
Contracts Company, and an FDP and associated
documents including WTCs between NNB and
the core Department.
The FDP and related documents including WTCs
require NNB to make prudent provision for their
waste and decommissioning liabilities. To meet
their liabilities, the operator must set up a fund
with an independent governance framework and
will pay into it so that it is on track to fund the
liabilities that arise from decommissioning and
waste management. The fund will report annually
to the Secretary of State and a full review will be
conducted every five years to ensure that the fund
is on track to meet all its liabilities. If it is off track,
the operator will be required to take corrective
action. These liabilities are strictly the operator’s
responsibility and the probability of taxpayers
picking up these liabilities is remote.
Alongside the FDP, the Government has entered
into two WTCs. These set out terms on which the
Government will take title to and liability for the
spent fuel and intermediate level waste (ILW) from
the site after decommissioning in order to dispose
of the waste safely. The WTCs have generally
been prepared in line with the Government’s
published waste transfer pricing methodology.19
Although the WTCs provide a default price based
on today’s best estimate, they allow the waste
transfer price to be set after a specified later date.
The final price agreed is subject to a cap, but
the likelihood of the future costs exceeding the
agreed cap is considered remote.

Accountability report
117
Capacity agreements
These are statutory arrangements between
National Grid, as system operator, and capacity
providers. They require the capacity provider
to be able to provide a given level of capacity
in relevant delivery years when called upon to
do so by National Grid. At a capacity auction,
applicants who offer the lowest bid can win a
capacity agreement. A capacity auction relates to
delivery of capacity approximately 4 years ahead
(T-4). Most recently, the capacity agreements
resulting from the 2017 T-4 capacity auction,
held in February 2018, are for the Delivery Year
commencing in 2021-22. Also, the capacity
agreements resulting from the 2017 T-1 capacity
auction, held in January 2018, are for the delivery
year commencing in 2019-20. The interim periods
are covered by Transitional Arrangements.
There have been 8 auctions awarding capacity
of 257.8 GW at a first year cost of £3.8 billion.
The payments to capacity providers will be
funded by a levy on licensed electricity suppliers.
The Department has responsibility for
administering the settlement process. This role
is carried out by the Electricity Settlements
Company (ESC), a company set up and owned
by the Department. The obligation for the ESC
to make capacity payments only arises when the
respective levy is received from licensed suppliers
and the generator provides the agreed level of
capacity. The potential income and payments
arising from these arrangements are set out in
the following table.
As at 31 March 2018
As at 31 March 2017
Due
within 1
year
Due
within
2 to 5
years
Due
over 5
years
Total
Due
within 1
year
Due
within
2 to 5
years
Due
over 5
years
Total
£m
£m
£m
£m
£m
£m
£m
£m
Capacity market – ESC
700
3,185
1,167
5,051
–
3,321
1,582
4,903
Income from levy – ESC
(700)
(3,185)
(1,167)
(5,051)
–
(3,321)
(1,582)
(4,903)
Total Departmental Group
–
–
–
–
–
–
–
–
Alex Chisholm
Permanent Secretary and
Principal Accounting Officer
3 July 2018

Annual report and accounts 2017-18
118
Opinion on financial statements
I certify that I have audited the financial
statements of the Department for Business,
Energy and Industrial Strategy (“the Department”)
and of its Departmental Group for the year
ended 31 March 2018 under the Government
Resources and Accounts Act 2000. The
Department comprises the core Department and
its agencies. The Departmental Group consists
of the Department and the bodies designated for
inclusion under the Government Resources and
Accounts Act 2000 (Estimates and Accounts)
Order 2017. The financial statements comprise:
the Department’s and Departmental Group’s
Statements of Comprehensive Net Expenditure,
Financial Position, Cash Flows, Changes in
Taxpayers’ Equity; and the related notes,
including the significant accounting policies.
These financial statements have been prepared
under the accounting policies set out within
them.
I have also audited the Statement of
Parliamentary Supply and the related notes,
and the information in the Accountability Report
that is described in that report as having been
audited.
In my opinion:
• the financial statements give a true and fair
view of the state of the Department’s and the
Departmental Group’s affairs as at 31 March
2018 and of the Department’s net expenditure
and Departmental Group’s net expenditure for
the year then ended
• the financial statements have been properly
prepared in accordance with the Government
Resources and Accounts Act 2000 and
HM Treasury directions issued thereunder
Emphasis of matter – Provisions for nuclear
decommissioning and Contracts for
Difference (CfDs) derivative
Without qualifying my opinion, I draw attention
to the disclosures made in Notes 1.25 and
19.1 to the financial statements concerning
the uncertainties inherent in the provisions
relating to the costs of dealing with nuclear
decommissioning. As set out in these notes,
given the complexity of the plants and materials
being handled and the very long timescales
involved, 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 which are
different from the current assumptions adopted.
Note 19.1 shows the increase in the liability
during 2017-18 arising from the changes in
the long-term discount rate, underlining the
uncertainty inherent in management’s estimate
associated with the long timescales involved
and discount rate assumptions. A further impact
of the change to a more negative long-term
discount rate for provisions is that the later
years, for which there is greater uncertainty
over the underlying future costs, constitute a
larger proportion of the liability estimate thereby
amplifying the overall level of uncertainty.
I also draw attention to the disclosures made
in Notes 1.25 and 9 to the financial statements
concerning the measurement of liabilities
relating to CfDs. As this note describes,
the fair value of these liabilities is highly
sensitive to assumptions regarding future
prices and volumes, particularly in view of the
long timescales involved. As disclosed in note
9, the Department has concluded that the
uncertainty over the valuation of the CfD for
Hinkley Point C is such that the liability does
not meet the recognition criteria set out in the
Conceptual Framework for Financial Reporting.
Opinion on regularity
In my opinion, in all material respects:
• the Statement of Parliamentary Supply
properly presents the outturn against voted
Parliamentary control totals for the year ended
31 March 2018 and shows that those totals
have not been exceeded
• 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
The Certificate and Report of the Comptroller
and Auditor General to the House of Commons

Accountability report
119
Basis of opinions
I conducted my audit in accordance with
International Standards on Auditing (ISAs)
(UK) and Practice Note 10 ‘Audit of Financial
Statements of Public Sector Entities in the
United Kingdom’. My responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of my certificate. Those
standards require me and my staff to comply
with the Financial Reporting Council’s Revised
Ethical Standard 2016. I am independent of
the Department in accordance with the ethical
requirements that are relevant to my audit and
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.
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 the
preparation of the financial statements and for
being satisfied that they give a true and fair view.
Auditor’s responsibilities for the audit of the
financial statements
My responsibility is to audit, certify and report on
the financial statements in accordance with the
Government Resources and Accounts Act 2000.
An audit involves obtaining evidence about
the amounts and disclosures in the financial
statements sufficient to give reasonable
assurance that the financial statements are
free from material misstatement, whether caused
by fraud or error. Reasonable assurance is a
high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement
when it exists. Misstatements can arise from
fraud or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the basis
of these financial statements.
As part of an audit in accordance with ISAs (UK),
I exercise professional judgment and maintain
professional scepticism throughout the audit.
I also:
• identify and assess the risks of material
misstatement of the financial statements,
whether due to fraud or error, design and
perform audit procedures responsive to
those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis
for my opinion. The risk of not detecting a
material misstatement resulting from fraud
is higher than for one resulting from error,
as fraud may involve collusion, forgery,
intentional omissions, misrepresentations,
or the override of internal control
• obtain an understanding of internal control
relevant to the audit in order to design audit
procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness
of the group’s and the Department’s
internal control
• evaluate the appropriateness of accounting
policies used and the reasonableness of
accounting estimates and related disclosures
made by management
• conclude on the appropriateness of
management’s use of the going concern
basis of accounting and, based on the
audit evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast significant doubt on
the group’s and the Department’s ability to
continue as a going concern. If I conclude that
a material uncertainty exists, I am required to
draw attention in my auditor’s report to the
related disclosures in the financial statements
or, if such disclosures are inadequate, to
modify my opinion. My conclusions are based
on the audit evidence obtained up to the date
of my auditor’s report. However, future events
or conditions may cause the entity to cease to
continue as a going concern

Annual report and accounts 2017-18
120
• evaluate the overall presentation, structure and
content of the financial statements, including
the disclosures, and whether the consolidated
financial statements represent the underlying
transactions and events in a manner that
achieves fair presentation
• obtain sufficient appropriate audit evidence
regarding the financial information of the
entities or business activities within the Group
to express an opinion on the group financial
statements. I am responsible for the direction,
supervision and performance of the group
audit. I remain solely responsible for my
audit opinion
I communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit and
significant audit findings, including any significant
deficiencies in internal control that I identify
during my audit.
I am required to obtain evidence sufficient to
give reasonable assurance that the Statement
of Parliamentary Supply properly presents the
outturn against voted Parliamentary control totals
and that those totals have not been exceeded.
The voted Parliamentary control totals are
Departmental Expenditure Limits (Resource
and Capital), Annually Managed Expenditure
(Resource and Capital), Non-Budget (Resource)
and Net Cash Requirement. I am also required
to obtain evidence sufficient to give reasonable
assurance that the expenditure and income
recorded in the financial statements have been
applied to the purposes intended by Parliament
and the financial transactions recorded in the
financial statements conform to the authorities
which govern them.
Other Information
The Accounting Officer is responsible for
the other information. The other information
comprises information included in the annual
report, other than the parts of the Accountability
Report described in that report as having
been audited, the financial statements and my
auditor’s report thereon. My opinion on the
financial statements does not cover the other
information and I do not express any form of
assurance conclusion thereon. In connection
with my audit of the financial statements,
my responsibility is to read the other information
and, in doing so, consider whether the other
information is materially inconsistent with
the financial statements or my knowledge
obtained in the audit or otherwise appears to
be materially misstated. If, 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.

Accountability report
121
Opinion on other matters
In my opinion:
• the parts of the Accountability Report to
be audited have been properly prepared in
accordance with HM Treasury directions
made under the Government Resources and
Accounts Act 2000;
• in the light of the knowledge and
understanding of the group and the parent
and its environment obtained in the course
of the audit, I have not identified any material
misstatements in the Performance Report or
the Accountability Report; and
• 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.
Matters on which I report by exception
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 or returns adequate for my audit have not
been received from branches not visited by my
staff; or
• the financial statements and the parts of the
Accountability Report to be audited are not in
agreement with the accounting records and
returns; or
• I have not received all of the information and
explanations I require for my audit; or
• the Governance Statement does not reflect
compliance with HM Treasury’s guidance.
Report
I have no observations to make on these financial
statements.
Sir Amyas C E Morse
Comptroller and Auditor General
6 July 2018
National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

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Financial
Statements

Financial Statements
123
Consolidated Statement of
Comprehensive Net Expenditure
for the year ended 31 March 2018
31 March 2018
31 March 2017 restated
Continuing operations
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Income from sales of goods and services
6.1
(1,023)
(3,341)
(286)
(1,782)
Total operating income
(1,023)
(3,341)
(286)
(1,782)
Staff costs
3
273
1,025
282
996
Purchase of goods and services
4.1
1,620
2,895
1,629
2,700
Depreciation and impairment charges
4.2
91
666
445
862
Provision expense
4.3
182
75,433
72
6,679
Grants
4.4
11,935
7,545
11,415
7,221
Other operating expenditure
4.5
(6)
(89)
(19)
(127)
Total operating expenditure
14,095
87,475
13,824
18,331
Net operating expenditure
13,072
84,134
13,538
16,549
Finance income
6.2
(184)
(350)
(168)
(279)
Finance expense
5
(19)
(1,206)
(29)
(1,265)
Contracts for difference derivatives
9
–
4,102
(1,337)
(181)
Net expenditure for the year
from continuing operations
12,869
86,680
12,004
14,824
Profit on disposal of Green
Investment Bank
15
(186)
(202)
–
–
Net expenditure for the year
from discontinuing operations
15
–
11
–
(18)
Net expenditure for the year
12,683
86,489
12,004
14,806
Other comprehensive income
and expenditure
Net (gain)/loss on:
Items that will not be reclassified
to net operating expenditure:
– revaluation of property,
plant and equipment
–
(52)
(1)
(145)
– revaluation of intangible assets
–
(31)
–
1
Items that may be reclassified
subsequently to net operating costs:
– revaluation of investments
(114)
(165)
(241)
(91)
– actuarial (gains)/losses
–
(123)
–
144
– other movements in fair value
2
15
(21)
(56)
Total other comprehensive net
income and expenditure from
continuing operations
(112)
(356)
(263)
(147)

Annual report and accounts 2017-18
124
31 March 2018
31 March 2017 restated
Continuing operations
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Total other comprehensive net
income and expenditure from
discontinuing operations
–
5
–
7
Total other comprehensive net
income and expenditure
(112)
(351)
(263)
(140)
Comprehensive net expenditure
for the year
12,571
86,138
11,741
14,666
All operations are continuing apart from those included in note 15.
Further analysis of staff costs can be found in the Staff report in the
Accountability Report on page 76.
The notes on pages 132 to 221 form part of these Accounts.

Financial Statements
125
Consolidated Statement of Financial Position
as at 31 March 2018
31 March 2018
31 March 2017 restated
1 April 2016 restated
Note
Core
Department
and Agencies
Departmental
Group
Core
Department
and Agencies
Departmental
Group
Core
Department
and Agencies
Departmental
Group
£m
£m
£m
£m
£m
£m
Non-current assets:
Property, plant
and equipment
7
276
3,414
264
3,422
264
3,916
Investment
properties
23
145
31
151
34
100
Intangible assets
8
9
145
6
103
9
107
Investments and
loans in other
public sector
bodies
10
2,996
1,630
2,171
1,317
2,908
1,326
Other financial
assets
11
1,028
4,194
1,484
4,082
1,637
4,552
Recoverable
contract costs
12
–
3,346
–
2,870
–
2,799
Derivative financial
instruments
47
78
64
70
54
65
Investment in
joint ventures and
associates
13
–
367
–
347
–
872
Trade and other
receivables
14
932
1,090
305
399
356
437
Total non-
current assets
5,311
14,409
4,325
12,761
5,262
14,174
Current assets:
Inventories
–
31
–
33
–
47
Non-current
assets held
for sale
15
–
15
1,517
2,609
–
19
Trade and other
receivables
14
544
1,343
438
1,301
549
1,298
Investments and
loans in public
bodies
16
732
732
682
682
541
541
Other financial
assets
11
142
142
1
1
2
2
Derivative financial
instruments
31
31
31
42
–
13
Cash and cash
equivalents
17
1,246
2,034
1,192
1,819
775
1,499
Total current
assets
2,695
4,328
3,861
6,487
1,867
3,419
Total assets
8,006
18,737
8,186
19,248
7,129
17,593
Current liabilities:
Trade payables
and other liabilities
18
(2,283)
(4,954)
(2,248)
(4,894)
(1,488)
(3,765)
Provisions for
liabilities and
charges
19
(278)
(3,332)
(289)
(3,582)
(315)
(3,496)

Annual report and accounts 2017-18
126
31 March 2018
31 March 2017 restated
1 April 2016 restated
Note
Core
Department
and Agencies
Departmental
Group
Core
Department
and Agencies
Departmental
Group
Core
Department
and Agencies
Departmental
Group
£m
£m
£m
£m
£m
£m
Financial
guarantees
(16)
(16)
(18)
(18)
(23)
(23)
Derivative financial
instruments
–
(11)
–
–
–
–
Non-current
liabilities held for
sale
15
–
–
–
(1,000)
–
–
Total current
liabilities
(2,577)
(8,313)
(2,555)
(9,494)
(1,826)
(7,284)
Non-current assets
plus/less net current
assets/ liabilities
5,429
10,424
5,631
9,754
5,303
10,309
Non-current
liabilities:
Trade payables
and other liabilities
18
(1,203)
(2,901)
(1,023)
(2,460)
(1,138)
(3,272)
Provisions for
liabilities and
charges
19
(2,176)
(237,603)
(2,297)
(165,931)
(2,516)
(164,111)
Financial
guarantees
(45)
(45)
(43)
(43)
(37)
(37)
Derivative financial
instruments
9
–
(15,904)
–
(12,339)
(1,318)
(12,608)
Retirement benefit
obligations
20
–
(686)
–
(877)
–
(288)
Total non-current
liabilities
(3,424)
(257,139)
(3,363)
(181,650)
(5,009)
(180,316)
Total assets
less liabilities
2,005
(246,715)
2,268
(171,896)
294
(170,007)
Taxpayers’ equity and other reserves:
General fund
995
(250,098)
1,364
(175,148)
(353)
(173,088)
Revaluation
reserve
1,010
2,915
904
2,813
647
2,685
Non-current assets
held for sale revaluation
reserve
–
–
–
15
–
–
Charitable funds
–
314
–
319
–
311
Non-controlling
interests
–
154
–
105
–
85
Total equity
2,005
(246,715)
2,268
(171,896)
294
(170,007)
Core Department and Agencies comprise the core Department and the UK Space Agency
and Insolvency Service.
The notes on pages 132 to 221 form part of these Accounts.
Alex Chisholm
Permanent Secretary and
Principal Accounting Officer.
3 July 2018

Financial Statements
127
Consolidated Statement of Cash Flows
for the period ended 31 March 2018
2017-18
2016-17 restated
Note
Core
Department
and Agencies
Departmental
Group
Core
Department
and Agencies
Departmental
Group
£m
£m
£m
£m
Cash flows from operating activities
Net operating cost
(12,683)
(86,478)
(12,004)
(14,824)
Net operating cost from discontinuing operations
–
(11)
–
18
Adjustment for non-cash expenditure
(60)
78,517
(941)
6,202
(Increase)/decrease in inventories
–
2
–
14
Less movements in inventories relating to items
not passing through the Consolidated Statement
of Comprehensive Net Expenditure
–
–
–
(1)
(Increase)/decrease in trade and other receivables
14
(733)
(733)
162
32
Less movements in receivables relating to items
not passing through the Consolidated Statement
of Comprehensive Net Expenditure
(7)
(7)
(5)
(66)
Increase/(decrease) in trade payables
and other liabilities
18
215
501
645
317
Less movements in payables relating to items
not passing through the Consolidated Statement
of Comprehensive Net Expenditure
(54)
(294)
(394)
334
Use of provisions
19
(284)
(3,238)
(301)
(3,157)
Financial guarantees called in
(11)
(11)
(11)
(11)
Expenditure funded by the National Insurance
Fund (RPS)
4.1
260
260
232
232
Payments to retirement benefit obligations
–
(19)
–
(155)
Net cash outflow from operating activities
(13,357)
(11,511)
(12,617)
(11,065)
Cash flows from investing activities
Purchase of property, plant and equipment
(48)
(353)
(25)
(343)
Purchase of intangible assets
(4)
(33)
(3)
(36)
Proceeds of disposal of property,
plant and equipment
11
106
3
25
Proceeds of disposal of investment property
11
11
–
–
Proceeds of disposal of intangible assets
–
–
1
1
Proceeds of disposal of assets held for sale
1,753
1,785
–
23
Adjustments for proceeds from disposal of assets
held for sale and other assets (surrendered to the
Consolidated Fund)
(1,639)
(1,620)
–
–
Loan redeemed from Post Office Limited
16
7,168
7,168
7,530
7,530
Loans made to Post Office Limited
16
(7,198)
(7,198)
(7,662)
(7,662)
Repayments of loans and investments
22
431
50
455
Payments to the Contracts for Difference
generators
–
(544)
–
(92)
Other investments and loans made
(253)
(798)
(173)
(1,355)
Launch investment receipts
102
102
144
144
Venture capital fund redemptions
181
110
14
12
Venture capital fund investments
(8)
(121)
(13)
(79)
Dividends from Joint ventures and associates
–
–
–
5
Disposal of Joint venture and associates
–
1
–
47
Investment in Joint ventures and associates
13
–
(7)
–
(186)
Investment in asset held for sale
(50)
(7)
–
–

Annual report and accounts 2017-18
128
2017-18
2016-17 restated
Note
Core
Department
and Agencies
Departmental
Group
Core
Department
and Agencies
Departmental
Group
£m
£m
£m
£m
Investment in shares
(393)
(30)
(753)
(37)
Repayment of shares
7
–
–
–
Net cash outflow from investing activities
(338)
(997)
(887)
(1,548)
Cash flows from financing activities
From Consolidated Fund (supply) – current year
13,646
13,646
14,750
14,750
From Consolidated Fund (supply) – prior year
–
–
153
153
To Consolidated Fund (supply) – prior year
–
–
(909)
(909)
Advances from the Contingencies Fund
2
2
–
–
From the National Insurance Fund
260
260
232
232
Payments in respect of National Insurance Fund
(260)
(260)
(232)
(232)
Capital element of payments in respect of finance
leases and on-balance sheet PFI contracts
–
–
–
(1)
Capital contributions from non-controlling interests
–
–
–
8
Issue of share capital
–
3
–
–
Other adjustments relating to financing activities
–
–
–
1
Net Financing
13,648
13,651
13,994
14,002
Less movements in cash and cash equivalents
relating to non-current assets held for sale
–
–
–
(69)
Net increase/(decrease) in cash and
cash equivalents in the period before
adjustment for receipts and payments to the
Consolidated Fund
(47)
1,143
490
1,320
Receipts due to the Consolidated Fund which are
outside the scope of the Department’s activities
2,684
1,655
1,005
77
Payments of amounts
due to the Consolidated Fund
(2,583)
(2,583)
(1,078)
(1,078)
Net increase/(decrease) in cash and
cash equivalents in the period after
adjustment for receipts and payments
to the Consolidated Fund
54
215
417
319
Restated cash and cash equivalents
opening balance
1,192
1,819
775
1,500
Cash and cash equivalents at the
end of the period
17
1,246
2,034
1,192
1,819
The notes on pages 132 to 221 form part of these Accounts.

Financial Statements
129
Statement of Changes in Taxpayers’ Equity
(Core Department and Agencies)
for the period ended 31 March 2018

Note
General
Fund
Revaluation
Reserve
Taxpayers’
equity
Total
Reserves
£m
£m
£m
£m
Balance at 1 April 2016
(353)
647
294
294
Net parliamentary funding – drawn down
14,750
–
14,750
14,750
Net parliamentary funding – deemed
(269)
–
(269)
(269)
National Insurance Fund – RPS
4.1
232
–
232
232
Supply (payable)/receivable adjustment
18
(977)
–
(977)
(977)
Income payable to the Consolidated Fund
(11)
–
(11)
(11)
Decrease in RPS receivables
14
(5)
–
(5)
(5)
Net expenditure for the year
(12,004)
–
(12,004)
(12,004)
Non-Cash Adjustments:
Auditors’ remuneration
4.1
1
–
1
1
Movements in Reserves:
Other comprehensive net expenditure for the year
–
263
263
263
Transfers between reserves
2
(2)
–
–
Other movements
(2)
(4)
(6)
(6)
Balance at 31 March 2017
1,364
904
2,268
2,268
Net parliamentary funding – drawn down
13,646
–
13,646
13,646
Net parliamentary funding – deemed
977
–
977
977
National Insurance Fund – RPS
4.1
260
–
260
260
Supply (payable)/receivable adjustment
18
(928)
–
(928)
(928)
Income payable to the Consolidated Fund
(1,640)
–
(1,640)
(1,640)
Decrease in RPS receivables
14
(7)
–
(7)
(7)
Net expenditure for the year
(12,683)
–
(12,683)
(12,683)
Non-Cash Adjustments:
Auditors’ remuneration
4.1
1
–
1
1
Movements in Reserves:
Other comprehensive net income for the year
–
112
112
112
Transfers between reserves
5
(5)
–
–
Other movements
–
(1)
(1)
(1)
Balance at 31 March 2018
995
1,010
2,005
2,005

Annual report and accounts 2017-18
130
Consolidated Statement of Changes in Taxpayers’ Equity (Departmental Group)
for the period ended 31 March 2018

Note
General
Fund
Revaluation
Reserve
Non-current
Assets Held
for Sale
Revaluation
Reserve
Taxpayers’
equity
Charitable
Funds -
Unrestricted/
Restricted
Non
controlling
interest
Total
Reserves
£m
£m
£m
£m
£m
£m
£m
Balance at 1 April 2016
(173,088)
2,685
–
(170,403)
311
85
(170,007)
Net parliamentary funding – drawn down
14,750
–
–
14,750
–
–
14,750
Net parliamentary funding – deemed
(269)
–
–
(269)
–
–
(269)
National Insurance Fund – RPS
4.1
232
–
–
232
–
–
232
Supply (payable)/receivable adjustment
18
(977)
–
–
(977)
–
–
(977)
Income payable to the Consolidated Fund
(782)
–
–
(782)
–
–
(782)
Decrease in RPS receivables
14
(5)
–
–
(5)
–
–
(5)
Net expenditure for the year
(14,806)
–
–
(14,806)
–
–
(14,806)
Amounts paid from distributable reserves
(194)
–
–
(194)
–
–
(194)
Non-Cash Adjustments:
Auditors’ remuneration
4.1
1
–
–
1
–
–
1
Movements in Reserves:
Other comprehensive net (expenditure)/ income for the year
(144)
284
–
140
–
–
140
Transfers between reserves
127
(150)
15
(8)
8
–
–
Minority interest
–
–
–
–
–
20
20
Other movements
7
(6)
–
1
–
–
1
Balance at 31 March 2017 restated
(175,148)
2,813
15
(172,320)
319
105
(171,896)
Net parliamentary funding – drawn down
13,646
–
–
13,646
–
–
13,646
Net parliamentary funding – deemed
977
–
–
977
–
–
977
National Insurance Fund – RPS
4.1
260
–
–
260
–
–
260
Supply (payable)/receivable adjustment
18
(928)
–
–
(928)
–
–
(928)
Income payable to the Consolidated Fund
(2,489)
–
–
(2,489)
–
–
(2,489)
Decrease in RPS receivables
14
(7)
–
–
(7)
–
–
(7)
Net expenditure for the year
(86,489)
–
–
(86,489)
–
–
(86,489)
Amounts paid from distributable reserves
(162)
–
–
(162)
–
–
(162)

Financial Statements
131
Consolidated Statement of Changes in Taxpayers’ Equity (Departmental Group)
for the period ended 31 March 2018

Note
General
Fund
Revaluation
Reserve
Non-current
Assets Held
for Sale
Revaluation
Reserve
Taxpayers’
equity
Charitable
Funds -
Unrestricted/
Restricted
Non
controlling
interest
Total
Reserves
Non-Cash Adjustments:
Auditors’ remuneration
4.1
1
–
–
1
–
–
1
Movements in Reserves:
Other comprehensive net (expenditure)/income for the year
123
233
–
356
–
–
356
Transfers between reserves
108
(124)
(6)
(22)
(5)
–
(27)
Minority interest
–
–
–
–
–
49
49
Transfer to Statement of Comprehensive Net Expenditure
–
–
(9)
(9)
–
–
(9)
Issue of share capital
3
–
–
3
–
–
3
Other movements
7
(7)
–
–
–
–
–
Balance at 31 March 2018
(250,098)
2,915
–
(247,183)
314
154
(246,715)
The notes on pages 132 to 221 form part of these Accounts.

Annual report and accounts 2017-18
132
Notes to the Accounts
1 Accounting policies, judgements and estimates
1.1
Basis of accounting
These financial statements have been
prepared in accordance with International
Financial Reporting Standards (IFRS) as
adapted and interpreted by the HM Treasury
2017-18 Financial Reporting Manual (FReM)
and as set out in the Accounts Direction to
the Department pursuant to section 5(2) of
the Government Resources and Accounts
Act 2000 except as described at 1.2 below.
Where the FReM permits a choice of
accounting policy, the policy selected is that
judged to be the most appropriate to the
particular circumstances of the Department
and its consolidated entities (the Group) for
the purpose of giving a true and fair view.
The policies adopted by the Group are
described below; they have been applied
consistently to items considered material to
the accounts.
The Consolidated Statement of Financial
Position shows significant net liabilities,
primarily relating to Contracts for Difference
derivatives and provisions for nuclear
decommissioning which will be settled
over many years. Liabilities in excess of
those to be funded by the Group will be
met by future funding voted by Parliament
annually in Supply and Appropriation
Acts. There is no reason to believe the
resources to settle these liabilities will not
be forthcoming. It has accordingly been
considered appropriate to adopt a going
concern basis for the preparation of these
financial statements.
1.2
Accounting convention
These accounts have been prepared under
the historical cost convention modified to
measure property, plant and equipment
(except specific waste management assets),
intangibles, investment properties and
financial instruments at fair value to the
extent required or permitted under IFRS
as set out in these policies.
The Department has agreed with
HM Treasury that specific nuclear waste
management assets should be measured
at historical cost less any impairment
losses where there is no reliable and cost
effective valuation methodology; this is a
departure from the FReM requirement to
report property, plant and equipment at fair
value. Public Dividend Capital and shares
in bodies held by the core Department
are carried at historical cost less any
impairment in accordance with the FReM.
1.3
Presentational currency
The financial statements are presented in
pounds sterling, the functional currency
of the Group. Transactions denominated
in a foreign currency are translated into
sterling at the rate of exchange on the
date of each transaction. In preparing the
financial statements, monetary assets and
liabilities denominated in foreign currencies
are translated at the rates prevailing at the
reporting date. All translation differences of
monetary assets and liabilities are included
in net expenditure for the year. Values are
rounded to the nearest million pounds (£m)
unless the FReM requires a lower threshold.
1.4
Basis of consolidation
The Group accounts consolidate the
balances of the core Department and
designated bodies listed in note 27,
which fall within the departmental boundary
as defined in the FReM and make up the
‘Departmental Group’, excluding transactions
and balances between them. Where
the Office for National Statistics (ONS)
designates a body retrospectively such that
the body should have been designated for
consolidation in a prior period, the accounts
are voluntarily restated to reflect the position
from the effective date of classification.
The consolidated bodies prepare accounts
in accordance with either the FReM or the
Companies Act 2006 (for limited companies).
For those bodies that do not prepare
accounts in accordance with the FReM,
adjustments are made at consolidation if
necessary where differences would have a
significant effect on the accounts. The core
Department and its designated bodies are all
domiciled in the UK.

Financial Statements
133
1.5
Changes in accounting policies
Accounting policies are unchanged
compared to those in the 2016-17
Departmental Group financial statements.
1.6
New accounting standards adopted
in the year and FReM changes
No new accounting standards were
incorporated into the FReM in 2017-18.
1.7
Applicable accounting standards
issued but not yet adopted and FReM
changes for 2018-19
IFRS 9 ‘Financial instruments’
IFRS 9 ‘Financial instruments’ replaces IAS
39 ‘Financial instruments: Recognition and
measurement’ and will be adopted by the
public sector from 1 April 2018. The FReM
removes the option to adopt IFRS 9
retrospectively, and therefore the Group
will recognise any difference between the
previous carrying amount and the carrying
amount under IFRS 9 on 1 April 2018.
The Group has carried out an initial review
of its Statement of Financial Position as at
31 March 2018 to assess potential changes
due to the introduction of IFRS 9. The key
impacts as at 1 April 2018 expected by the
Group have been set out below. This initial
assessment may change as detailed work
on specific instruments is completed.
(a) Classification and measurement of
financial assets and financial liabilities
Under IFRS 9, the requirement for
classifying and measuring financial assets is:
• loans and debt securities are classified
as either held at amortised cost, fair value
through other comprehensive income
(FVOCI) or fair value through profit or loss
(FVTPL), dependent on the business
model and cash flow characteristics of
the financial asset
• derivatives are classified as FVTPL
• investments in equity instruments
are classified as FVTPL, unless
an irrevocable election is made
at initial recognition to present in
Other Comprehensive Income (OCI)
subsequent changes in the fair value of
an investment in an equity instrument
that is not held for trading
Potential changes in each of the IAS 39
categories are discussed below.
Loans and receivables
The Group has £5,584 million of loans
and receivables as at 31 March 2018.
The objective and cash flow characteristics
tests will be assessed for these items.
However, current expectations are
that there will be no change and those
instruments currently classified as loans
and receivables will continue to be
measured at amortised cost.
Public Dividend Capital
The Group has £81 million of Public
Dividend Capital as at 31 March 2018.
According to the FReM interpretation,
Public Dividend Capital is not a financial
instrument within the meaning of IAS 32
and out of scope of IFRS 9. Therefore,
no changes are expected.
Available for sale (AFS)
The Group has £5,060 million of AFS
financial assets as at 31 March 2018:
31 March 2018
£m
Repayable Launch Investments
1,047
Ordinary shares in public sector
companies
1,337
Other AFS financial assets
2,676
Total loans and receivables
5,060
• Repayable Launch Investments
Under the provision of the 1982 Civil
Aviation Act, Repayable Launch
Investments are provided by the core
Department to companies to fund a
proportion of the non-recurring eligible
design and development capital costs on
civil aerospace development products.
Each product supported is covered by
separate contractual terms and conditions,
and periodic repayments become due
when products are delivered or at other
specific points.
It is expected that these investments will
fail the cash flow characteristics test as
repayments are not solely payments of
principal and interest on the principal
amount outstanding.

Annual report and accounts 2017-18
134
Under IFRS 9, these debt instruments
will be reclassified to FVTPL. On adoption,
the cumulative gain or loss previously
recognised in Taxpayer’s Equity of
£235 million as at 31 March 2018
and subsequent fair value movement
for 2018‑19 will be recognised in the
Consolidated Statement of Comprehensive
Net Expenditure (SoCNE).
• Ordinary shares in public sector
companies
Ordinary shares held outside the
Departmental consolidation boundary are
equity instruments in public bodies which
work with the Department to achieve its
objectives but have authority over their own
policies and are not consolidated in to the
group financial statements. No changes
are expected in the classification for these
instruments, since they are not held for
trading and, therefore, the irrevocable
election option is available to present
subsequent changes in the fair value in
OCI under IFRS 9.
• Other AFS financial assets
Work is currently underway to confirm
whether reclassifications are required
for other AFS financial assets. However,
the initial expectation is that investment
funds and private equities may be subject
to potential reclassification.
The majority of investment funds is
comprised of British Business Bank’s
investments, which are classified as
debt instruments. The initial assessment
indicates that the repayments do not
meet the cash flow characteristics test as
they are not solely payments of principal
and interest on the principal amount
outstanding. If this is confirmed in the final
assessment, the financial assets will be
reclassified to FVTPL.
For the investment in listed securities, the
irrevocable election to present subsequent
changes in the fair value in OCI will not be
available if the equity instrument is held for
trading. If confirmed in the final assessment
that these equity instruments are held
for trading, the financial assets will be
reclassified to FVTPL.
In the case of reclassifications to FVTPL,
the cumulative gain or loss previously
recognised in Taxpayer’s Equity will be
recognised in the Consolidated Statement
of Comprehensive Net Expenditure.
Other categories
No material changes are anticipated
for instruments currently classified as
derivatives, FVTPL and held to maturity
financial assets, and financial liabilities
under IFRS 9.
Derivative financial instruments comprise
£86 million of forward contracts held by UK
Space Agency and Science and Technology
Facilities Council (UKRI from 30 March 2018)
to hedge the exposure to foreign currency
risk. The impact of IFRS 9 on hedge
accounting is expected to be immaterial.
(b) Impairment
IFRS 9 replaces the ‘incurred loss model’
in IAS 39 with a forward looking ‘expected
credit loss’ (ECL) model. There is no
change to how impairments on equity
investments or debt instruments measured
at FVTPL are recognised. Therefore, the
new impairment model mainly impacts the
Group’s loans and receivables balances,
debt instruments measured at amortised
cost, and some trade and other receivables
balances. It also potentially impacts on the
Group’s financial guarantee contracts.
The Group will consider reasonable and
supportable information that is relevant
and available without undue cost of
effort in assessing the credit risk and
determining the appropriate level of
ECLs. This will include qualitative and
quantitative information and analysis
based on historical experience, expert
credit assessment (where available) and
forward‑looking information.
IFRS 15 ‘Revenue from Contracts
with Customers’
IFRS 15 ‘Revenue from Contracts with
Customers’ replaces IAS 18 ‘Revenue’
and IAS 11 ‘Construction Contracts’ and
will be adopted by the public sector from
1 April 2018. The FReM removes the
option to adopt IFRS 15 retrospectively,
and therefore the Group will recognise any
difference between the previous carrying
amount and the carrying amount under
IFRS 15 on 1 April 2018.
IFRS 15 requires the Group to apportion
revenue earned from contracts to individual
promises, or performance obligations, on

Financial Statements
135
a stand-alone selling price basis, based on
a five-step model. The Group has carried
out an initial review of its income streams
for 2017-18 to assess potential changes
due to the introduction of IFRS 15. The
review and conclusion is ongoing. However,
the anticipated impacts on significant
revenue streams have been set out below.
Service contracts
The largest stream of income from
service contracts in 2017-18 is Nuclear
Decommissioning Authority (NDA)’s
income of £1,014 million, mainly from fuel
reprocessing, waste and product storage
and the transportation of spent fuel, waste
and products. NDA currently recognises
income on a percentage of completion
basis with the relative costs in delivering
each activity (e.g. reprocessing, waste
treatment, and waste storage) being used
as the main measure of completion. Under
the new standard, the income figure is
subject to increased uncertainty as a higher
proportion of revenue recognition will be
dependent on the performance of key
plants at Sellafield in the remainder of their
commercial operations.
Due to the limited availability of consistent
historical data relating to the contracts
and the extent to which the contracts and
associated assumptions have changed
over time, NDA has obtained a derogation
from HM Treasury to apply IFRS 15
on first time adoption in 2018-19 on a
prospective basis, and therefore, will not
be required to report any retrospective
adjustments for prior years. A derogation
has been granted to the Group to this
effect. A detailed assessment of the
impacts is currently being carried out,
with further detail provided in NDA’s annual
report and accounts.
Levy income
The Group’s levy income of £818 million
in 2017‑18 is comprised of Low Carbon
Contract Company Ltd (LCCC)’s
operational costs levy of £544 million,
Electricity Settlements Company
Ltd (ESC)’s settlement costs levy of
£226 million, Oil and Gas Authority (OGA)’s
petroleum licences levy of £20 million,
Financial Reporting Council (FRC)’s
preparers levy of £19 million and the core
Department’s levy of £9 million. Apart from
FRC’s preparers levy, which is based on
voluntary contributions and accounted for
on a cash receipts basis, the majority of
the remaining levies arise from regulations
and legislation. They are typically set on
an annual basis, invoiced quarterly or
bi‑annually, and accounted for in the period
to which the invoices are related. LCCC
and ESC do not prepare their individual
accounts under FReM and have judged
that IFRS 15 does not apply to income from
electricity suppliers. IFRS 15 is applicable
to the Group’s levy income under FReM
guidance. However, the Group does not
expect material changes in the recognition
and measurement of levy income under
IFRS 15.
Income from Mineworkers’ Pension
Scheme
Income of £742m was recognised during
2017-18 relating to the Government
guarantee of certain benefits payable
to members and beneficiaries of
the Mineworkers’ Pension Scheme.
The Government is entitled to a portion
of any periodic valuation surpluses,
generally determined by the Government
Actuary following triennial valuations.
The cash amounts are to be received
annually up to 2027. The Coal Pension
receivables have been classified as loans
and receivables in accordance with IAS
39 ‘Financial Instruments: Recognition and
Measurement’ and will be classified as held
at amortised cost under IFRS 9 ‘Financial
Instruments’. The associated income,
therefore, is considered to be out of scope
of IFRS 15.
Grant income
The total grant income for 2017-18 is
£138 million. Under the FReM grants and
grants-in-aid should be accounted for in
accordance with IAS 20 ‘Accounting for
Government Grants and Disclosure of
Government Assistance’ as interpreted by
the Manual. The grant income is, therefore,
out of scope under IFRS 15 and no
changes are anticipated.
IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’
and will be adopted by the public sector in
2019-20. IFRS 16 represents a significant
change in lessee accounting by removing
the distinction between operating leases
(off-statement of financial position financing)
and finance leases (on-statement of

Annual report and accounts 2017-18
136
financial position financing), and introducing
a single lessee accounting model. IFRS 16
requires the recognition of all leases
with terms over 12 months as finance
leases. This will result in the recognition
of a right-to-use asset, measured at the
present value of future lease payments,
and a matching liability in the Statement
of Financial Position (SoFP). Disclosure of
operating leases is included in note 21.2.1.
The Group is currently assessing the
impacts of IFRS 16 adoption.
1.8
Operating income
Operating income relates directly to the
operating activities of the Group and is
measured at the fair value of consideration
received or receivable net of trade
discounts, value added tax and other taxes.
Operating income is recognised when
the Group has performed its contractual
obligations, the income can be measured
reliably and it is probable that the economic
benefits will flow to the Group. The Group is
required to identify receipts which it collects
on behalf of the Consolidated Fund; these
are not recognised as income but instead
are disclosed in a separate Trust Statement
published alongside these accounts and
in note 4 in the Statement of Parliamentary
Supply in the Accountability Report.
The Low Carbon Contracts Company
Ltd and Electricity Supply Company Ltd
are permitted to retain levies collected
under statute and classified as taxes in
the national accounts. This income is
recognised by the companies in the same
period as the related expenditure; it is only
recognised in the Group accounts when
an event has occurred that creates an
obligation on a counterparty to pay the levy,
the amount can be reliably measured and it
is probable that the economic benefits will
flow to the Group.
Operating income from contracts
Where the outcome of a contract can
be estimated reliably, income and costs
are recognised by reference to the
stage of completion of contract activity
at the reporting date, i.e. the proportion
of total contract costs represented by
costs incurred to date except where this
would not be representative of the stage
of completion. Where the outcome of a
contract cannot be estimated reliably,
contract revenue is recognised to the
extent of contract costs incurred where
it is probable they will be recoverable.
When it is probable that total contract
costs will exceed total contract revenue,
the expected loss is recognised as an
expense immediately.
A non-current financial asset for
recoverable contract costs is recognised
where costs incurred plus recognised
profits less recognised losses exceed
amounts invoiced to date. Where amounts
invoiced to date exceed costs incurred
plus recognised profits less recognised
losses the balance is reported as payments
received on account.
Grant income
European Funding Grants are recognised
as income when there is reasonable
assurance that there are no conditions
attached, or that any such conditions have
been complied with and it is certain the
grant will be received. Research grants and
fellowships are recognised in line with a
schedule of pre-agreed payment profiles,
which include matching considerations
over the period of the grant duration and
to the period which they relate. Where the
terms and conditions do not specify a pre-
agreed payment profile or other matching
considerations, obligations are recognised
in full. Where the profile indicates an
unclaimed and/or unpaid amount exists at
the reporting date, such sums are accrued.
Income from the Mineworkers’
Pension scheme
Income arising from the Government
guarantee of certain benefits payable
to members and beneficiaries of the
Mineworkers’ Pension scheme is
recognised when cash is received.
1.9
Staff costs
Staff costs are recognised as expenses
when the Group becomes obligated to pay
them, including the cost of any untaken
leave entitlement.
1.10 Grants payable
Grants payable are recognised when the
grant recipient has performed the activity
that creates an entitlement to the grant
under the terms of the scheme and include
estimates for claims not yet received.
Grant contributions to international
organisations in the form of promissory
notes are recognised as expenses when

Financial Statements
137
they become payable on demand with the
Department exercising no further control
over disbursement.
1.11 Taxation
The core Department and its executive
agencies are exempt from corporation
tax by way of Crown exemption.
Some consolidated bodies are subject
to corporation tax on taxable profits.
Current tax assets and liabilities are
measured at the amount expected to be
recovered from or paid to HM Revenue and
Customs, based on tax rates and laws that
are enacted or substantively enacted by the
reporting date.
Value Added Tax (VAT) is accounted for
in the Accounts, in that the amounts are
shown net of VAT except for irrecoverable
VAT, which is aggregated with the cost of
purchased items.
Deferred taxation
Deferred tax is recognised on temporary
differences arising between the tax bases
of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax assets are recognised for
all tax-deductible temporary differences,
carry forward of unused tax credits and
unused tax losses to the extent that it is
probable that taxable profit will be available
in future years against which they can
be utilised.
1.12 Property, plant and equipment (PPE)
Assets are capitalised as PPE if they are
intended for use on a continuing basis
and their original carrying value, on an
individual or asset pool basis, exceeds
the relevant capitalisation threshold which
ranges from £1,000 to £10,000 across the
Group. Exceptions are: a) assets held by
the Nuclear Decommissioning Authority
on designated nuclear sites are only
recognised where the economic element
of their value at the reporting date exceeds
£100,000 and the proportion of asset value
relating to commercial activity exceeds 10%;
and b) operational mine water schemes and
subsidence pumping stations are held by
the Coal Authority at nil value because they
are used to address pollution caused by
past mining activities where the economic
benefits have already been received.
To the extent that it has been recognised
as a provision under IAS 37, the estimated
cost of decommissioning facilities is
recognised as part of the carrying value
of the asset at initial recognition and
depreciated over its useful life.
Valuation of PPE
PPE is carried at fair value except for
nuclear waste management assets held
at historical cost (note 1.2) and assets
under construction which are held at cost.
In accordance with the FReM, assets that
have short useful lives or are of low value
are carried at depreciated historical cost
less impairment as a proxy for fair value.
Non-specialist land and buildings are
measured at current value in existing use
using professional valuations. Specialist
land and buildings are measured at
depreciated replacement cost which
represents the present value of the asset’s
remaining service potential.
Revaluation of PPE
Any accumulated depreciation at the
date of revaluation is eliminated and the
resulting net value restated to equal the
revalued amount. Any revaluation increase
arising is credited to the revaluation reserve
except to the extent that it reverses a
revaluation decrease for the same asset
previously recognised as an expense in
which case the increase is credited to net
expenditure for the year to the extent of the
decrease previously charged. A decrease
in carrying amount arising on revaluation is
charged as an expense to the extent that
it exceeds the balance, if any, held in the
revaluation reserve relating to a previous
revaluation of that asset. On de-recognition,
any revaluation surplus remaining in the
revaluation reserve attributable to the asset
is transferred directly to the General Fund.
Depreciation of PPE
Apart from freehold and long leasehold
land which are not depreciated, PPE assets
are depreciated to estimated residual
values on a straight-line basis over the
following estimated useful lives:

Annual report and accounts 2017-18
138
Freehold buildings
10-60 years
Leasehold land and buildings
10-60 years or remaining life of lease
Agricultural buildings
Up to 60 years
Dwellings
Up to 60 years
Leasehold improvements
Shorter of estimated remaining useful life or outstanding term of lease
Computer equipment
2-10 years
Plant and machinery
3-50 years or remaining life of lease
Office machinery (included in plant and
machinery), furniture, fixtures and fittings
2-11 years or remaining life of lease
Transport equipment
2-14 years
Ships (included in transport equipment)
Minimum of 20 years
Aircraft (included in transport equipment)
Minimum of 15 years
Assets under construction
Not depreciated until available for use as intended by management
Residual values and useful lives are reviewed and adjusted if appropriate at each reporting date.
1.13 Investment property
The Group holds a number of properties
which have been classified as investment
properties and are measured using the fair
value model specified in IAS 40. Gains and
losses arising from changes in fair value are
recognised in net expenditure for the year.
1.14 Intangible non-current assets
Intangible non-current assets are
capitalised if they are intended for use on a
continuing basis and their original carrying
value, on an individual or asset pool
basis, exceeds the relevant capitalisation
threshold which ranges from £1,000 to
£10,000 across the Group. There are
no active markets for any of the Group’s
intangible non-current assets which
are valued at the lower of depreciated
replacement cost and value in use using
a valuation technique (for example for
income-generating assets); where there is
no value in use, depreciated replacement
cost is used. Assets of low value or with
short useful lives are carried at cost less
accumulated amortisation and impairment
losses as a proxy for fair value. They are
amortised on a straight-line basis over the
following periods:
Software licences
3-10 years
Internally developed software
Up to 10 years
Website development costs
2-5 years
Patents, licences and royalties
7-15 years
1.15 Impairment of PPE and intangible
non‑current assets
The Group reviews carrying amounts at
each reporting date. If an indicator for
impairment occurs then the recoverable
amount of the asset (the higher of fair
value less costs to sell and value in use)
is estimated and an impairment loss
recognised to the extent that it is lower
than the carrying amount. Losses arising
from a clear consumption of economic
benefit are charged to net expenditure for
the year. Losses that do not result from a
loss of economic value or service potential
are taken to the revaluation reserve to the
extent that a revaluation reserve exists
for the impaired asset; otherwise to net
expenditure for the year.
1.16 Assets held for sale
Assets are classified as held for sale if
their carrying amount will be recovered
through a sale transaction rather than
through continuing use. This condition
is regarded as met only when the sale is
highly probable, the asset is available for
immediate sale in its present condition
and the asset is actively marketed for sale.
Management must be committed to the
sale which should be expected to qualify
for recognition as a completed sale within
one year from the date of classification.
Assets held for sale are measured at the
lower of a) carrying amount and b) fair value
less costs to sell.

Financial Statements
139
1.17 Cash and cash equivalents
Cash and cash equivalents comprise
cash in hand and other short term highly
liquid investments which are readily
convertible to known amounts of cash
are subject to insignificant risk of changes
in value and have an original maturity of
three months or less. Any bank overdraft
amounts are included within trade payables
and other liabilities.
1.18 Leases
Leases are classified as finance leases
when the risks and rewards of
ownership are transferred substantially to
the lessee; all other leases are classified
as operating leases.
Finance leases

Group as lessor
Amounts due from lessees under finance
leases are recognised as receivables at
the amount of the Group’s net investment
in the lease. Finance lease income is
allocated to accounting periods so as to
reflect a constant periodic rate of return on
the Group’s net investment outstanding in
respect of the leases.
Group as lessee
Assets subject to finance leases and the
associated liabilities for future payments
(if any) are recognised in the Consolidated
Statement of Financial Position.
Operating leases

Group as lessor
Assets subject to operating leases are
recognised in the Consolidated Statement
of Financial Position with rental income
plus initial direct costs incurred in arranging
the lease, including incentives to the lessee
to enter into the lease, recognised on a
straight-line basis over the lease term.
Group as lessee
Rentals payable under operating leases,
including benefits received and receivable
as incentives to enter into the leases,
are expensed on a straight-line basis over
the term of the lease.
1.19 Subsidiaries, associates and
joint ventures
Subsidiaries and public sector joint
ventures are consolidated where
designated within the Departmental
Group boundary (note 27); those
outside the Departmental boundary are
measured in accordance with IAS 39.
Equity investments in associates or joint
ventures outside the public sector are
initially recorded at cost and subsequently
adjusted to reflect the Group’s share
of net profit or loss of the associate or
joint venture.
1.20 Financial instruments
Financial assets and liabilities are measured
initially at fair value plus transaction costs
unless carried at fair value through profit
or loss in which case transaction costs
are charged to net expenditure for the
year. Fair value is determined by reference
to quoted prices where an active market
exists for the instrument; otherwise it is
determined using generally accepted
valuation techniques including discounted
estimated cash flows.
Financial assets
Financial assets are derecognised when
the rights to receive future cash flows
have expired or are transferred and the
risks and rewards of ownership have been
substantially transferred.
Categories of financial asset
Financial assets are categorised as one of
the following:
• loans and receivables: are non-
derivative financial assets with fixed
or determinable payments that are not
quoted in an active market. They are
initially recognised at fair value and
thereafter at amortised cost using
the effective interest method less any
impairment. The effective interest rate
method is a method of calculating the
amortised cost of a financial asset and
of allocating interest income over the
relevant period
• held to maturity: are non-derivative
financial assets with fixed or
determinable payments and fixed
maturity where there is the positive
intention and ability to hold to maturity.
After initial recognition at fair value,
they are measured at amortised cost
• at fair value through profit or loss
(FVTPL): are financial assets held for
trading or designated as being held at

Annual report and accounts 2017-18
140
FVTPL at initial recognition. Transaction
costs and any subsequent movements in
the valuation of the asset are recognised
in net expenditure for the year
• available for sale: are non-derivative
financial assets designated as such or
not classified in any of the other three
categories. After initial recognition,
these assets are subsequently carried
at fair value. Gains and losses in fair
value are recognised directly in equity
except for impairment losses which are
recognised in net expenditure for the
year. On de-recognition, the cumulative
gain or loss previously recognised in
equity is recognised in net expenditure
for the year
Impairment of financial assets
Financial assets other than those at
FVTPL are assessed for impairment at
each reporting date and impaired where
there is evidence that future cash flows
have been reduced by one or more events
that occurred after initial recognition.
The carrying amount is reduced directly
except for trade receivables where it is
reduced through the use of an allowance
account. Impairment losses are recognised
in net expenditure for the year. If, in a
subsequent period, the amount of the
impairment loss decreases as a result of an
event after the impairment was recognised,
the previously recognised impairment loss
is reversed through net expenditure for the
year. The reversal should only be to the
extent that the carrying amount of the asset
does not exceed what it would have been
had the impairment not been recognised.
Financial liabilities
Financial liabilities are derecognised when
the obligation is discharged, cancelled or
expires. The Group’s financial liabilities
excluding derivatives are initially recognised
at fair value including directly attributable
transaction costs, and subsequently at
amortised cost using the effective interest
rate method.
Derivative financial instruments
Derivatives are initially recognised at fair
value and subsequently at fair value. Gains/
losses in fair value are recognised in net
expenditure for the year unless hedge
accounting is applied.
The Group has two classes of derivative
financial instrument, foreign exchange
contracts to which hedge accounting is
applied and Contracts for Difference to
which hedge accounting is not applied.
Forward foreign exchange contracts
Forward contracts are held as cash flow
hedges to reduce exposure to foreign
currency risk. The effective portions of
changes in their fair values are recognised
in equity. Gains and losses relating
to ineffective portions are recognised
immediately in net expenditure for the
year. Amounts accumulated in equity are
recycled to net expenditure for the year
in the same period as the hedged item.
Contracts for Difference (CfDs)
CfDs are held to incentivise investment
in low carbon electricity generation by
agreeing strike prices with electricity
generators which are counterparties to
the contracts. The counterparty pays or
is paid the difference between the strike
price and the reference price (a measure
of the average market price of electricity)
at the time of electricity supply. CfDs
are measured at FVTPL, initially at their
transaction price (£nil) with subsequent
changes in fair value (as measured by
a valuation model) recognised in net
expenditure for the year along with
amortisation over the contracts settlement
period of the difference between the
transaction price and the valuation model
estimate of fair value at initial recognition
which is usually different from the
transaction price. Where the valuation
model estimate of fair value at initial
recognition is different from the transaction
price, the difference is deferred and
amortised to net expenditure for the year
over the contract settlement period (note 9).
1.21 Financial guarantees
Financial guarantees are initially recognised
at fair value on the date the guarantee
was given and subsequently re-
measured at the higher of a) the amount
determined in accordance with IAS 37
‘Provisions, Contingent Liabilities and
Contingent Assets’ and b) the amount
initially recognised less when appropriate,
cumulative amortisation in accordance with
IAS 18 ‘Revenue’.

Financial Statements
141
1.22 Pensions
The accounting for each of the
Departmental Group’s pension plans is
dependent on its nature.
Funded defined-benefit pension schemes
The Group has nine funded defined-benefit
pension schemes: the Medical Research
Council Pension Scheme (MRCPS); two
schemes through the NDA; and six others
through the nuclear site licence companies.
The net liabilities recognised in the
Statement of Financial Position for funded
defined benefit schemes are calculated by
independent actuaries by deducting the
fair value of scheme assets (at bid prices)
from the present value of defined benefit
obligations (estimated using the projected
unit credit method, less any amounts
receivable from third parties). Where the
scheme is in surplus, the asset recognised
in these statements is limited to the present
value of benefits available from future
refunds from the plan, reductions in future
contributions to the plan or on settlement
of the plan and takes into account the
adverse effect of any minimum funding
requirements. Actuarial gains and losses
are recognised as Other Comprehensive
Income and Expenditure except for site
licence companies where they are included
in provision expense relating to the Nuclear
Decommissioning Provision.
Unfunded defined benefit pension
schemes
The Group contributes towards a number
of unfunded defined benefit pension
schemes of which employees are
members: these include the Principal Civil
Service Pension Scheme, the Civil Servant
and Other Pension Scheme, the Combined
Pension Scheme of the UK Atomic Energy
Authority. The participating employers
in these schemes are unable to identify
their share of the underlying net liability;
as such these schemes are accounted
for as defined contribution pension
schemes, with employers’ contributions
charged to the Consolidated Statement
of Comprehensive Net Expenditure in
the period to which they relate. Further
information regarding PCSPS and CSPOS
is presented in the Staff Report.
Defined contribution pension schemes
Contributions are charged to the
Consolidated Statement of Comprehensive
Net Expenditure when they become
payable. The Group has no further
liabilities in respect of benefits to be paid
to members.
More information about the Group’s
pension schemes can be found in the
accounts of the consolidated entities,
including in note 3 for the core Department,
and of the pension schemes themselves.
1.23 Provisions
A provision is recognised when it is
probable that an outflow of economic
benefits will be required to settle a present
obligation (legal or constructive) that can be
reliably measured and which results from a
past event. Where the time value of money
is material the provision is measured
at present value using discount rates
prescribed by HM Treasury and based
upon the real yield of UK index-linked gilts:
2017-18
2016-17
Short-term
(between 0 and 5 years)
(2.42%)
(2.70%)
Medium-term
(between 5 and 10 years)
(1.85%)
(1.95%)
Long-term
(over 10 years)
(1.56%)
(0.8%)
Nuclear decommissioning provisions
Where expenditure in settlement of a
provision is expected to be recovered
from a third party, the recoverable amount
is treated as a separate asset (note 12).
Provision charges in the Consolidated
Statement of Comprehensive Net
Expenditure are shown net of changes in
these recoverable amounts.
1.24 Contingent assets and liabilities
Where an outflow of economic benefits
from a past event is possible but not
probable, the Department discloses a
contingent liability. In addition to contingent
liabilities disclosed in these financial
statements in accordance with IAS 37
‘Provisions, Contingent Liabilities and
Contingent Assets’, certain statutory and
non-statutory contingent liabilities where
the likelihood of a transfer of economic
benefit is remote are disclosed in the

Annual report and accounts 2017-18
142
Accountability Report for Parliamentary
reporting and accountability purposes.
Where an inflow of economic benefits
from a past event is probable, the Group
discloses a contingent asset. Estimates
of the financial effects are disclosed
where practicable; where the time value of
money is material, contingent liabilities and
assets are stated at discounted amounts
and the amount reported to Parliament
separately noted. Remote contingent
liabilities reported in the Accountability
Report are stated at the amounts reported
to Parliament.
1.25 Judgements, estimates and
assumptions
Preparation of financial statements requires
management to make judgements,
estimates and assumptions based on
experience and expected events that
affect the reported amounts of assets
and liabilities, income and expenditure.
Key accounting judgements applied in
these statements are described below.
Judgements

Hinkley Point C (HPC) (note 9)
In accordance with the IFRS Conceptual
Framework – Hinkley Point C Contract
for Difference (CfD) liability has not
been recognised in these financial
statements. This is due to the unavoidable
uncertainties in creating a fair value
estimate for HPC CfD due to the duration
of the contract and lack of reliable
independent estimates or readily available
forecasts of wholesale electricity prices
beyond 2040. Reliability is defined as
using information that is complete, neutral
and free from error. This means that a
condition of the Conceptual Framework,
that an item is recognised in the financial
statements when the item has a cost or
value that can be measured with reliability,
is not met.
Estimates
In accordance with IAS 8 ‘Accounting
Policies, Changes in Accounting Estimates
and Errors’, revisions to accounting
estimates are recognised prospectively.
Revisions of the estimates and
assumptions below could cause material
adjustment to the carrying amounts
of assets and liabilities within the next
financial year.
Income recognition (note 6.1)
The percentage of completion method
used to measure income on contracts
(note 1.8) requires the Group to estimate
the work performed to date as a proportion
of the total work to be performed.
Useful lives of non-current assets
There is uncertainty in relation to estimated
useful lives of non-current assets; these
are reviewed as at the reporting date and
updated if expectations differ from previous
estimates due to physical wear and tear,
technical or commercial obsolescence or
legal or other limits on their use.
Impairment of assets (notes 4.2, 7, 8, 10
and 11)
Impairment is measured by comparing
the carrying value of the asset or cash
generating unit with management’s
estimate of its recoverable amount.
Fair value of Repayable Launch
Investments (note 11)
The econometric model used to estimate
future cash flows from Repayable
Launch Investments includes a number
of assumptions including on future
economic growth.
Fair value of private equity investments
(note 11)
A range of valuation techniques are
used for private equity investments,
including discounted cash flows and net
asset values.
Redundancy Payments Service receivable
(note 14)
There is uncertainty in the estimate
of the amount to be realised by the
Insolvency Service from sale of assets of
insolvent employers.

Financial Statements
143
CfD contracts (note 9)
The significant uncertainties affecting
measurement of Financial Investment
Decision Enabling for Renewables (FIDeR)
and CfD contracts, which facilitate
investment in low-carbon electricity
generation, are described in note 9.
Fair value of financial guarantees
Fluctuations in the fair value of financial
guarantees are measured using modelling
techniques that have an unavoidable risk
of error.
Provisions (note 19)
Provision discount rates set by
HM Treasury are updated annually and
have a material effect on liabilities. There
are other significant uncertainties in relation
to measurement of the liabilities reported
in note 19, in particular in relation to future
decommissioning costs to be incurred by
the UK Atomic Energy Authority, Nuclear
Decommissioning Authority and Coal
Authority, which are described in the note.
1.26 Prior Period Adjustments
In accordance with the FReM, where a
prior period adjustment is identified as a
result of an error, the Departmental Group
will correct all material prior period errors
retrospectively in the first set of financial
statements authorised for issued after their
discovery by:
• restating the comparative amounts for
the prior periods presented in which the
error occurred
• if the error occurred before the earliest
prior period presented, restating the
opening balances of assets, liabilities
and equity for the earliest prior period
presented
However, if it is impracticable to determine
the period-specific effects of an error on
comparative information for one or more
prior periods presented, the Departmental
Group will restate the opening balances of
assets, liabilities and equity for the earliest
period for which retrospective restatement
is practicable.
The prior period adjustments and their
impact on the comparative amounts for the
prior periods represented in which the error
occurred are detailed in note 26.
2 Reporting by operating
segment
In accordance with the relevant reporting
requirements, including IFRS 8, the
Statement of Parliamentary Supply and
supporting notes reflect net resource
and capital outturn in line with the control
totals voted by Parliament. The figures
within SoPS 1.1 provide the income
and expenditure totals associated with
key business activities within the Group
and therefore reflect the management
information reporting to the Board
during the period.

Annual report and accounts 2017-18
144
3 Staff costs
Staff costs comprise:
2017-18
2016-17
restated
Permanently
employed
staff
Others
Total
Total
£m
£m
£m
£m
Wages and salaries
719
60
779
784
Social security costs
81
–
81
71
Other pension costs
168
–
168
145
Sub total
968
60
1,028
1,000
Less recoveries in respect of outward secondments
(3)
–
(3)
(4)
Total net costs
965
60
1,025
996
Of which:
Core Department and Agencies
255
18
273
282
NDPBs and other designated bodies
710
42
752
714
Total net costs
965
60
1,025
996
For further information on staff costs and numbers, please see the Staff
Report and the Remuneration Report which includes staff costs for nuclear
site licence companies which are not included in the table above.

Financial Statements
145
4 Operating expenditure
4.1
Purchase of goods and services
2017-18
2016-17 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Rentals under operating leases
43
58
35
51
Accommodation and office equipment costs
50
202
49
203
Legal, professional and consultancy costs
101
199
115
198
Finance, HR, IT and support costs
102
120
77
82
Training and other staff costs
11
32
8
27
Travel and subsistence costs
8
51
10
49
Advertising and publicity
2
15
1
9
Programme management and administration
of grants and awards
37
206
18
330
Capacity Market payments
–
224
–
9
Professional and international subscriptions
317
567
332
578
Enforcement costs of employment related policies
27
27
17
17
Donations
–
9
–
19
Funding Paternity, Adoption and
Shared Parental Leave policy
7
7
133
133
Purchase of geographical and scientific equipment
78
129
79
99
Purchase of weather information and weather
related services
99
99
97
97
Redundancy payments service
260
260
232
232
Sponsorship costs
–
1
1
1
Payment of taxes and levies
–
4
–
14
Subsidy to Post Office Limited
95
95
140
140
Innovation subsidies
–
–
5
5
Energy intensive industries subsidies
302
302
265
265
Other purchase of goods and services cost
81
288
15
142
Total
1,620
2,895
1,629
2,700
Purchase of goods and services

Core Department
Included within other purchase of goods and
services cost above is £60 million of costs
in relation to special payments. See special
payments note for further details.
Audit fees
Audit fees are included under the heading
‘Legal, professional and consultancy costs’.
During the year the core Department did not
purchase any non-audit services from its auditor,
the National Audit Office. The non-cash auditors’
remuneration of £655,750 (2016-17: £705,750)
comprises £600,000 (2016-17: £650,000)
for the cost of the audit of the Departmental
Group, £20,000 (2016-17: £20,000) for the Trust
Statement, and £35,750 (2016-17: £35,750) for
the audit of the UK Atomic Energy Authority
Pension Scheme Accounts.
Agencies
During the year the Agencies did not purchase
any non-audit services from their auditor, the
National Audit Office. Details of the non-cash
auditors’ remuneration of £131,000 (2016-17:
£159,000) can be found in the accounts of the
individual agencies.
NDPBs and other designated bodies
The cash remuneration of £2,353,105 (2016-17
restated: £2,487,347) relates to the statutory
audit of NDPBs and other designated bodies.
Of this amount, £1,943,700 (2016-17: £1,980,352)

Annual report and accounts 2017-18
146
was payable to the NAO and £409,405 (2016‑17
restated: £506,995) was payable to auditors
other than the NAO.
In 2017-18, £nil was payable to the NAO (2016‑17:
£nil) and £123,079 was payable to auditors
other than the NAO (2016-17: £182,093) for
non‑audit services. Further details can be
obtained from the accounts of the NDPBs and
other designated bodies.
Redundancy Payments Service
The Insolvency Service, an executive agency
of the Department of Business, Energy and
Industrial Strategy, is responsible for the approval
and processing of claims under the Redundancy
Payment Service (RPS), which is financed from
the National Insurance Fund. Redundancy
payments are made from the National Insurance
Fund to employees whose employers have failed
to make payments due or who were insolvent.
The Insolvency Service has a service level
agreement with HM Revenue and Customs.
Claims processed fall into two categories:
• RP1 (which covers redundancy pay, holiday
pay and arrears of pay): an average amount
of £3,329 was paid during 2017-18 for RP1
(2016‑17: £2,829)
• RP2 (pay in lieu of notice): an average amount
of £1,358 was paid during 2017-18 for RP2
(2016-17: £1,253)
There is associated income arising from two
sources:
• Solvent Recovery – where money is recovered
from solvent employers to meet the costs of
redundancy payments made by the RPS
• Insolvent Recovery – the core Department
becomes a creditor receiving a dividend if
there are sufficient funds in the insolvency of
the employer
Expenditure in respect of RPS in 2017-18 totalled
£292 million (2016-17: £269 million) against
income of £32 million (2016-17: £37 million).
The net amount totalled £260 million (2016-17:
£232 million).
4.2
Depreciation and impairment charges
2017-18
2016-17 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Amortisation of recoverable contract costs
–
227
–
203
Depreciation
20
257
23
260
Amortisation
2
26
5
34
Impairment of property, plant and equipment
2
48
–
76
Impairment of intangible assets
–
–
–
1
Impairment of investments1
67
108
417
288
Total
91
666
445
862
1
The 2017-18 investment impairment figure for core Department and Agencies includes £nil (2016-17: £138 million)
impairment of Postal Services Holding Company Limited (PSH). This impairment is eliminated on consolidation and is
treated as a downward revaluation movement in the Departmental Group, for which details are disclosed in note 10.1.

Financial Statements
147
4.3
Provision expense
2017-18
2016-17
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Increase/(decrease) in bad debt provision
3
3
(6)
(5)
Increase/(decrease) in provisions
178
75,429
81
6,687
Change in discount rate
Nuclear provisions
(17)
70,985
69
4,964
Other provisions
47
1,594
28
35
Other movements
148
2,850
(16)
1,688
Increase/(decrease) in financial guarantee liabilities
1
1
(3)
(3)
Total
182
75,433
72
6,679
The significant increase in the provision expense was primarily driven by
the change in discount rate. Further detail of the movements in provisions
can be found in note 19.1 for Nuclear Provisions and note 19.2 for
Other Provisions.
4.4
Grants
2017-18
2016-17 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Research and development
101
115
100
148
Grant in aid
8,179
–
7,501
–
Post Office Network Reform
45
45
80
80
Market frameworks
63
63
58
58
Science and research
2,377
5,695
2,346
4,861
International Climate Fund
307
311
332
332
Global Threat Reduction Programme
11
11
11
11
Renewable Heat Incentive
687
687
545
545
Innovation programme
136
667
437
1,244
Energy Markets and Consumers
9
8
7
7
Heat Infrastructure Team
9
9
13
13
Other grants
11
(66)
(15)
(78)
Total
11,935
7,545
11,415
7,221
4.5
Other operating expenditure
2017-18
2016-17 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Profit on disposal of investments, share of loss
or profits in joint ventures and minority interest
3
(72)
–
(107)
Revaluations of investments and specific bad
debt write offs
(9)
(17)
(19)
(20)
Total
(6)
(89)
(19)
(127)

Annual report and accounts 2017-18
148
5 Finance Expense
2017-18
2016-17 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Change in fair value - Financial Assets
4
28
(3)
36
Net loss/(gain) on foreign exchange
–
4
1
(3)
Unrealised foreign exchange rate (gains)/losses
2
3
1
3
Bank charges
1
1
–
–
Interest payable
–
27
–
3
Expected return on funded pension scheme assets
–
–
–
(42)
Interest on pension liabilities
–
37
–
38
Borrowing costs on provisions
(26)
(1,306)
(28)
(1,300)
Total
(19)
(1,206)
(29)
(1,265)
The impact of HM Treasury-prescribed negative discount rates for
provisions was to increase undiscounted liabilities for the Departmental
Group, the unwinding of which gave rise to a negative expense for
borrowing costs on provisions.
6 Income
6.1
Operating income
2017–18
2016–17 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Income from sales of goods and services:
Income from other Government departments:
Department of Health and Social Care funding
for the Francis Crick Institute
–
–
9
9
European Union funding
2
24
3
17
Fees, charges and recharges to/from external
customers and central Government organisations
146
466
133
221
Levy income
9
818
20
154
Sales of goods and services
12
955
3
1,046
Current grants and capital grants
1
138
49
143
Coal pension receipts
742
742
–
–
Venture capital and Repayable Launch
Investments income
102
102
26
28
Miscellaneous income
9
96
43
164
Total operating income
1,023
3,341
286
1,782
Income of £742 million was recognised in 2017-18 in relation to an additional
sum receivable from the September 2017 valuation of the Mineworkers’
Pension Scheme. Further detail of the Coal Pensions receivables is
disclosed in note 14.

Financial Statements
149
6.2
Finance income
2017–18
2016–17 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Effective interest:
Repayable Launch Investments and other assets
11.1
39
39
44
44
Other
12
38
17
16
Dividend and interest income
133
273
107
219
Finance income
184
350
168
279
In 2017-18 the core Department recognised dividend income of
£121 million (2016-17: £98 million). This includes a dividend of £88 million
from Enrichment Holdings Limited (EHL) (2016-17: £86 million).
In 2017-18 the Departmental Group received dividend income of
£124 million (2016-17: £124 million) included within the total dividend
and interest income shown above of £273 million (2016-17 restated:
£219 million). The Departmental Group recognised the 2017-18 year-end
dividend from URENCO of £88 million (2016-17: £86 million).

Annual report and accounts 2017-18
150
7 Property, plant and equipment
Departmental Group 2017-18
Departmental
Group 2017-18
Land
Freehold
Buildings
Dwellings
Leasehold
Improvements
Information
Technology
Plant and
Machinery
Furniture,
Fixtures and
Fittings
Transport
Equipment
Assets
under
Construction
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
Cost or valuation
Balance at 1 April 2017
374
4,110
39
72
210
6,057
20
326
462
11,670
Additions
–
28
–
2
9
31
1
5
277
353
Disposals
(64)
(142)
–
(3)
(15)
(42)
(4)
(5)
(1)
(276)
Impairments
–
(2)
–
–
(2)
(8)
–
–
(32)
(44)
Transfers in/(out) of boundary
–
(1)
–
–
(2)
–
2
–
1
–
Reclassifications
–
22
–
3
27
151
(1)
1
(205)
(2)
Revaluations
(7)
40
1
–
5
19
–
(3)
4
59
At 31 March 2018
303
4,055
40
74
232
6,208
18
324
506
11,760
Depreciation
Balance at 1 April 2017
–
(2,816)
–
(37)
(149)
(5,051)
(13)
(182)
–
(8,248)
Charged in year
–
(52)
(1)
(7)
(31)
(146)
(2)
(20)
–
(259)
Disposals
–
116
–
2
13
34
3
4
–
172
Impairments
–
–
–
–
–
(4)
–
–
–
(4)
Reclassifications
–
(1)
–
–
(1)
2
–
–
–
–
Revaluations
–
4
1
–
(3)
(12)
–
3
–
(7)
At 31 March 2018
–
(2,749)
–
(42)
(171)
(5,177)
(12)
(195)
–
(8,346)
Carrying amount
at 31 March 2018
303
1,306
40
32
61
1,031
6
129
506
3,414
Carrying amount
at 31 March 2017
374
1,294
39
35
61
1,006
7
144
462
3,422
Asset financing:
Owned
291
1,306
40
32
58
1,031
6
123
506
3,393
Finance leased
12
–
–
–
–
–
–
6
–
18
On balance sheet (SoFP) PFI
and other service concession
arrangements
–
–
–
–
3
–
–
–
–
3

Financial Statements
151
Departmental
Group 2017-18
Land
Freehold
Buildings
Dwellings
Leasehold
Improvements
Information
Technology
Plant and
Machinery
Furniture,
Fixtures and
Fittings
Transport
Equipment
Assets
under
Construction
Total
Carrying amount
at 31 March 2018
303
1,306
40
32
61
1,031
6
129
506
3,414
Of the total:
Core Department and
Agencies
18
93
–
29
2
75
1
–
58
276
NDPBs and other
designated bodies
285
1,213
40
3
59
956
5
129
448
3,138
Carrying amount
at 31 March 2018
303
1,306
40
32
61
1,031
6
129
506
3,414
Departmental Group 2016-17
Land
Freehold
Buildings
Dwellings
Leasehold
Improvements
Information
Technology
Plant and
Machinery
Furniture,
Fixtures and
Fittings
Transport
Equipment
Assets
under
Construction
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
Cost or valuation
Balance at 1 April 2016
417
4,051
36
75
229
6,598
22
323
416
12,167
Additions
–
–
–
–
7
36
2
5
293
343
Disposals
(3)
(49)
–
–
(33)
(196)
(5)
(5)
(3)
(294)
Impairments
(10)
(9)
–
–
(9)
(23)
(1)
(7)
(22)
(81)
Transfers in/(out) of boundary
–
–
–
–
1
–
1
–
–
2
Reclassifications
(31)
51
(5)
(3)
14
(432)
–
4
(223)
(625)
Revaluations
1
66
8
–
1
74
1
6
1
158
At 31 March 2017
374
4,110
39
72
210
6,057
20
326
462
11,670
Depreciation
Balance at 1 April 2016
(6)
(2,761)
–
(32)
(147)
(5,125)
(16)
(164)
–
(8,251)
Charged in year
–
(54)
(1)
(7)
(37)
(171)
(2)
(19)
–
(291)
Disposals
1
31
–
–
27
181
4
4
–
248
Impairments
6
–
–
–
–
(2)
1
–
–
5
Reclassifications
–
–
–
2
1
51
–
–
–
54
Revaluations
(1)
(32)
1
–
7
15
–
(3)
–
(13)
At 31 March 2017
–
(2,816)
–
(37)
(149)
(5,051)
(13)
(182)
–
(8,248)

Annual report and accounts 2017-18
152
Departmental Group 2016-17
Land
Freehold
Buildings
Dwellings
Leasehold
Improvements
Information
Technology
Plant and
Machinery
Furniture,
Fixtures and
Fittings
Transport
Equipment
Assets
under
Construction
Total
Carrying amount at 31
March 2017
374
1,294
39
35
61
1,006
7
144
462
3,422
Carrying amount at 1 April
2016
411
1,290
36
43
82
1,473
6
159
416
3,916
Asset financing:
Owned
362
1,294
39
35
58
1,006
7
135
462
3,398
Finance leased
12
–
–
–
–
–
–
9
–
21
On balance sheet (SoFP) PFI
and other service concession
arrangements
–
–
–
–
3
–
–
–
–
3
Carrying amount at 31
March 2017
374
1,294
39
35
61
1,006
7
144
462
3,422
Of the total:
Core Department and Agencies
18
102
–
32
7
73
2
–
30
264
NDPBs and other designated
bodies
356
1,192
39
3
54
933
5
144
432
3,158
Carrying amount at 31
March 2017
374
1,294
39
35
61
1,006
7
144
462
3,422

Financial Statements
153
Property, plant, and equipment (PPE) held by
the Departmental Group
The professional valuations of land and buildings
undertaken within the Departmental Group were
prepared in accordance with the Royal Institute of
Chartered Surveyors (RICS) Valuation Standards
(6th Edition), the ‘Red Book’. Unless otherwise
stated, land and buildings are professionally
revalued every five years and where appropriate
in the intervening period, relevant indices are
used. The most significant land and buildings
at 31 March 2018 were held by Nuclear
Decommissioning Authority (NDA), Medical
Research Council (MRC), Biotechnology and
Biological Sciences Research Council (BBSRC),
Science and Technology Facilities Council (STFC)
and Natural Environment Research Council
(NERC). Revaluations for these entities were
conducted by Powis Hughes Limited (for MRC),
and GVA Grimley Limited (for NDA, BBSRC and
STFC). NERC assets were jointly revalued by GVA
Grimley Limited and Powis Hughes Limited.
In accordance with the FReM, the majority of
leasehold improvements, information technology,
furniture, fixtures and fittings and plant and
machinery are held at depreciated historic cost
as a proxy for fair value as the assets have
short useful lives or low values. Land, freehold
buildings, dwellings, transport equipment and the
remainder of plant and machinery are held at fair
value based on professional valuations.
Within the Departmental Group, a variety of
valuation techniques are used depending upon
whether the PPE asset is a specialised asset
or a non-specialised asset. Where the PPE
asset is a specialised asset, then a depreciated
replacement cost valuation is used, for example
by scientific institutes. Where the PPE asset
is a non-specialised asset, then an existing-
use valuation is used, for example for land and
office buildings. Depreciated replacement cost
(DRC) valuations are based on a number of
unobservable inputs; these would be classified
as level 3 in accordance with IFRS 13 ‘Fair
Value Measurement’. Existing-use value (EUV)
valuations are based on a number of market
corroborated but unobservable inputs e.g.
land valuations are based on similar prices per
hectare adjusted for the specific location of the
land, whilst other EUV valuations use specific
unobservable inputs, e.g. rental yields. The EUV
valuations inputs are classified as level 2 and
level 3 in accordance with IFRS 13 ‘Fair Value
Measurement’.
The Departmental Group does not hold any
material individual PPE assets. Therefore there
are no individually material level 3 assumptions
included in the overall Departmental Group
fair value of PPE. For there to be a material
movement in the fair value of PPE, this would
require a significant increase in a number of level
3 valuation assumptions across the Departmental
Group. This is unlikely, given that the fair value
movement in PPE in 2017-18 was £52 million
(2016-17: £145 million).
Further information can be found in the financial
statements of the individual bodies’ accounts.

Annual report and accounts 2017-18
154
8 Intangible Assets
Departmental Group
2017-18
Assets under
Construction
Information
Technology
Software
Licences
Websites
Patents
Total
£m
£m
£m
£m
£m
£m
Cost or Valuation
Balance at 1 April
2017 (restated)
7
139
52
1
267
466
Additions
20
10
3
–
–
33
Disposals
–
(3)
(1)
–
–
(4)
Reclassifications
(21)
6
17
–
–
2
Transfers in/(out)
1
–
–
–
–
1
Revaluations
–
–
1
–
30
31
At 31 March 2018
7
152
72
1
297
529
Amortisation
Balance at 1 April
2017 (restated)
–
(107)
(28)
(1)
(227)
(363)
Charged in year
–
(11)
(6)
–
(8)
(25)
Disposals
–
3
1
–
–
4
Reclassifications
–
1
(1)
–
–
–
At 31 March 2018
-
(114)
(34)
(1)
(235)
(384)
Carrying amount
at 31 March 2018
7
38
38
–
62
145
Carrying amount
at 31 March 2017
7
32
24
–
40
103
Asset financing:
Owned
7
38
38
–
62
145
Carrying amount
at 31 March 2018
7
38
38
–
62
145
Of the total:
Core Department and
Agencies
3
2
4
–
–
9
NDPBs and other
designated bodies
4
36
34
–
62
136
Carrying amount
at 31 March 2018
7
38
38
–
62
145

Financial Statements
155
Departmental Group
2016-17 (restated)
Assets under
Construction
Information
Technology
Software
Licences
Websites
Patents
Total
£m
£m
£m
£m
£m
£m
Cost or Valuation
At 1 April 2016
17
130
24
1
268
440
Additions
4
15
16
–
–
35
Disposals
(1)
–
(1)
–
–
(2)
Impairments
–
(2)
–
–
–
(2)
Reclassifications
(12)
(6)
13
–
–
(5)
Transfers in/(out)
(1)
2
–
–
–
1
Revaluations
–
–
–
–
(1)
(1)
At 31 March 2017
7
139
52
1
267
466
Amortisation
At 1 April 2016
–
(93)
(19)
(1)
(220)
(333)
Charged in year
–
(18)
(10)
–
(7)
(35)
Disposals
–
–
1
–
–
1
Impairments
–
1
–
–
–
1
Reclassifications
–
3
–
–
–
3
At 31 March 2017
–
(107)
(28)
(1)
(227)
(363)
Carrying amount
at 31 March 2017
7
32
24
–
40
103
Carrying amount
at 1 April 2016
17
37
5
–
48
107
Asset financing:
Owned
7
32
24
–
40
103
Carrying amount
at 31 March 2017
7
32
24
–
40
103
Of the total:
Core Department and
Agencies
4
1
1
–
–
6
NDPBs and other
designated bodies
3
31
23
–
40
97
Carrying amount
at 31 March 2017
7
32
24
–
40
103
All software licences are acquired separately.
All Information Technology (IT) assets are
internally generated. IT assets are initially
classified as assets under construction and
are not amortised until they are commissioned,
at which time they are re-classified as IT.
The Departmental Group holds its intangible
assets at valuation. In accordance with the
FReM, the Departmental Group adopts cost
less amortisation as a proxy for fair value as the
intangible assets have short lives. The exception
to this are patents which are held at fair value
based on a valuation model.
The model uses a variety of assumptions to
estimate the value of future income streams from
the patents to determine the fair value; these
include an estimate for future royalty income
derived from the consensus forecast data
from industry specialists, which are adjusted
for expected future USD/GBP exchange
rates, the territories in which the patents are
applicable and potential threats to future income
(such as competitor products and regulatory
approval). In accordance with IFRS 13 ‘Fair Value
Measurement’, these assumptions would be
classed as level 3 assumptions. The carrying
amount of the patents at year end is £62 million
(2016-17: £40 million) and there would need to be
a substantial increase in expected royalty income
to result in a material increase in the fair value of
the patents.

Annual report and accounts 2017-18
156
9 Derivative financial instruments
The most significant items included within
Derivatives on the Consolidated Statement of
Financial Position (SoFP) are the Contracts for
Difference (CfDs).
Contracts for Difference (CfDs)
Contracts for Difference (CfDs) are a mechanism
used to support investment in UK low carbon
generation projects. CfDs have been established
as a contract between the ‘Generator’ and the
Low Carbon Contracts Company Ltd (LCCC), a
company wholly owned by the Government and
consolidated within the Department’s accounts.
CfDs, other than the CfD relating to Hinkley
Point C (HPC) nuclear generating plant, have
been classified as derivatives in accordance with
IAS 39 ‘Financial Instruments: Recognition and
Measurement’ and recognised at their ‘fair value’
by deferring the difference between fair value
and transaction price. Any subsequent gain or
loss in fair value is recognised in the Statement
of Comprehensive Net Expenditure. The HPC
CfD has not been recognised in these accounts
and its accounting treatment is described under
heading ‘Hinkley Point C’ of this note.
The fair value of any derivative is assessed by
reference to IFRS 13 ‘Fair Value Measurement’,
which provides three options for assessment.
Fundamentally the value should always reference
an open market place but where no market
place exists, an option is available for internally
generated fair value. The different options are
hierarchical and classed as Level 1, 2, or 3
inputs, where Level 1 is based on market prices,
Level 2 is based on observable data other than
market prices and Level 3 is used where Level 1
or 2 data is unavailable.
The fair value of the Department’s CfDs has
been calculated using the income approach
based on Level 3 inputs, which reflects the
present value (PV) of future cash flows that are
expected to occur over the contract term of the
CfD. The discount rate which has been used to
determine the PV for financial reporting is the
Financial Instrument real rate of 0.7% set by
HM Treasury Public Expenditure System (PES)
Secretariat on 11 December 2017.
By contrast, for investment decisions and project
appraisal the Department is required to use
the social discount rate of 3.5% published in
HM Treasury’s Green Book. As the cash flows
are expected to occur over a 35 year period
from 2025 to 2060 the valuation for financial
reporting based on the 0.7% discount rate will be
significantly higher than the economic valuation
based on the 3.5% discount rate, even where all
other inputs are the same.
The deferred difference between the fair value of
the liability on day one and the transaction price
is amortised over the contract life of the CfDs,
which commences from the earlier of i) the actual
start date of generation or ii) the end of the Target
Commissioning Window (TCW) identified in the
CfD, as this is the point at which the contractual
liability will start to unwind (i.e. it is the point at
which the potential payment period under the
CfD commences).
The significance of these two dates is that
they are the part of the contractual provisions
which determine when the right to potential
CfD payments starts. The contract payment
period is typically for 15 years, but specific
exceptions exist:
• for contracts relating to biomass conversion
which have an expiration date in 2027
• the contract for HPC nuclear generating plant
which will expire at the earlier of 35 years after
the start date of the second reactor or when
the total CfD payments made have reached
the Generation Cap (i.e. 910,000,000 MWh)
CfDs may be signed many years in advance of
actual generation. The main benefit to generators
is the fact that they can derive economic benefit
from these contracts across the payment period
life of the contract and the added certainty which
the CfD contract provides helps them to finance
the project.
Under the legislation, there is an obligation
placed on licensed electricity suppliers to fund
the CfD liabilities as they crystallise through the
Supplier Obligation Levy. The future levy amounts
which will be received from the licensed suppliers
will be accounted for within the LCCC and will
be triggered by the generation and supply of low
carbon electricity.
As at 31 March 2018 the LCCC was counterparty
to 56 contracts recognised in the accounts
(at 31 March 2017: 40 contracts). Of those,
16 contracts were signed that were successful in
the 2017 allocation round. The liability associated
with Hinkley Point C has not been recognised in
the accounts and is further explained below.

Financial Statements
157
Measurement differences relating to
day one recognition
The transaction price for CfDs differs from the
fair value at initial recognition measured using a
valuation model, mainly because the transaction
price is not established in an active market.
If there are significant unobservable inputs used
in the valuation technique (Level 3), the financial
instrument is recognised at the transaction price,
and any difference between the transaction price
and fair value at initial recognition measured using
a valuation model is deferred.
The following table represents the difference
between the CfD liability at initial recognition and
at the reporting date:
Core Department
and Agencies
LCCC CfDs
Departmental
Group Total
£m
£m
£m
CfD liability as at 31 March 2016 recognised on the
Consolidated Statement of Financial Position
1,337
11,270
12,607
CfD liability transferred during the year
(1,111)
1,111
–
CfD reinstated during the year
–
575
575
Re-measurement of the CfD liability
(226)
(571)
(797)
Payments to the CfD generators
–
(92)
(92)
Deferred difference recognised during the year
–
41
41
CfD liability as at 31 March 2017 recognised on the
Consolidated Statement of Financial Position
–
12,334
12,334
Re-measurement of the CfD liability
–
3,720
3,720
Payments to the CfD generators
–
(544)
(544)
Deferred difference recognised during the year
–
382
382
CfD liability as at 31 March 2018 recognised on the
Consolidated Statement of Financial Position
–
15,892
15,892
Other non-CfD liabilities as at 31 March 2018
–
–
12
Carrying value of non-current derivative liabilities as
at 31 March 2018
–
15,892
15,904
The net movement in the fair value of CfDs is recognised in the Statement of Comprehensive Net Expenditure.

Annual report and accounts 2017-18
158
Movement in deferred measurement differences
The following table shows the movement in
deferred day one loss.
Core Department
and Agencies
LCCC CfDs
exc. HPC
Departmental
Group Total
£m
£m
£m
Deferred measurement
differences as at 31 March 2016
1,499
16,536
18,035
Measurement differences deferred
relating to a reinstated CfD
–
1,085
1,085
Measurement differences deferred on
contract transferred within the Group
(1,499)
1,499
–
Deferred measurement differences
recognised during the year
–
(41)
(41)
Deferred measurement
differences as at 31 March 2017
–
19,079
19,079
Measurement differences deferred
during the year
–
4,612
4,612
Deferred measurement differences
recognised during the year
–
(382)
(382)
Deferred measurement
differences as at 31 March 2018
–
23,309
23,309
Fair value measurement of CfDs
The fair value of CfDs (which excludes the HPC
CfD which has not been recognised in these
accounts) represents the LCCC’s best estimate of
the payments which the LCCC will be committed
to make, if and when the generators supply
low carbon electricity in accordance with their
contractual terms. They are based upon the
estimates of future fossil fuel prices, estimated
using the central projections of fossil fuel prices
and rising carbon prices to forecast the potential
liabilities using the Dynamic Dispatch Model
(DDM) owned by the Department.
Should no low carbon electricity be supplied
in accordance with the contractual terms,
then the LCCC is not under any obligation to
make these payments.
Fair value of CfDs (financial liabilities at fair value
through profit and loss)

Reconciliation of CfDs
The following table shows the impact of the fair
value of all CfDs which have been recognised
in these accounts, classified under Level 3,
by using the assumptions described below
(all held by LCCC):
–
Core Department
and Agencies
LCCC CfDs exc.
HPC
Departmental
Group Total
£m
£m
£m
As at 31 March 2016
2,836
27,806
30,642
CfD reinstated during the year
–
1,660
1,660
Transferred during the year
(2,610)
2,610
–
Change in fair value during the year
(226)
(571)
(797)
Payments to the CfD generators
–
(92)
(92)
As at 31 March 2017
–
31,413
31,413
Additions during the year
–
4,612
4,612
Change in fair value during the year
–
3,720
3,720
Payments to the CfD generators
–
(544)
(544)
As at 31 March 2018
–
39,201
39,201

Financial Statements
159
The additions in the year reflect the contracts that
were signed in the 2017 allocation round.
The most significant components of the changes
in fair value during the year were as follows:
• changes to price series (wind and solar capture
prices) – lower forecast market reference
prices for wind and solar technologies have
resulted in a £1.6 billion increase in the CfD
liability. 2017-18 was the first time separate
capture prices for wind and solar technologies
have been incorporated, representing a
revision in the estimation basis
• inflation – adjustments to Consumer Price
Index (CPI) inflation inputs have increased the
expectation of future cash flows resulting in a
£1.7 billion increase in the CfD liability
• £0.7 billion is the result of a one-off
revision in estimation basis. Under the
previous basis the strike price input
assumed 2012 prices adjusted for inflation.
The revised method uses actual strike
prices incorporating inflation and other
adjustments
• £1.0 billion is driven by the increase in CPI
inflation inputs between 2017 and 2018
The fair value of the unquoted contracts has been
estimated using a discounted cash flow model.
This method involved the projection of a series
of cash flows and application of a discount rate
to establish the present value of the expenses
associated with the liability. The valuation requires
management to make certain assumptions
about the model inputs, including cash flows,
the discount rate, credit risk and volatility.
Key assumptions (excluding HPC CfD)
The probabilities of the various estimates within the
range can be reasonably assessed and are used
in management’s estimate of fair value for these
unquoted contracts. Annual cash flow is estimated
as reference price less strike price multiplied by
estimated generation delivered. The series of cash
flows is then discounted using the HM Treasury
discount rate of 0.7% (2016-17: 0.7%). The following
six assumptions are key to the CfD valuation:
a) Transmission Loss Multiplier (TLM)
TLM reflects the fact that electricity is lost as it
passes through the transmission system from
generators to suppliers. If the TLM is incorrect,
this will have implications for the volume of
electricity subject to CfD payments. Any change in
TLM will be corrected through adjustments in strike
prices although the change in TLM is expected to
be immaterial.
b) Start date
Generators nominate a Target Commissioning
Date (TCD) in their binding application form for
a CfD, and this date is specified in their CfD
following contract award. However, the generator
is free to commission at any time within their
Target Commissioning Window (TCW), a period
of one year from the start of the TCW for most
technologies, with no penalty, or after the end of
the TCW and up to their ‘Longstop Date’ (one to
two years after the end of the TCW depending
on technology) with a penalty in the form of
reduction of contract length for each day they are
late in commissioning after the end of the TCW.
The contract can be terminated if the generator
has not commissioned 95% (or 85% for offshore
wind) of their revised installed capacity estimate
by the end of the Longstop Date. Any change
to the start date will change the timing of future
cash flows and impact on the discounted fair
value. The valuation uses the most recent
estimate from generators on the start date.
c) Strike price
The strike price is an agreed price which
determines the payments made to the generator
under the contract with reference to its low
carbon output and the market reference price.
The relevant strike price is specified in each
CfD and is not intended to change for the
duration of the project, other than through
indexation to CPI and certain network charges,
or in the event of certain qualifying changes
in law. The strike price is updated to reflect
the CPI rate for January 2018, in line with the
requirements of the CfD contract.
d) Future forecast wholesale electricity prices
Forecast wholesale electricity prices are derived
from the DDM which has been developed by the
Department to facilitate/inform policy decisions
by modelling investor behaviour in response to
fuel and carbon prices and policy environment.
The DDM estimates the wholesale price by:
• using the Short Run Marginal Cost (SRMC)
for each plant
• using daily demand for electricity, taking into
account wind profiles, inter-connector flows,
pumped storage, auto-generation and wind
generation
• using a mark-up on the price derived
from historic data and the difference
between marginal price and cost affected
by reduced capacity

Annual report and accounts 2017-18
160
Economic, climate, policy, generation and
demand assumptions are external inputs to the
model including demand load curves for both
business and non-business days and seasonal
impacts. Specific assumptions can also be
modelled for domestic and non-domestic sectors
and smart meter usage.
The forecast trajectory of electricity prices is
uncertain. In the valuation, the central case
from the DDM has been used. The DDM also
produces low and high cases. These have been
included in the sensitivity analysis.
In the valuation, the wholesale price has been
reduced to reflect the price the wind generator
is likely to receive. On windy days, the price that
wind generators receive is likely to be reduced.
The effect of reduced prices for wind generation
adds approximately £3 billion to the valuation.
e) Installed capacity
The figure for the maximum installed capacity
was provided by the generator in its application
for a CfD and specified in its CfD contract
following allocation. The installed capacity cannot
be increased after contract signature, but can be
reduced by the generator by no more than 25%
with no penalty between contract signature and
the completion of the first contractual milestone
by its contractual deadline (i.e. the Milestone
Requirement which must be completed 12
months after contract award). Thereafter the
installed capacity figure can only be reduced
by the generator for a permitted contractual
construction event (which is a narrowly defined
concept) or by the difference by which the
relevant project has an installed capacity of 95%
(or 85% in the case of offshore wind) of its current
contractual installed capacity figure and 100%.
The actual output of the generator will depend on
the load factor.
f) Load factor
Load factor is defined as the actual power output
of a project as a proportion of its rated installed
capacity. It is a percentage figure which is used
to transform installed capacity into actual power
output (generation). Load factor assumptions
are based on reference factors published by
the Department for given technology types;
however, actual power outputs are sensitive to
technological and environmental factors which
may impact actual cash flows.
Sensitivity analysis (excluding HPC CfD)
The following table shows the impact on
the fair value of CfDs, classified under Level 3
in accordance with IFRS 13 ‘Fair Value
Measurement’, by using reasonable possible
alternative assumptions:
Change in fair value of CfDs recognised in the accounts if:
Favourable changes
Unfavourable changes
£m
£m
Electricity prices decrease by 10%
–
2,708
Electricity prices increase by 10%
2,708
–
10% more load factor
–
3,919
10% less load factor
3,919
–
Estimated Commissioning Date moves back by one year
333
–
Generation starts at earliest possible date
–
155
DDM low case
–
5,585
DDM high case
4,637
–
The fair value is highly dependent upon the actual
capacity generated once the plant is built and
the electricity prices which will prevail at the time
of generation. The favourable and unfavourable
changes show how the impact of changes in
capacity and prevailing electricity prices will affect
the fair value of CfDs due to the change in the
level of cash flows. The Group auditors continue
to include an emphasis of matter paragraph in
their audit certificate concerning the uncertainty
around valuation of these CfD contracts.
Significant unobservable inputs
The following table discloses the valuation
techniques and significant unobservable inputs
for CfDs recognised at fair value and classified
as Level 3, along with the range of values used
for these significant unobservable inputs.

Financial Statements
161
Fair value
of CfDs
Valuation
technique
Significant
unobservable inputs
Range
Units
£m
(min-max)
2017
31,413
DCF
Future electricity prices
35.20-53.42
£/MWh
2018
39,201
DCF
Future electricity prices
37.13-63.25
£/MWh
Hinkley Point C
The Department entered into the Hinkley Point
C (HPC) CfD on 29 September 2016. This
project has a maximum capacity of 910,000,000
MWh. The HPC contract will expire at the
earlier of 35 years after the start date of the
second reactor or when the total CfD payments
made have reached the Generation Cap
(i.e. 910,000,000 MWh).
The valuation of HPC CfD requires that an
assumption be made of wholesale electricity
prices in each year to 2060. The Department
uses its Dynamic Despatch Model to develop
scenario-based estimates of future wholesale
electricity prices. This model currently extends
only as far as 2050 and the Department has
therefore assumed flat wholesale prices for
the ten years 2050-2060. Moreover there is
an inherent limitation in accurate estimation
beyond 2040 because there is a paucity of
independent third-party information beyond this
point from which to validate the Department’s
assumptions. The unavoidable uncertainty over
possible scenarios so far into the future extend to
a variety of factors including electricity demand,
fossil fuel prices, generation mix, carbon prices
and technology.
Under International Financial Reporting
Standards (IFRS) the Conceptual Framework sets
out the concepts which underlie the preparation
and presentation of financial statements.
The Conceptual Framework deals with,
amongst other things, the definition, recognition
and measurement of the elements from which
financial statements are constructed. Paragraph
4.38 of the Conceptual Framework states that an
element should be recognised in the accounts if:
a) it is probable that any future economic benefit
associated with the item will flow to or from
the entity
b) the item has a cost or value that can be
measured with reliability (defined as: using
information that is complete, neutral and free
from error)
In comparison to other CfDs the Department
considers the CfD for HPC to be unique.
The European Pressurised Reactor is a much
more complex asset than the wind turbines
or bio-mass generators associated with the
Department’s other CfDs. It has very high
levels of safety, reinforcement and containment
incorporated into the design, which make it
more expensive and complex to build and result
in a significant lead time before generation
commences (planned for 2025). Until these
challenges are overcome and the asset is built,
no payments will be made by the Department
under the CfD. This unavoidably long lead time
before generation commences is relevant to
condition (a) above.
The HPC CfD contract duration is also more
than double (35 years) the length of other CfDs
(15 years) so far entered into by the Department.
This makes it considerably more challenging
to provide a single point fair value estimate,
as required for accounting purposes, as that
requires estimation of future wholesale electricity
prices in every year out to 2060. This means
that there are considerable but unavoidable
uncertainties in creating a fair value estimate for
the HPC CfD because of the unusually long time
period involved.
Uncertainty increases with time and so the
choice of discount rate plays a significant part in
determining how much uncertainty is weighted
into a present value calculation; a higher
discount rate places less weight on increasingly
more uncertain later years of a present value
calculation. For example, in conducting the
economic appraisal for the HPC project the
Department used the social discount rate of
3.5% per year, as required by the HM Treasury
Green Book. However for valuing financial
instruments like CfDs the Department is obliged
to use the financial instrument discount rate of
0.7%, as required by the Government Financial
Reporting Manual. Therefore, compared to an
economic appraisal, a present value estimate
for a financial instrument includes progressively
more weight from the less certain later years of
the appraisal period. For comparison, using the
social discount rate leads to a valuation of

Annual report and accounts 2017-18
162
£19.1 billion compared to £36.8 billion using the
financial instrument discount rate of 0.7%.
This is particularly relevant to the HPC CfD fair
value because external forecasts for wholesale
electricity prices are not currently readily available
beyond 2040. It has not been possible for the
Department to satisfactorily verify whether a
single point fair value estimate for the HPC CfD is
complete, neutral and free from error. (Verifiability
is one of the qualitative characteristics of useful
financial information for financial statements
as set out in the Conceptual Framework.)
The Department has therefore concluded that
for the time being the HPC CfD fails to meet
the recognition criteria (b) as outlined above.
Therefore, the HPC CfD has not been recognised
as a transaction in these primary statements.
The Department has nonetheless set out
below its best estimation of the fair value of
the contract, and the assumptions which
have been considered in its valuation, in the
interests of transparency. This follows a ‘Level
3’ methodology under IFRS 13 ‘Fair Value
Measurement’, which allows for use of the entity’s
own models and assumptions.
Fair value measurement of HPC
The Department has set out below its best
estimation of the fair value of the contract, and
the assumptions which have been considered in
its valuation. This follows a Level 3 methodology
under IFRS 13 ‘Fair Value Measurement’, which
allows for use of the entity’s own models and
assumptions. This disclosure is consistent with
IAS 39 ‘Financial Instruments’ where the initial
recognition of a financial instrument like the HPC
CfD requires a deferred liability disclosure rather
than a transaction of the initial fair value estimate
through the primary statements.
The following table provides an analysis of the fair
value of HPC, grouped into Levels 1 to 3 within
the fair value hierarchy based on the degree to
which the fair value is observable:
Level 1
Level 2
Level 3
Total
£m
£m
£m
£m
As at 31 March 2017
–
–
28,824
28,824
As at 31 March 2018
–
–
36,585
36,585
The Department’s estimate of the fair value of the
liabilities under the HPC CfD at 31 March 2018 is
£36,585 million. This represents a £7,761 million
(27%) increase on the valuation prepared to
31 March 2017. The most significant components
of the changes in fair value during the year were
as follows:
• changes in wholesale electricity price
forecasts – volatility of post-2040 price
forecasting has resulted in a £5.5 billion
increase in the CfD liability. This is derived
from the Department’s DDM
• inflation – adjustments to the estimation basis,
consistent with the method applied for other
CfDs, and an increase in the CPI inflation input
have resulted in a £1.9 billion increase in the
CfD liability
Information on other factors which impact on the
fair value of HPC is set out below.

Financial Statements
163
Start date
The Target Commissioning Date (TCD: current
expected start date) for reactor one and reactor
two of the HPC project are 1 December 2025
and 1 June 2026 respectively.
The generator is free to commission at any
time within their Target Commissioning Window
(TCW), with no penalty, or after the end of the
TCW and up to their ‘Longstop Date’ (one to
two years after the end of the TCW depending
on technology) with a penalty in the form of
reduction of contract length for each day they are
late in commissioning after the end of the TCW.
The contract can be terminated if the generator
has not commissioned a reactor by the end of
the Longstop Date. The TCW for reactor one
is 1 May 2025 to 30 April 2029. The TCW for
reactor two is 1 November 2025 to 31 October
2029. The Longstop Date is 31 October 2033.
Any change to the start date will change the
timing of future cash flows and impact on the
discounted fair value.
Equity gain share for Hinkley Point C
The equity gain share mechanism consists of
two separate components: (i) a mechanism to
capture gains above specified levels where the
HPC project outperforms relative to the original
base case assumptions; and (ii) a mechanism to
capture gains above specified levels arising from
the sale of equity and economic interests (direct
or indirect) in the HPC project.
In each case, as and when the Internal Rate of
Return (IRR) thresholds are reached:
• if the relevant IRR is more than 11.4%,
the LCCC will receive 30% of any gain above
this level
• if the relevant IRR is more than 13.5%,
the LCCC will receive 60% of any gain above
this level
Installed Capacity
HPC which does not have an installed capacity
cap, is only entitled to CfD payment support up
to a Generation Cap of 910,000,000 MWh.
Strike price
The strike price is an agreed price which
determines the payments made to the generator
under the contract with reference to its low
carbon output and the market reference price.
The relevant strike price is specified at £92.50 in
real 2012 terms and is not intended to change for
the 35 year contract duration, other than through
indexation to CPI and certain network charges,
or in the event of certain qualifying changes in law.
In addition to the factors mentioned above,
HPC’s strike price change is also subject to the
following three additional factors:
1. Construction gain share for HPC
If the construction costs of HPC come in
under budget, the strike price will be adjusted
downwards so that the gain (or saving) is shared
with the LCCC. The gain share is 50/50 for the
first billion pounds, with savings in excess of this
figure being shared 75% to the LCCC and 25%
to the generator, NNB Generation Company
(HPC) Limited (NNBG).
If the outturn cost of construction is less than
assumed, then by reducing the strike price
the amounts paid out to NNBG under the CfD
will reduce and hence the benefit of the lower
construction costs is shared between NNBG
and ultimately consumers. There is, however,
no similar upward adjustment if the construction
cost of HPC is over budget.
2. OPEX reopener for HPC
The strike price may be adjusted upwards if
the operational expenditure costs are more
than assumed and downwards if they are less.
There are two operational expenditure reopener
dates, at 15 years and 25 years after the first
reactor start date. The rationale behind the
reopener is that the strike price is based on long-
term assumptions on operational expenditure
costs. The reopener provides a way of mitigating
long-term cost risks for both parties.

Annual report and accounts 2017-18
164
3. Sizewell C strike price adjustment for HPC
If the Sizewell C condition is not satisfied on or
before the reactor one start date, there shall
be no strike price adjustment. However, if the
Sizewell C condition is satisfied after the reactor
one start date, then the applicable strike price
shall be reduced with effect from the date
of satisfaction of the Sizewell C condition by
£3/MWh.
Sensitivity analysis
Using a Level 3 technique to assess the value
of the HPC CfD is permissible when there is no
observable input against which to assess the
valuation. The Department has used internally
generated models and assumptions consistent
with an emissions pathway towards the
Government’s decarbonisation commitments to
generate the wholesale electricity price scenarios
used in the valuation of the HPC CfD. There
is unavoidable uncertainty inherent in all such
modelling and as such the results should be
interpreted as a range of plausible scenarios
rather than a single point value. However,
IFRS 13 ‘Fair Value Measurement’ requires that
a single amount be declared for fair value and
so to satisfy this condition the Department has
adopted its central scenario when valuing the
HPC CfD. In the sensitivity analysis a high and a
low case scenario have also been included.
To provide transparency for the reader it is
important to highlight the uncertainty inherent in
material values over a long period of time such
is the nature of this CfD. The predicted price
series from the DDM between 2025 and 2050
(flat-lined from 2050 to 2060) has a higher degree
of certainty in the early years (2025-2040) and
a lower degree of certainty in later years (2040-
2060). This is due to the lack of available market
data against which to judge the output.
The Department has illustrated some empirical
impact of changes in assumptions on the fair
value of the HPC CfD (in 2016 prices). These are
shown in the table below:
Change in fair value of HPC if:
Favourable changes
Unfavourable changes
£m
£m
Electricity prices decrease by 10%
–
4,154
Electricity prices increase by 10%
4,154
–
At generation cap
–
116
10% less load factor
3,659
–
Estimated commissioning date moves back one year
295
–
Generation starts one year earlier
–
312
Sizewell C strike price adjustment for HPC
2,534
–
Low wholesale price scenario
–
4,781
High wholesale price scenario
10,117
–
The low DDM case assumptions are similar to
reference scenario but with lower projected
fossil fuel prices, the high case assumes higher
projected fossil fuel prices.

Financial Statements
165
10 Investments and loans in other public
sector bodies
Ordinary
shares
Public
Dividend
Capital
Other
loans and
investments
Core
Department
and
Agencies
Total
Elimination
of shares
and other
investments
and loans
held in
NDPBs
NDPBs
Ordinary
Shares
Departmental
Group Total
£m
£m
£m
£m
£m
£m
£m
Balance at 1 April
2016 restated
2,617
81
210
2,908
(2,119)
537
1,326
Additions
753
–
168
921
(822)
–
99
Impairments
(148)
–
–
(148)
148
–
–
Revaluations
18
–
–
18
–
(115)
(97)
Reclassification
(1,517)
–
(5)
(1,522)
1,517
–
(5)
Unwinding of
discount
–
–
3
3
–
–
3
Loans repayable
within 12 months
transferred to
current assets
–
–
(9)
(9)
–
–
(9)
Balance at
31 March 2017
restated
1,723
81
367
2,171
(1,276)
422
1,317
Additions
393
–
243
636
(556)
30
110
Disposals
(7)
–
–
(7)
7
–
–
Redemptions
–
–
(22)
(22)
22
–
–
Impairments
23
–
–
23
(23)
–
–
Revaluations
214
–
–
214
–
8
222
Unwinding of
discount
–
–
1
1
–
–
1
Loans repayable
within 12 months
transferred to
current assets
–
–
(20)
(20)
–
–
(20)
Balance at
31 March 2018
2,346
81
569
2,996
(1,826)
460
1,630

Annual report and accounts 2017-18
166
10.1 Ordinary Shares in other public sector bodies
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
1,723
1,086
2,617
1,146
Additions
393
30
753
37
Disposals
(7)
–
–
–
(Impairments) / Impairment reversal
23
–
(148)
–
Revaluations
214
221
18
(97)
Reclassification
–
–
(1,517)
–
Balance at 31 March
2,346
1,337
1,723
1,086
Comprising
Ordinary Shares held within the Departmental boundary
– held at cost
1,466
–
1,059
–
Ordinary Shares held outside the Departmental
boundary – held at fair value
880
1,337
664
1,086
Balance at 31 March
2,346
1,337
1,723
1,086
Ordinary Shares in other public sector bodies
held within the Departmental boundary
In accordance with the FReM, ordinary shares
held within the Departmental boundary are
carried at historical cost less any provision for
impairment. They are eliminated on consolidation.
Green Investment Bank Limited (GIB)
The core Department held 1,567,450,000 shares
of £1 each (31 March 2017: 1,517,450,000)
in GIB. BEIS made £50 million (31 March
2017: £483 million) capital injections into GIB
during the year in exchange for share capital.
The £50 million addition is included in the non-
current assets held for sale (note 15).
On 20 March 2017, the core Department
had committed to the sale of GIB. The core
Department’s shareholding in GIB met the
classification criteria of a non-current asset
held for sale in accordance with IFRS 5.
The shareholding was reviewed for impairment
(of which no impairment was identified) prior to
being reclassified as a non-current asset held
for sale. On 17 August 2017, the Department
disposed of the full shareholding in GIB.
A realised profit on disposal of £186 million
has been recognised as shown in note 15.
UK Green Infrastructure Platform Limited (UK GIP)
On 17 August 2017, immediately after the sale of
GIB, the core Department acquired 900 shares
(90% of the share capital) of UK GIP, each with
a nominal value of £1. The transaction involved
additions in ordinary share capital shown in the
totals above of £93 million and a shareholder
loan of £40 million. The total loan outstanding at
31 March 2018 was £31 million which is included
within the loans and investments in public sector
bodies note.
UK GIP was established to enable Government to
retain an interest in five existing GIB investments.
The Green Investment Group is the remaining
10% shareholder. The primary activity of UK
GIP is to hold green investments and identify
opportunities to realise them in a way which
returns best value for taxpayers’ money.
British Business Bank Plc (BBB)
The core Department holds 1,371,407,933
ordinary shares (31 March 2017: 1,071,407,935),
each with a nominal value of £1. The core
Department made £300 million (31 March 2017:
£234 million) of share capital additions in BBB
during the year. The core Department’s holding
had a cost of £1,371 million at 31 March 2018
(31 March 2017: £1,046 million).
The principal objective of the company is to
address long-standing, structural gaps in the
supply of finance and bring together in one place
Government finance support for small and mid-
sized businesses.
UK Shared Business Services Limited (UKSBS)
The core Department holds 62,016,358 non-
voting shares and one voting share in UKSBS,

Financial Statements
167
held at cost less provision for impairment of
£3 million at 31 March 2018 (31 March 2017:
£6 million).
The company is a specialist business services
organisation that provides finance, procurement,
grants, information systems and HR and payroll
services to the public sector. Its main objective
is to improve the economy, efficiency and
effectiveness of corporate services to the core
Department and its Partner Organisations.
Postal Services Holding Company Limited (PSH)
The Secretary of State owns 50,005 ordinary
shares in PSH which is 100% of the issued
share capital at a historic cost of £430 million at
31 March 2018 (31 March 2017: £430 million).
The Secretary of State also owns one special
share in PSH, relating to certain areas for which
Special Shareholder’s consent is required.
The core Department’s holding had a cost less
provision for impairment of £nil at 31 March
2018 (31 March 2017: £7 million), due to a
return of capital from PSH to BEIS core of
£6.9 million. In addition, PSH’s holding of Post
Office Limited (POL) shares was transferred to
the core Department. PSH is currently in the
process of liquidation on the cessation of its
primary activities.
The principal objective of the company prior to
cessation was to hold and manage its shares
in POL.
Low Carbon Contracts Company Limited (LCCC)
The core Department holds one ordinary share in
LCCC with a nominal value of £1.
The principal objective of the company is to be
the counterparty to and manage Contracts for
Difference (CfDs) throughout their lifetime.
Electricity Settlements Company Limited (ESC)
The core Department holds one ordinary share in
ESC with a nominal value of £1.
The principal objective of the company is to
oversee settlement of the Capacity Market
agreements.
Enrichment Holdings Limited (EHL)
The core Department holds two shares of £1
each in EHL with a nominal value of £2.
EHL has been set up as a holding company, along
with a subsidiary company, Enrichment Investments
Limited (EIL), solely to hold the Government’s
one third share in URENCO Limited, an entity
operating in the civil uranium enrichment sector.
BIS (Postal Services Act 2011) Company Limited
The core Department holds one ordinary share in
BIS (Postal Services Act 2011) Company Limited
with a nominal value of £1.
The principal objective of the company is to
dispose of the assets transferred to it from the
Royal Mail Pension Plan (RMPP).
South Tees Site Company Limited (STSC)
The core Department holds one ordinary share in
STSC with a nominal value of £1.
The principal objective of the company is to
secure and manage the South Tees Site.
Ordinary Shares held outside of the
Departmental boundary
Shares held outside of the Departmental
boundary are carried at fair value in accordance
with IAS 39.
Post Office Limited (POL)
The core Department holds 100% of the shares
in the Postal Services Holding Company Limited
(PSH), the company which up to 12 June 2017,
wholly owned the shareholding of POL and up
to the end of 2015-16 held the Department’s
investment in Royal Mail plc.
PSH held 50,003 ordinary shares in POL at a
nominal value of £1 each which is 100% of the
issued share capital. There is a special share in
POL (nominal value of £1) which is held directly
by the Secretary of State.
On 12 June 2017, the shareholding in POL,
with a value of £nil, was transferred to the core
Department. This shareholding is held at fair
value, but as there is no active market for these
shares the net asset value of POL is considered
to be a reasonable approximation for fair
value. The fair value of the investments, held
by the core Department, as at 31 March 2018
was £195 million (31 March 2017: £nil when the
investment was held by PSH).
The principal objective of POL is to provide retail
post office services through its national network
of branches.
British Nuclear Fuels Limited (BNFL)
The core Department holds 50,000 ordinary
shares in BNFL at a nominal value of £1 each.
The Secretary of State holds 49,999 ordinary
shares and the Treasury Solicitor holds one
ordinary share.
The core Department’s shareholding is held at
fair value, but because there is no active market
for these shares the net asset value of BNFL is

Annual report and accounts 2017-18
168
considered to be a reasonable approximation of
fair value. The fair value as at 31 March 2018 was
£324 million (31 March 2017: £324 million).
Ordnance Survey Limited (OSL)
The core Department holds 34,000,002 ordinary
shares in OSL at a nominal value of £1 each
which is 100% of the issued share capital.
The shareholding is held at fair value, but as
there is no active market for these shares the
net asset value of OSL is considered to be a
reasonable approximation for fair value. The fair
value as at 31 March 2018 was £196 million
(31 March 2017: £189 million).
The principal objective of OSL is to produce
mapping products and mapping data
information.
NPL Management Limited (NPLML)
The core Department holds 57 ordinary shares in
NPLML which is 100% of the issued share capital.
The shareholding is held at fair value, but as there
is no active market for these shares the net asset
value of NPLML is considered to be a reasonable
approximation for fair value. The fair value as at
31 March 2018 was £85 million (31 March 2017:
£75 million).
NNL Holdings Limited (NNLH)
The core Department holds two shares of £1
each in NNLH with a nominal value of £1 each.
NNLH has been set up as a holding company,
to hold all the shares in the National Nuclear
Laboratory Limited.
The shareholding is held at fair value but because
there is no active market for these shares the
net asset value of NNLH is considered to be a
reasonable approximation of fair value. The fair
value as at 31 March 2018 was £78 million
(31 March 2017: £76 million).
Nuclear Liabilities Fund
The primary objective of the Nuclear Liabilities
Fund Limited is to produce sufficient returns to
cover the cost of decommissioning eight existing
nuclear power stations, all now owned by EDF
Energy Nuclear Generation Limited (EDFE) and
to cover certain of EDFE’s uncontracted liabilities
(principally the removal and storage of spent fuel).
A remote contingent liability has been disclosed
in relation to these costs in the Parliamentary
Accountability and Audit Report.
The Fund is owned by the Nuclear Trust, the
members of which also constitute the Fund’s
Board. The Secretary of State has powers to
set the Fund’s investment policy and appoints
three of the trustees; the other two trustees
are appointed by EDFE. In addition to the
ordinary shares jointly owned by the trustees,
the Secretary of State and EDFE each own a
special share in the Fund (note 10.4). The fair
value of the Fund (i.e. assets less liabilities as
recognised in the accounts) as at 31 March 2018
was £nil (31 March 2017: £nil).
NDA subsidiaries
The NDA controls the following subsidiaries,
all of which are outside the Departmental Group
boundary and not consolidated into these
accounts. The holdings are valued at fair value.
As there is no active market, the net assets of
the entities are considered the most appropriate
approximation of fair value, and amounted to
£459 million as at 31 March 2018 (31 March
2017: £422 million).
Name
Country of
incorporation Nature of business
Holding
entity
Proportion
of ordinary
shares held
Direct Rail Services Limited
UK
Rail transport services within
the UK
NDA
100%
International Nuclear Services
France SAS (i)
France
Transportation of spent fuel
NDA
100%
International Nuclear Services
Japan KK (i)
Japan
Transportation of spent fuel
NDA
100%
International Nuclear Services
Limited
UK
Contract management and the
transportation of spent fuel,
reprocessing products and waste
NDA
100%
NDA Properties Limited
UK
Property management
NDA
100%
Pacific Nuclear Transport Limited (i)
UK
Transportation of spent fuel,
reprocessing products and waste
NDA
68.75%
Rutherford Indemnity Limited
Guernsey
Nuclear insurance
NDA
100%
(i) Ownership through International Nuclear Services Limited.

Financial Statements
169
10.2 Public Dividend Capital (PDC)
Companies
House
UKIPO
Met Office
Total
£m
£m
£m
£m
Balance at 1 April 2016
16
6
59
81
Additions
–
–
–
–
Redemptions
–
–
–
–
Impairments
–
–
–
–
At 31 March 2017
16
6
59
81
Additions
–
–
–
–
Redemptions
–
–
–
–
Impairments
–
–
–
–
At 31 March 2018
16
6
59
81
PDC is held by the core Department.
In accordance with the FReM, PDC is carried at historical cost less any impairment.
10.2.1 Share of net assets and results for Public Dividend Capital holdings outside the Departmental
consolidation boundary
The Department is required to disclose its share of the net assets and the results for the year of other
public sector bodies, which are outside of the departmental boundary. The following disclosures
relate to the Department’s trading funds.
Companies
House
UKIPO
Met Office
£m
£m
£m
Net Assets/(Liabilities) at 31 March 2017
79
85
246
Turnover
66
88
227
Surplus/profit (deficit/loss) for the year before financing
7
7
5
Net Assets/(Liabilities) at 31 March 2018
80
92
258
Turnover
69
96
230
Surplus/profit (deficit/loss) for the year before financing
5
10
20
For all bodies, information for 2017-18 was derived from their draft unaudited accounts.
The information for 2016-17 was derived from their audited accounts. The accounts were
prepared on an IFRS basis, in accordance with the requirements of the FReM.
10.3 Other investments and loans in public sector bodies
31 March 2018
31 March 2017
Restated
Core Department
and Agencies
Departmental
Group
Core Department
and Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
367
150
210
99
Additions
243
80
168
62
Repayments
(22)
–
–
–
Unwinding of discount
1
–
3
3
Reclassification
–
–
(5)
(5)
Revaluations
–
1
–
–
Loans repayable within 12 months
transferred to current assets
(20)
(20)
(9)
(9)
Balance at 31 March
569
211
367
150

Annual report and accounts 2017-18
170
Core Department
Loans in other public sector bodies
Loans in other public sector bodies are classified
as ‘loans and receivables’ and measured at
amortised cost in accordance with IAS 39.
The balance comprises a number of loans to
public sector bodies, the most significant loans
making up the balance are detailed below.
Energy Efficiency Loans
The core Department’s energy efficiency loans
scheme was set up under the Environmental
Protection Act 1990 to help businesses and
public sector organisations reduce their energy
costs by providing interest free loans for the
implementation of energy efficiency projects.
The total carrying amount with public sector
bodies is £180 million at 31 March 2018
(31 March 2017: £137 million). The non-current
element of the loans is £141 million at 31 March
2018 (31 March 2017: £107 million) included in
the table above; the current element of these
loans is £39 million at 31 March 2018 (31 March
2017: £30 million), which is included in note 16.
These loans are to non-consolidated public
sector entities and are not eliminated on
consolidation.
Fleetbank Funding Limited Loan (Enable Funding
programme)
The core Department’s loan to Fleetbank
Funding Limited is to provide funding to support
the Enable Funding programme, managed by
the British Business Bank. This was launched
in November 2014 and aimed at improving the
provision of asset and lease finance to smaller
UK businesses.
The carrying amount of the Fleetbank Funding
Limited loan is £205 million at 31 March 2018
(31 March 2017: £130 million).
This loan is to an entity that is consolidated
within these financial statements and the loan is
eliminated on consolidation.
Northern Powerhouse Investment Limited and
Midlands Engine Investment Limited Loans
The core Department has loans with Northern
Powerhouse Investment Fund and Midlands
Engine Investment Fund. The funds are matched
by funding from the European Investment Bank.
The funds are set up to provide commercially-
focused finance to help small and medium-sized
enterprises start up and grow.
The carrying amount of the loan investments
in these entities is £63 million at 31 March
2018 (31 March 2017: £58 million). The loan
investments were made during 2016-17.
The loans are accounted for at cost under IAS 27
in the core Department and Agencies column.
These loans are to consolidated bodies and are
eliminated on consolidation.
10.4 Special Shares
The Secretary of State holds one Special Share
in each of the entities listed below. The list is
a summary and not a comprehensive record
of the terms of each respective shareholding.
Further details can be obtained from the annual
report and financial statements of each body or
their Articles of Association.
The core Department does not recognise the
special or ‘golden’ shares on its Statement of
Financial Position.

Financial Statements
171
Body in which Share is
held and type and value
of Share
Significant terms of Shareholding
Postal Services Holding
Company Limited
£1 Special Rights
Preference Share
• created in January 2001 (formerly called Royal Mail Holdings plc)
• it may be redeemed at any time by the shareholder
• the consent of the special shareholder is required for a number of decisions,
including:

– appointments to the Board (the special shareholder can also make appointments
to the Board)

– setting (and approving any material changes in) the remuneration packages
of the Directors

– borrowing

– disposing of substantial assets of the business and shareholdings

– voluntary winding-up of the company

– varying certain of the company’s Articles of Association, including the rights
of the special shareholder
Post Office Limited (‘POL”)
£1 Special Rights
Redeemable Preference
Share
• created in April 2012
• special Shareholder is entitled to attend and speak at any general meeting or any
meeting of any other class of shareholders of POL, but the Special Share does not
carry voting rights or any other rights at any such meeting
• it may be redeemed at any time by the Special Shareholder. POL cannot redeem
the Special Share without prior consent of the Special Shareholder
• the consent of the special shareholder is required for a number of decisions,
including:

– varying POL’s Articles of Association, including the rights of the special shareholder

– appointment or removal from office of any Director of POL

– approval of (including material variations) Directors’ remuneration and terms
of employment

– adoption of (and any material variation in) POL’s strategic plan

– substantial alterations in the nature of the business carried on by POL

– sale of material assets in the absence of which POL would not be able to deliver
its strategic plan

– incurring of any borrowing exceeding pre-set limits as agreed with HM Treasury

– issuing or allotment of shares or granting of share rights in the company

– voluntary winding-up of the company or member of the group

– any transaction which will result in a commitment or liability – either individually
or when taken together with related relevant transactions – of an amount in excess
of £50m
BAE Systems plc
£1 Special Rights
Preference Share
• created in 1985 (but subsequently amended)
• no time limit
• provides for a 15% limit on any individual foreign shareholding, or group of foreign
shareholders acting in concert, in the company
• requires a simple majority of the Board and the Chief Executive to be British
• requires any Executive Chairman to be British and, if both the Chairman and Deputy
Chairman are non-executives, requires at least one of them to be British

Annual report and accounts 2017-18
172
Body in which Share is
held and type and value
of Share
Significant terms of Shareholding
Rolls Royce Holdings plc
£1 Special Rights
Non-Voting Share
• created in 1987 (but subsequently amended and transferred to Rolls-Royce Holdings plc)
• no time limit
• provides for a 15% limit on any individual foreign shareholding, or group of foreign
shareholders acting in concert, in the company
• requires a simple majority of the Board to be British
• allows either the Chairman or the Chief Executive to be either an EU or US citizen
provided that the other is a British citizen
• provides for a veto over the material disposal of assets of the group
• provides for a veto for a proposed voluntary winding up
EDF Energy Nuclear
Generation Group Limited
(formerly British Energy
Group plc)
£1 Special Share
• British Energy Group plc Special Share created on 13 January 2005 and held jointly
by the Secretary of State for Business, Energy and Industrial Strategy and the
Secretary of State for Scotland
• the consent of the Special Shareholder, which can only be refused on grounds
of national security (except in relation to an amendment to the company’s Articles
of Association), is required in respect of:

– various amendments to the company’s Articles of Association

– any purchase of more than 15% of the company’s shares

– the issue of shares carrying voting rights of 15% or more in the company

– variations to the voting rights attaching to the company’s shares

– the giving of consent in respect of the issue of shares by, the sale of shares in or
amendments to the Articles of Association of various subsidiaries in certain cases
British Energy Limited
(formerly British Energy
Holdings plc)
£1 Special Share
• British Energy Holdings plc Special Share created on 13 January 2005 and held
jointly by the Secretary of State for Business, Energy and Industrial Strategy and
the Secretary of State for Scotland
• the consent of the Special Shareholder, which can only be refused on grounds
of national security (except in relation to an amendment to the company’s Articles
of Association), is required in respect of:

– various amendments to the company’s Articles of Association; and

– the giving of consent in respect of the issue of shares by, the sale of shares
in or amendments to the Articles of Association of various subsidiaries in
certain case
EDF Energy Nuclear
Generation Limited
(formerly British Energy
Generation Ltd)
£1 Special Share
• British Energy Generation Ltd Special Share created in 1996 is held solely by the
Secretary of State for Business, Energy and Industrial Strategy
• the consent of the Special Shareholder, which can only be refused on grounds
of national security (except in relation to an amendment to the company’s Articles
of Association), is required in respect of:

– various amendments to the company’s Articles of Association

– the disposal of any of the nuclear power stations owned by the company

– prior to the permanent closure of such a station, the disposal of any asset which
is necessary for the station to generate electricity

Financial Statements
173
Body in which Share is
held and type and value
of Share
Significant terms of Shareholding
British Energy Ltd (formerly
British Energy plc)
£1 Special Share
• British Energy plc Special Share created in 1996 is held solely by the Secretary
of State for Business, Energy and Industrial Strategy.
• the consent of the Special Shareholder, which can only be refused on grounds
of national security (except in relation to an amendment to the company’s Articles
of Association), is required in respect of:

– various amendments to the company’s Articles of Association

– the giving of consent in respect of the issue of shares by, the sale of shares in or
amendments to the Articles of Association of various subsidiaries in certain cases
• the company has no significant assets or liabilities as a result of the restructuring
scheme, which came into effect on 14 January 2005.
Nuclear Liabilities Fund Ltd
£1 Special Rights
Redeemable
Preference Share
• created in 1996.
• the Secretary of State for Business, Energy and Industrial Strategy has a Special ‘A’
Share (there is also a ‘B’ Share held by British Energy)
• the consent of the Special Shareholder is required for any of the following:

– to change any of the provisions in the Memorandum of Association or Articles
of Association

– to alter the share capital or the rights attached thereto

– the company to create or issue share options

– the ‘B’ Special Shareholder or any of the Ordinary shareholders to dispose
or transfer any of their rights in their shares

– the company to pass a members voluntary winding-up resolution

– the company to recommend, declare or pay a dividend

– the company to create, issue or commit to give any loan capital

– the company to issue a debenture

– the company to change its accounting reference date
10.5 Membership Fund
The Secretary of State for Business, Energy and Industrial Strategy has a
share in the membership fund of the Carbon Trust. The members’ fund at
31 March 2018 was £nil (31 March 2017: £nil).

Annual report and accounts 2017-18
174
11 Other financial assets
31 March 2018
31 March 2017 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
1,485
4,083
1,639
4,554
Transfer
–
1
–
7
Reclassifications
–
–
5
(1,267)
Additions
17
839
17
1,372
Repayments
(284)
(605)
(206)
(544)
Effective interest
39
39
45
45
Unwinding of discount
–
–
–
2
Amortisation
–
(1)
–
–
Revaluations
(83)
23
(7)
(11)
Impairments
(4)
(57)
(8)
(75)
Impairment reversals
–
14
–
–
Balance at 31 March
1,170
4,336
1,485
4,083
Comprising:
Repayable Launch Investments
11.1
1,047
1,047
1,205
1,205
Other loans and investments
11.2
123
3,289
280
2,878
Balance at 31 March
1,170
4,336
1,485
4,083
Other financial assets analysed between current and non-current assets:
31 March 2018
31 March 2017 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Due within twelve months
142
142
1
1
Due after twelve months
1,028
4,194
1,484
4,082
Balance at 31 March
1,170
4,336
1,485
4,083
11.1 Repayable Launch Investments
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
1,205
1,205
1,389
1,389
Repayments
(103)
(103)
(144)
(144)
Effective interest
39
39
44
44
Revaluations
(94)
(94)
(84)
(84)
Balance at 31 March
1,047
1,047
1,205
1,205
Repayable Launch Investments are held by the
core Department.

Financial Statements
175
The core Department has determined that
Repayable Launch Investments are to be
classified as ‘available for sale financial assets’ and
measured at fair value, in accordance with IAS 39.
The core Department, under the provisions of
the 1982 Civil Aviation Act, provides Repayable
Launch Investment to companies to fund a
proportion of the non-recurring eligible design
and development capital costs on civil aerospace
development products. Each product supported
is covered by separate contractual terms and
conditions. Under these contracts, periodic
repayments become due when products are
delivered or at other specific points. The portfolio
of investments is valued twice annually and the
valuations are based on forecast annual income
arising under each contract.
Measurement and carrying values
Repayable Launch Investment contracts are
initially recognised at fair value which is the
transaction price. After initial recognition, the
value is the discounted forecast value of future
income streams, excluding accrued income
which is included in receivables when products
are delivered. The value of future income streams
is predominantly driven by the core Department’s
view of the applicable programme’s performance
in the global market over the period of the
contract’s life; a number of activities inform this
view and some are described below.
The core Department uses a variety of sources
to inform a forecast of deliveries for individual
programmes. This can include using: an internal
delivery forecast model and market share
model, forecast delivery schedules and other
data directly provided from the RLI recipient
companies, publicly available aircraft delivery
forecasts, specifically commissioned consultant
programme forecasts as well as commentary and
views from industry experts.
The approach taken is entirely dependent on the
programme in question. Other valuation variables
include inflation measures – or proxies (such as
RPI, RPIX, gilt rates and GDP deflators). Some
contracts entitle the core Department to a share
of aircraft or engine spare part and support
income, and the valuation of these contracts is
based on analysis of past income streams and
forecasts of future demand. The forecast income
streams are adjusted by inflation of 2.45% and
then are discounted to present value using a
constant discount rate of 3.5% representing the
effective rate of return of the investment portfolio.
The carrying value of Repayable Launch
Investments is influenced by the interaction of key
drivers such as aircraft or engine deliveries and
economic variables. The core Department uses
Monte-Carlo simulation to understand the effect
of different scenarios for these drivers on the
valuation of each contract. The core Department
considers that the carrying value is a reasonable
approximation of the fair value of Repayable
Launch Investments.
Where the valuation exceeds historical cost,
increases in value are taken to the revaluation
reserve and are released to the Consolidated
Statement of Comprehensive Net Expenditure
as investments are realised. Any permanent
diminution in value is charged to the
Consolidated Statement of Comprehensive
Net Expenditure. Fluctuations in fair value
are adjusted through the revaluation reserve.
The balance on the Revaluation Reserve
pertaining to Repayable Launch Investments
was a £235 million credit at 31 March 2018
(31 March 2017: £268 million credit).
The carrying value of the investments derived
from the discounted cash flow model at
31 March 2018 was £1,047 million (31 March
2017: £1,205 million). The historic cost, including
repayments to date and excluding accrued
income, of the portfolio at 31 March 2018 was
£527 million (31 March 2017: £600 million).
Sensitivity analysis
The core Department has developed a Monte-
Carlo based approach which uses the software
package @Risk to assess the impact of
uncertainty on forecast income, overall contract
values, and enhance the robustness of the
valuation process. Uncertainties are addressed
by constructing different scenarios for the key
drivers and then assigning probabilities to these
scenarios to implement a Monte-Carlo simulation
of the contracts on a contract-by-contract
basis. The key variables include: programme
development delays, changes to entry into
service and out of service dates, production
levels, market shares and economic variables
used as inflation measures.
The contracts are highly complex and generally
distinct from each other in their terms and
structure, yet there are cases of significant
interdependencies between contracts and
correlations between variables.

Annual report and accounts 2017-18
176
The model is iterated ten thousand times to
produce distributions of income for each contract
and thus the overall portfolio. Each iteration of the
model produces an income forecast. These are
collated and used to form an income distribution.
It is from this distribution that the value of the
portfolio is calculated.
In order to give an assessment of potential
volatility for the portfolio, we calculate the 5th and
95th percentiles from the income distribution –
90% of all the iterations outputted from the Monte-
Carlo simulation lie between these particular
percentile points. The lower (5th) and upper (95th)
points which define this interval were £999 million
and £1,076 million respectively, at 31 March 2018
(2016-17: £1,179 million and £1,229 million).
Risk
Market Risk
This constitutes the largest area of potential risk
in the portfolio as the primary method of the
calculation of income streams is based on the
forecasts of aircraft or engine deliveries. The core
Department uses internal analysis, company
information and third party information to
forecast deliveries and ultimately future income
on each investment over the life of the investment
period. Deliveries in the short term are driven by
variables which include manufacturer production
plans, market cycles, customer demand and
availability of financing. Medium and longer-
term deliveries will be affected by overall market
growth and the market attractiveness of an
aircraft programme. A negative shift in outlook
may result in the core Department not being
able to recover its investment in whole or in
part, although once deliveries have commenced
some level of income is usually due to the core
Department. The core Department aims to
minimise risk of under-recovery of investments
by carrying out a full evaluation of each
business case submitted for launch investment
support, and by monitoring programmes for
the substantive life of the contracts to allow it to
assess exposure to risks (including project risk,
market risk and technical risk).
Interest Rate Risk
A number of the contracts use retail price
indexes (such as RPI and RPIX) or other
surrogates as a tool to inflate the value of income
due to the core Department over time. As such
there is a risk relating to the forecasting of these
indexes and surrogates within the valuation,
although we estimate that the risk is relatively low
and the overall impact relatively minor.
Foreign Exchange Risk
The core Department has a small number
of contracts which may deliver a US Dollar
denominated income in their later stages
which would be translated into pounds sterling.
We assess these income streams as relatively
low value and low likelihood, thus exchange rate
risk exists but is minimal in the context of the
overall portfolio.
Credit Risk
Company failure could result in the core
Department’s investment not being recovered in
whole or in part. The core Department seeks to
offset this low probability risk by analysing the
financial health of any applicant at the time of
application for launch investment and reviewing
financial health as part of the programme
monitoring activity. In addition, contracts aim to
contain provisions which will (as a minimum) not
disadvantage the core Department compared to
other creditors in the event of a corporate failure.
The core Department takes steps to monitor
the payments that become due to companies
under launch investment contracts to ensure they
comply with the terms of the contracts. Finally,
the contracts also require the company’s auditors
to confirm that all payments have been made
correctly and to identify any errors made.
Other Risk
The core Department’s investments are exposed
to wider risks such as economic downturns
or market shocks from natural or non-natural
events. These risks may adversely impact the
value and timing of the income received by
the core Department. The core Department
seeks to manage this risk by actively monitoring
such events when they arise to assess any
potential impact.

Financial Statements
177
11.2 Other loans and investments
Gilts and
bonds
Term
deposits
Private
sector loans
Property
related
holdings
Equities
(listed
securities)
Private
equities
Investment
funds
Other
investments
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
Balance at 1 April 2016 restated
55
15
590
83
206
485
1,049
682
3,165
Transfers in/(out)
–
–
6
–
–
–
–
1
7
Reclassifications
–
–
(255)
–
–
–
(51)
(961)
(1,267)
Additions
–
–
232
–
70
14
275
781
1,372
Redemptions
(12)
(1)
(131)
(23)
(41)
(118)
(81)
7
(400)
Revaluations
3
–
(6)
5
31
62
108
(130)
73
Effective interest
–
–
1
–
–
–
–
–
1
Unwinding of discount
–
–
2
–
–
–
–
–
2
Impairments
–
–
(16)
–
–
–
(55)
(4)
(75)
Balance at 31 March 2017 restated
46
14
423
65
266
443
1,245
376
2,878
Additions
12
–
306
–
–
7
299
215
839
Redemptions
–
–
(111)
(23)
(18)
(98)
(220)
(32)
(502)
Revaluations
1
–
(3)
–
21
(35)
23
110
117
Impairments
–
–
(17)
–
–
–
(40)
–
(57)
Impairment reversals
–
–
–
–
–
–
14
–
14
Balance at 31 March 2018
59
14
598
42
269
317
1,321
669
3,289
Of the total:
Core Department and Agencies
–
–
2
–
–
–
121
–
123
NDPBs and other designated bodies
59
14
596
42
269
317
1,200
669
3,166
Balance at 31 March 2018
59
14
598
42
269
317
1,321
669
3,289

Annual report and accounts 2017-18
178
Core Department

Investment Funds
Investment Funds are classified as ‘available
for sale financial assets’ and measured at fair
value in accordance with IAS 39. After initial
recognition the carrying value is based upon
the valuations prepared by the fund managers.
They are taken from the most recent set of
annual Accounts for each of the funds and,
where available, updated with interim fund
manager valuations. These investments support
private sector led venture capital to stimulate
private investment into early stage small and
medium-sized enterprise (SME) businesses.
The UK Innovation Investment Fund (UKIIF)
was the largest Investment Fund of the core
Department. The Fund was announced in June
2009 to drive economic growth and create
highly-skilled jobs by enabling investment
in growing small businesses, start-ups and
spin-outs in key technology areas such
as life sciences, clean technology and low
carbon, digital technologies, and advanced
manufacturing. The funds are managed by
two private sector fund managers – Hermes
GPE and the European Investment Fund.
On 14 July 2017, UKIIF was transferred to
British Business Investments Limited (BBIL),
a subsidiary of the British Business Bank
(BBB). At the point of transfer the fair value
of the fund was £134 million. In exchange
for the investment fund transferring to BBIL,
BBB issued £134 million of share capital to the
core Department.
NDPBs and other designated bodies

Gilts and Bonds
The Nesta Trusts hold investments in bonds.
The investments in corporate bonds are classified
as ‘available-for-sale financial assets’, and are
measured at fair value in accordance with IAS
39 based on market quotes. The value of bonds
held by the Nesta Trusts as at 31 March 2018
was £59 million (31 March 2017: £46 million).
Private sector loans
BBB, Fleetbank Funding Ltd and Science and
Technology Facilities Council have entered into
loan agreements with parties within the private
sector. The loans within the Departmental
Group are carried at historic cost as a proxy for
amortised cost because the NDPBs and other
designated bodies have determined that there
is no material difference between historical
cost and amortised cost. As at 31 March 2018,
£596 million of loans were held by NDPBs
and other designated bodies (31 March 2017:
£304 million).
During the reporting period BBB made loans
of £239 million (31 March 2017: £70 million)
to private companies through the BFP Small
Business and Investment Programme schemes.
The fair value of loans held by BBB as at
31 March 2018 was £397 million (31 March
2017: £170 million). The conditions attached to
each loan vary depending on the details of the
arrangement. Repayment schedules have been
agreed and all loans are expected to be repaid at
the end of the loan term.
During 2017-18, FFL made loans of £66 million
(31 March 2017: £34 million) to private companies
through the Enable Loan Programme scheme.
The fair value of loans held by FFL as at
31 March 2018 was £189 million (31 March 2017:
£122 million).
Property related holdings
BIS (Postal Services Act 2011) Company Ltd
have property related holdings of £42 million
at 31 March 2018 (31 March 2017: £65 million).
The holdings relate to a number of marketable
real estate investment funds which are held as
‘available for sale financial assets’ in accordance
with IAS 39.
Equities (listed securities)
At 31 March 2018 the Departmental Group
held £269 million of listed equities (31 March
2017: £266 million). The investments are held by
Nesta Trust.

Financial Statements
179
Private Equities
BIS (Postal Services Act 2011) Company Limited,
Nesta Trust, STFC and NERC have investments
in private equity. These investments have
been classified as ‘available for sale’ assets in
accordance with IAS 39. The value invested at
31 March 2018 was £317 million (31 March 2017:
£443 million).
The fair value of the remaining investments in BIS
(Postal Services Act 2011) Company Limited as
at 31 March 2018 was £305 million (31 March
2017: £428 million). These investments primarily
comprised investments in European and North
American unquoted shares.
The fair values are estimated based on a
variety of valuation techniques, adopted by
the investment managers that comply with
the International Private Equity and Venture
Capital (PEVC) Valuation Guidelines or the
valuation guidelines produced by the British
Venture Capital Association (BVCA). Valuation
techniques used include the use of earnings
multiples, discounted cash flows analysis,
and net asset values.
Investment Funds
BBB, Nesta Trust and BIS (Postal Services
Act 2011) Company Limited hold investment
funds. The value invested at 31 March 2018 was
£1,200 million (31 March 2017: £968 million).
In accordance with IAS 39, the investments of
BBB and Nesta Trust are classified as ‘available
for sale’ assets, those of BIS (Postal Services
Act 2011) Company Limited are held at ‘fair value
through profit and loss’.
BBB held investment funds valued at
£1,195 million at 31 March 2018 (31 March 2017:
£956 million). The most significant investment
is in the Business Finance Partnership (BFP) for
medium-sized businesses at 31 March 2018,
this was valued at £551 million (31 March 2017:
£584 million). The BFP aims to increase the
supply of capital through non-bank lending
channels and, in the longer-term, to help to
diversify the sources of finance available to
businesses. BBB also has an investment fund in
Enterprise Capital Funds which were valued at
£182 million at 31 March 2018 (31 March 2017:
£155 million). BBB provides invoice discount
finance and peer to peer lending through the
Investment Programme funds which were valued
at £242 million at 31 March 2018 (31 March 2017:
£122 million).
Other Investments
Other investments includes Enrichment Holdings
Limited investment in URENCO. This is measured
as an ‘available for sale’ financial asset in
accordance with IAS 39. The fair value of this
investment at 31 March 2018 was £456 million
(31 March 2017: £350 million).
UK Green Infrastructure Platform Limited holds
investments which are classified as ‘available for
sale’ in accordance with IAS 39. The fair value
of these investments as at 31 March 2018 was
£132 million (31 March 2017: £nil).
The remaining other investments are held by
Nesta Trust, Northern Powerhouse Investment
Fund Limited, Medical Research Council,
UK Climate Investments and Midlands Engine
Investments Limited and are classified as
‘available for sale’ in accordance with IAS 39.
The fair value of these other investments at
31 March 2018 was £80 million (31 March 2017:
£26 million).

Annual report and accounts 2017-18
180
12 Recoverable contract costs
The Group has commercial agreements in place under which some or all of
the expenditure required to settle nuclear provisions will be recovered from
third parties. Net recoverable costs at 31 March 2018 were £3,346 million
(31 March 2017: £2,870 million).
Recoverable contract costs relating to nuclear provisions
31 March 2018
Departmental
Group
31 March 2017
Departmental
Group
£m
£m
Gross recoverable contract costs
6,789
6,885
Less applicable payments received on account
(3,192)
(3,445)
Less associated contract loss provisions
(251)
(570)
Balance at 31 March
3,346
2,870
The above balances relate to the Nuclear Decommissioning Authority (NDA).
The movements in gross recoverable contract costs during the year were:
31 March 2018
Departmental
Group
31 March 2017
Departmental
Group
£m
£m
Gross recoverable contract costs at 1 April
6,885
7,221
Increase/(decrease) in year
472
175
Unwinding of discount
(49)
(42)
Release in year – continuing operations
(291)
(266)
Amortisation of recoverable contract costs
(228)
(203)
Gross recoverable contract costs at 31 March
6,789
6,885
The gross balance of recoverable contract costs of £6,789 million
(31 March 2017: £6,885 million) comprises £1,783 million (31 March 2017:
£2,011 million) of past costs which were incurred before the revenue
recognition period of the related contracts and will be amortised in future
years in line with revenue and £5,006 million (31 March 2017: £4,874 million)
of probable future costs which form part of the nuclear decommissioning
provision (note 19) and will be released as they are incurred. Further details
are published in the NDA’s accounts.

Financial Statements
181
13 Investments in Joint Ventures and Associates
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
–
347
–
872
Reclassifications
–
–
–
(682)
Additions
–
7
–
186
Dividends
–
–
–
(5)
Disposals
–
(1)
–
(47)
Profit/(Loss)
–
1
–
18
Revaluations
–
13
–
5
Balance at 31 March
–
367
–
347
NDPBs and other designated bodies
Medical Research Council (MRC), Science and
Technology Facilities Council (STFC), United
Kingdom Atomic Energy Authority (UKAEA) and
Biotechnology and Biological Sciences Research
Council (BBSRC) have joint ventures and/or
associates. The most significant holding is the
Francis Crick Institute Limited.
The Francis Crick Institute was established in
2010 to deliver a world class interdisciplinary
biomedical research centre. MRC holds 42%
(31 March 2017: 42%) of the ordinary shares in
the Institute. The remaining shares are held by
Cancer Research UK, University College London,
the Wellcome Trust, Kings College London and
Imperial College of Science, Technology and
Medicine. The Institute became fully operational
in 2016-17 following the completion of the Crick
building. Accordingly, the value of the BEIS
investment at 31 March 2018 is £254 million
(31 March 2017: £266 million), reflecting BEIS’s
share of net assets.
The results and financial position of the Francis
Crick Institute are summarised as follows:
31 March 2018
31 March 2017
£m
£m
Current assets
52
55
Non-current assets
580
606
Current liabilities
(26)
(26)
Non-current liabilities
–
–
Revenue
146
151
Profit/(loss) from continuing activities
(28)
(7)

Annual report and accounts 2017-18
182
14 Trade and other receivables
31 March 2018
31 March 2017 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Amounts falling due within one year:
Trade receivables
97
433
93
535
Other receivables:
VAT and other taxation
20
133
18
131
Staff receivables
1
2
1
2
RPS receivables
128
128
135
135
Other
196
262
89
109
Prepayments and accrued income
102
385
102
389
544
1,343
438
1,301
Amounts falling due after more than one year:
Trade receivables
17
75
4
60
Deposits and advances
–
–
–
1
Other receivables
915
968
301
300
Prepayments and accrued income
–
47
–
38
932
1,090
305
399
Total Receivables at 31 March
1,476
2,433
743
1,700
The Redundancy Payment Scheme (RPS)
receivable is shown net of an annual impairment.
The impairment is calculated by the Insolvency
Service using a model which is approved by
HMRC. The model calculates the recoverable
debt as £128 million as at 31 March 2018
(31 March 2017: £135 million). There is a risk
that the estimation of 14% for recoverability is
over-optimistic and therefore would result in a
downward revision in future years. Additionally
the model has been created using only 12
years of available data with 14 years of data
required for a full model to be effective. However,
the model is designed to self-check against
recovery rates and for data available there is only
a small annual variation from the 14% target.
This variation is not material and therefore does
not render the model invalid. The model is
also designed to be monitored and amended
annually as required. Additionally, reporting is on
a monthly basis to ensure early warning of any
trends outside the parameters set in the model.
Other receivables held by the core Department
include a discounted receivable of £1,033 million
(31 March 2017: £331 million) relating to the
government guarantee of certain benefits
payable to members and beneficiaries of the
Mineworkers’ Pension Scheme made after
privatisation of the British Coal Corporation
in 1994. The undiscounted amount is
£1,207 million. The agreement relating to the
guarantee entitles the Government to a portion
of any periodic valuation surpluses, generally
determined by the Government Actuary following
triennial valuations, the most recent valuation
was at 30 September 2017. The receivables
have been classified as loans and receivables in
accordance with IAS 39: Financial Instruments:
Recognition and Measurement and are held
at amortised cost. In accordance with IAS 39
the receivable is initially recognised at fair value
which equates to the future cash flows being
discounted at HM Treasury’s financial instrument
nominal rate of 3.7%. Income of £742 million was
recognised in 2017-18 in relation to an additional
sum receivable from the September 2017
valuation (note 6.1). A contingent asset in relation
to a similar financial guarantee for the British
Coal Staff Superannuation Scheme is disclosed
in note 24. More information about the pension
schemes can be found at http://www.mps-
pension.org.uk and https://www.bcsss-pension.
org.uk.

Financial Statements
183
15 Non-current assets and liabilities held for sale
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance of assets at 1 April
1,517
2,609
–
19
Additions and reclassifications
50
(12)
1,517
2,605
Disposals
(1,567)
(2,582)
–
(23)
Revaluations
–
–
–
8
Carrying amount of assets at 31 March
–
15
1,517
2,609
Balance of liabilities at 1 April
–
(1,000)
–
–
Additions and reclassifications
–
–
–
(1,000)
Disposals
–
1,000
–
–
Carrying amount of liabilities at 31 March
–
–
–
(1,000)
Carrying amount at 31 March
–
15
1,517
1,609
The most significant disposal item held as
a ‘Non-current assets classified as held for
sale’ in accordance with IFRS 5 at 31 March
2017 was the core Department’s shareholding
in Green Investment Bank Limited (GIB).
The shareholding was held at a carrying value
equal to the historic cost less impairment as at
31 March 2017 of £1,517 million.
GIB was subsequently sold to the Macquarie
Group Limited during 2017-18, with the sale
completing on 17 August 2017. HM Government
received proceeds of £1,753 million, against a
revised carrying value of £1,567 million, resulting
in a profit of £186 million, which is disclosed on
the face of the Statement of Comprehensive Net
Expenditure in Core Department and Agencies.
In Departmental Group, the net operating
expenditure of GIB for the period up to the sale
was an £11 million loss. The net assets at the
date of disposal were £1,561 million. The profit on
disposal in Departmental Group was £202 million.
The results of GIB for the year up to the sale date
of 17 August 2017 are presented below:
31 March 2018
31 March 2017
£m
£m
Income from sale of goods and services
(49)
(145)
Total operating income from discontinued operations
(49)
(145)
Staff costs
7
19
Purchase of goods and services
28
59
Depreciation and impairment charges
20
35
Other operating expenditure
19
(12)
Total operating expenditure from discontinued operations
74
101
Finance income
(21)
(6)
Finance expense
7
32
Net operating expenditure from discontinued operations
11
(18)

Annual report and accounts 2017-18
184
The net cash flows incurred by GIB are as follows:
31 March 2018
31 March 2017
£m
£m
Cash flows: Net cash outflow from operating activities
(14)
354
Cash flows: Net cash outflow from investing activities
(20)
(889)
Cash flows: Net Financing
50
482
Cash flows: Net increase / (decrease) in cash equivalents in the period
16
(53)
16 Investments and loans in public sector bodies: current
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance of assets at 1 April
682
682
541
541
Additions
7,198
7,198
7,662
7,662
Repayments
(7,168)
(7,168)
(7,530)
(7,530)
Loans repayable within 12 months transferred from
non-current assets
20
20
9
9
Balance at 31 March
732
732
682
682
The most significant item included above is
a loan facility to Post Office Limited (POL).
Since October 2003 the core Department
has made available to POL a revolving loan
facility of up to £950 million. This is to help
the company fund its daily in-branch working
capital requirements to deliver services through
the network, such as social benefits payments
and access to cash. The facility was due to
mature in March 2018 but was extended to
run until 31 March 2021. The outstanding balance
at 31 March 2018 was £644 million (31 March
2017: £649 million) which is included in the
£732 million above.
17 Cash and cash equivalents
31 March 2018
31 March 2017 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
1,192
1,819
775
1,499
Net change in cash and cash equivalent balances
54
215
417
320
Balance at 31 March
1,246
2,034
1,192
1,819
The following balances at 31 March were held at:
The Government Banking Service (GBS)
1,244
1,818
1,191
1,608
Commercial banks and cash in hand
2
216
1
211
Balance at 31 March
1,246
2,034
1,192
1,819

Financial Statements
185
18 Trade payables and other liabilities
31 March 2018
31 March 2017 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Amounts falling due within one year:
VAT, social security and other taxation
7
102
8
91
Trade payables
14
461
–
310
Other payables
68
365
28
359
Accruals and deferred income
948
2,779
1,020
2,930
Amounts issued from the Consolidated Fund for supply
but not spent at year end
928
928
977
977
Advances from Contingencies Fund
2
2
–
–
Consolidated Fund Extra Receipts due to be paid to the
Consolidated Fund:
Received
316
317
215
227
2,283
4,954
2,248
4,894
Amounts falling due after more than one year:
Trade Payables
–
–
–
2
Other payables, accruals and deferred income
1,203
2,901
1,023
2,456
Finance leases
–
–
–
2
1,203
2,901
1,023
2,460
Total payables at 31 March
3,486
7,855
3,271
7,354
Included under accruals and deferred income
are: a) promissory note liabilities with maturities
of less than one year of £276 million (31 March
2017: £446 million) and with maturities greater
than one year of £1,202 million (31 March 2017:
£1,022 million) which represent amounts owed
for various ODA (Official Development Assistance)
projects to which the Department has contributed
and b) sums received on account by the Nuclear
Decommissioning Authority relating to income
from long-term contracts to be recognised
within one year of £680 million (31 March 2017:
£719 million) and after one year of £1,594 million
(31 March 2017: £1,416 million); more details
are available in the accounts of the Nuclear
Decommissioning Authority.

Annual report and accounts 2017-18
186
19 Provisions for liabilities and charges
31 March 2018
31 March 2017
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Current liabilities:
Not later than one year
278
3,332
289
3,582
Total current liabilities
278
3,332
289
3,582
Non-current liabilities:
Later than one year and not later than five years
944
12,963
1,008
13,209
Later than five years
1,232
224,640
1,289
152,722
Total non-current liabilities
2,176
237,603
2,297
165,931
Total at 31 March
2,454
240,935
2,586
169,513
Total provisions
Nuclear
19.1
1,412
235,101
1,592
165,248
Other
19.2
1,042
5,834
994
4,265
Total at 31 March
2,454
240,935
2,586
169,513
The values presented in note 19.1 and note 19.2 below are discounted to
present value using discount rates prescribed by HM Treasury.
31 March 2018
31 March 2017
Cash outflows expected within five years
(2.42%)
(2.70%)
Cash outflows expected between five and ten years
(1.85%)
(1.95%)
Cash outflows expected after ten years
(1.56%)
(0.80%)
Discounting using the above negative rates can increase reported liabilities
significantly; undiscounted equivalent values are provided below to illustrate
the effect.

Financial Statements
187
19.1 Nuclear provisions
British
Energy
UK Atomic
Energy Authority
Decommissioning
Core
Department
and
Agencies
Total
NDA
Decommissioning
Contract
loss
Departmental
Group Total
£m
£m
£m
£m
£m
£m
Balance at
1 April 2016
1,415
283
1,698
160,182
1,348
163,228
Transferred in/(out)
–
–
–
–
–
–
Unwinding of
discount
(17)
(1)
(18)
(1,273)
(18)
(1,309)
Change in
discount rate
54
15
69
4,895
–
4,964
Provided in the year
38
9
47
2,232
–
2,279
Provisions not
required written
back
–
–
–
(265)
(675)
(940)
Provisions utilised
in the year
(204)
–
(204)
(2,636)
(134)
(2,974)
Balance at
31 March 2017
1,286
306
1,592
163,135
521
165,248
Transferred in/(out)
–
–
–
–
27
27
Unwinding of
discount
(14)
(1)
(15)
(1,286)
(15)
(1,316)
Change in
discount rate
(18)
1
(17)
71,002
–
70,985
Provided in the year
37
8
45
3,462
40
3,547
Provisions not
required written
back
–
–
–
(291)
–
(291)
Provisions utilised
in the year
(193)
–
(193)
(2,740)
(166)
(3,099)
Balance at
31 March 2018
1,098
314
1,412
233,282
407
235,101

Estimated forward discounted cash flows as at 31 March 2018
British
Energy
UK Atomic
Energy Authority
Decommissioning
Core
Department
and
Agencies
Total
NDA
Decommissioning
Contract
loss
Departmental
Group Total
£m
£m
£m
£m
£m
£m
Not later than
one year
175
1
176
2,856
132
3,164
Later than one year
and not later than
five years
535
86
621
11,560
105
12,286
Later than five years
388
227
615
218,866
170
219,651
Total forward
cash flows as at
31 March 2018
1,098
314
1,412
233,282
407
235,101

Annual report and accounts 2017-18
188
Core Department

British Energy
As a result of the restructuring of British Energy
(BE) in January 2005, the Government assists
BE (now EDF Energy Nuclear Generation Limited)
in meeting its contractual historic fuel liabilities.
The provision is based on the forecast payment
schedule up to 2029 which is set out in the waste
processing contracts agreed between BE, BNFL
and the Department. The discounted liability at
31 March 2018 is £1,098 million (31 March 2017:
£1,286 million). The undiscounted liability at
31 March 2018 is £1,022 million (31 March 2017:
£1,177 million). Each year the profile of future
payments is reassessed in line with the Retail
Prices Index and the level of provision adjusted in
accordance with the Historic Liabilities Funding
Agreement with BE.
UK Atomic Energy Authority Decommissioning
The decommissioning provision represents the
estimated costs of decommissioning fusion
research facilities at UKAEA’s Culham site,
including the storage, processing and eventual
disposal of radioactive wastes. The core
Department retains the liability for these costs.
The estimate for the provision is reassessed
annually. The last detailed Life Time Plan (LTP)
for decommissioning, funded by the Nuclear
Decommissioning Authority (NDA), was drawn
up in 2007-08. Since then UKAEA has each year
carried out a high level assessment of changes
to the assumptions made in the previous LTP.
For example, the provision includes estimates
for the decommissioning of facilities built since
2007‑08, and an assessment of the effect of
changes to some key assumptions such as the
date of Joint European Torus (JET) closure.
The approach taken, until a further LTP is
prepared, and the fact that much of the work
required to deal with the liabilities will not be
undertaken until well into the future, means
that there is at present a significant uncertainty
as to the amount of the provision. In addition,
timing of expenditure on the decommissioning
provision is dependent on the closure date of
the JET facility which is to be decommissioned.
The discounted liability at 31 March 2018 is
£314 million ((31 March 2017: £306 million).
The undiscounted liability is £273 million
(31 March 2017: £266 million).
NDPBs and other designated bodies

NDA Decommissioning
The NDA’s nuclear decommissioning liability
represents NDA’s best estimate of the costs
of decommissioning plant and equipment on
each of the designated nuclear licensed sites in
accordance with the published strategy.
The programme of decommissioning work will
take until 2137 but, in preparing the estimate,
the NDA has focused in particular on the first
20 years which represent £56 billion out of the
total £233 billion provision (31 March 2017:
£53 billion out of £163.1 billion). The estimates
are necessarily based on assumptions about
the processes and methods likely to be used
to discharge the obligations and reflect the
latest technical knowledge, existing regulatory
requirements, government policy and commercial
agreements. Given the very long timescale and
the complexity of the plants and material being
handled, considerable uncertainty remains in
the cost estimate, particularly in the later years.
Discounting of the forward cash flow estimates
to present value also has a significant impact
on the liability reported in the Statement of
Financial Position of £233.3 billion at 31 March
2018 (31 March 2017 restated: £163.1 billion).
The undiscounted equivalent of this reported
liability is £120.2 billion at 31 March 2018
(31 March 2017 restated: £118.1 billion).
The Group auditors continue to include an
emphasis of matter paragraph in their audit
certificate concerning the overall measurement
uncertainty.
The NDA has commercial agreements in place
under which a portion of the expenditure
required to settle certain elements of the
decommissioning provision are recoverable from
third parties. Changes in future cost estimates
of discharging these particular elements are
therefore matched by a change in recoverable
contract costs. In accordance with IAS 37,
these recoverable amounts are not offset against
the decommissioning provision but are treated as
a separate asset (note 12).
Sensitivity Analysis – discount rate:
An increase of 0.5% in the discount rate would
reduce the provision to £185 billion, whilst a
decrease in discount rate of 0.5% would increase
the provision to £303 billion.
The change in discount rates (see note 1.25) in
the current financial year produced an increase
of £65,964 million (2017: £1,446 million increase),
excluding increases due to inflation.

Financial Statements
189
Sensitivity Analysis – other factors:
Analysis of expected timing of discounted cash flows for the NDA Nuclear Provision is as follows:
NDA Group
Waste
Research
Sellafield
Fuel
manufacturing
and generation
Others
2017-18
Total
2016-17
total
£m
£m
£m
£m
£m
£m
£m
Up to 1 year
71
306
1,940
480
58
2,855
3,024
2 to 5 years
372
1,121
8,290
1,459
315
11,557
11,761
6 to 20 years
2,569
1,613
35,010
1,516
734
41,442
38,176
21 to 50 years
5,857
324
54,643
1,340
778
62,942
46,946
50 years +
16,057
148
66,012
32,645
412
115,274
64,093
24,926
3,512
165,895
37,440
2,297
234,070
164,000
Deduction in respect
of Site Licence
Companies pension
receivable from NDA

(788)
(865)
Total NDA
Decommissioning
Provisions

233,282
163,135
Sensitivity range
NDA Group
Waste
Research
Sellafield
Fuel
manufacturing
and generation
Others
2017-18
Total
£m
£m
£m
£m
£m
£m
Increase
63,026
135
175,081
15,590
115
253,947
Reduction
(10,618)
(269)
(29,180)
(15,590)
(230)
(55,888)
The reasons underpinning the sensitivity ranges
above are discussed further below.
The NDA calculates its provision based on
management’s best estimate of the future costs
of the decommissioning programme, which
is expected to take until 2137 to complete.
The NDA also considers credible risks and
opportunities which may increase or decrease
the cost estimate, but which are deemed less
probable than the best estimate. These are the
basis of the sensitivities identified above, and the
key sensitivities are as follows:
• waste activities cover the Low Level
Waste Repository and the GDF, with the
key sensitivities being in the timing and
costs of constructing and operating the
GDF. The above range from a reduction
of £10,618 million to an increase of
£63,026 million reflects three separate
sensitivities:
• the potentially higher costs of
constructing and operating the GDF
itself, which dependent on the location
and construction requirements of the
facility, could be up to £62,964 million
higher (or £10,494 million lower) than
the base case assumption
• the impact of the timing of the facility’s
construction and operations. The current
planned date for the facility to receive
waste is 2045. NDA has identified a
risk that the construction and opening
of the facility may be delayed beyond
2045. A delay to this date may increase
the cost of the facility itself, along with
the cost of interim storage of waste at
sites across the NDA estate. A delay of
a small number of years is considered
to be within the overall tolerance of
the estimate for GDF construction and
waste transfer, and is not considered to
have a material impact on the provision
estimate. A longer delay of say 20 years
could materially impact the provision,
by approximately £3,600 million when
combined with a managed deferral of
other programmes
• a delay of 20 years would not
necessarily increase the underlying
costs of the facility, but would increase
the discounted value of the estimate
by approximately £10 billion due
to the effect of long-term negative
discount rates

Annual report and accounts 2017-18
190
• activities on the sites primarily used for
research (Dounreay, Harwell, and Winfrith)
are concerned with final decommissioning
of assets and site clearance. Sites will be
cleared by 2080. Options are being explored
to accelerate site clearance, which in the case
of Dounreay would reduce the provision by
£269 million; an increase in the cost and/or
a delay of past the latest anticipated Interim
State date (2029) would increase the provision
by up to £135 million
• Sellafield represents activities associated
with operation of the site, reprocessing and
eventual decommissioning, and includes
all site overheads. Principal sensitivities
are around the cost of delivering the plan,
particularly the costs of new construction,
decommissioning and post operational clean
out (POCO) work in the long-term (beyond the
next twenty years). The potential costs range
from a £29,180 million reduction against the
current estimate, to a £175,081 million increase
• fuel manufacturing and generation (which
for this purpose includes Magnox and
Springfields) programme of work includes
defueling the generating stations and preparing
for interim Care and Maintenance (complete by
2030) followed by a final site clearance phase
around 2070 to 2107. The main cost risk is
in the final site clearance phase, which may
increase costs by £15,590 million. Conversely
a reduction in the costs associated with this
phase my reduce costs by £15,590 million
Further details are reported in (b) Nuclear
Decommissioning Authority provisions of the
financial review of the Directors’ Report on
page 48 of the Annual Report and in the NDA
Annual Report and Accounts.
Contract loss
Contract loss provisions have been recognised
by the Nuclear Decommissioning Authority to
cover anticipated shortfalls between total income
and total expenditure on relevant long-term
contracts. The amounts are disclosed net after
deduction of amounts relating to recoverable
contract costs (note 12). The amount provided
in the year for contract losses relates to changes
in estimates of the costs of existing contracts.
The discounted liability at 31 March 2018 is
£407 million (31 March 2017: £521 million).
Further detail, including movement on the gross
provision, can be found in the accounts of
the NDA.

Financial Statements
191
19.2 Other provisions
Concessionary
fuel
British
Shipbuilders
Legacy
ailments
Onerous
leases
Other
Core
Department
and
Agencies
Total
Coal
Authority
Early
departure
costs and
restructuring
Other
Departmental
Group Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
Balance at 1 April 2016
471
203
194
115
150
1,133
2,822
152
272
4,379
Transferred in/(out)
–
–
–
–
–
–
–
–
(34)
(34)
Change in discount rate
15
5
1
3
4
28
–
(3)
10
35
Provided in the year
–
–
–
31
8
39
57
25
130
251
Provisions not required written back
(5)
(2)
(47)
(16)
(30)
(100)
(14)
(4)
(34)
(152)
Provisions utilised in the year
(43)
(6)
(15)
(19)
(13)
(96)
(23)
(49)
(15)
(183)
Unwinding of discount
(5)
(2)
(2)
(1)
–
(10)
(24)
–
3
(31)
Balance at 31 March 2017
433
198
131
113
119
994
2,818
121
332
4,265
Change in discount rate
28
12
3
(1)
5
47
1,485
–
62
1,594
Provided in the year
49
3
–
31
24
107
80
1
3
191
Provisions not required written back
–
–
(2)
–
(3)
(5)
(2)
(16)
15
(8)
Provisions utilised in the year
(42)
(11)
(7)
(15)
(16)
(91)
(26)
(20)
(2)
(139)
Unwinding of discount
(5)
(1)
(1)
(2)
(1)
(10)
(27)
(1)
(31)
(69)
Balance at 31 March 2018
463
201
124
126
128
1,042
4,328
85
379
5,834
Estimated forward discounted cash flows as at 31 March 2018
Not later than one year
39
8
19
19
17
102
26
28
12
168
Later than one year and not later than
five years
135
36
36
76
40
323
115
38
201
677
Later than five years
289
157
69
31
71
617
4,187
19
166
4,989
Total forward cash flows as at 31
March 2018
463
201
124
126
128
1,042
4,328
85
379
5,834

Annual report and accounts 2017-18
192
Core Department
Concessionary fuel
The provision covers the cost of the
Department’s responsibility arising from
government announced guarantees to provide
either solid fuel or a cash alternative to ex-miners
formerly employed by British Coal and their
dependants and to certain former employees
who lost their entitlement as a consequence of
the restructuring and run down of UK Coal in
2013 and 2015; it includes administration costs.
Of the total of 47,888 current beneficiaries at
31 March 2018, 40,601 have opted for the cash
alternative at an average cost per beneficiary
of £698 per annum; the average annual cost
of solid fuel for the remainder is £1,524 per
beneficiary. The provision is based on standard
female mortality rates and assumes beneficiaries
will continue to switch their entitlement from
solid fuel to cash in line with rates observed
in the recent past. Costs are expected to be
incurred up to 2062. The discounted liability
at 31 March 2018 is £463 million (31 March
2017: £433 million); the undiscounted liability is
£397 million (31 March 2017: £390 million).
British Shipbuilders
The provision covers the cost of personal injury
compensation claims by former employees of
British Shipbuilders and its subsidiaries arising
primarily from exposure to asbestos during the
course of their work. The Department has taken
on full responsibility for the liabilities of the former
Corporation which was abolished in March
2013. It is subject to considerable uncertainty.
The discounted liability at 31 March 2018 is
£201 million (31 March 2017: £198 million); the
undiscounted liability of £168 million (31 March
2017: £176 million) is based on an actuarial review
as at 31 March 2016 which identified a range for
the potential undiscounted liability of between
£118 million and £389 million. The current
estimate is that the liabilities will extend for up
to 2048. Actuarial reviews are undertaken when
conditions change materially.
British Coal Corporation Health Liabilities
(Legacy ailments)
The provision under Coal health in the table
covers the cost of compensation claims relating
to personal injuries suffered by former British
Coal mineworkers, responsibility for which
falls to the Department by a restructuring
scheme under the Coal Industry Act 1994.
Over £6.3 billion has been paid out in damages
and claimant’s solicitors costs. The discounted
liability at 31 March 2018 is £124 million
(31 March 2017: £131 million); the undiscounted
liability of £109 million (31 March 2017:
£117 million) is based on forecasts of settlement
of claims, taking account of discussion with
the Department’s legal advisors and claim
handlers and recent actuarial estimates.
It is subject to considerable uncertainty and
includes undiscounted estimates of £22 million
(31 March 2017: £28 million) for induced hearing
loss, £68 million (31 March 2017: £69 million)
for miscellaneous disease claims including
phurnacite, mesothelioma, pneumoconiosis,
pleural thickening, asbestos related conditions,
vibration white finger, chronic obstructive
pulmonary disease, cancer, pleural plaques and
other minor benefits schemes and £19 million
(31 March 2017: £20 million) for litigation by
former British Coal Coke Oven Workers.
The current estimate is that liabilities will extend
up to 2050.
Onerous Leases
The core Department has onerous leases in
respect of leased offices at 151 Buckingham
Palace Road (BPR), 10-18 Victoria Street
(10VS) and various leases transferred from
other bodies following their winding up.
The Department provides for these leases
in full when the lease becomes onerous by
establishing a provision for the future estimated
payments. The current estimate is that the
liabilities will extend up to 2026.
The core Department has attempted to mitigate
any potential losses through subletting against
the existing head leases for the buildings
and has sublet BPR, 10VS and some of the
properties transferred into the Department.
However, given current market conditions
and future forecasts the core Department has
determined that, at the reporting date, neither
the current nor future potential subleases will
recover the full costs incurred.
Work is also on-going to dispose of some of the
leases to a specialist company which primarily
deals with surplus buildings.
The core Department is also undergoing a
program to rationalise the impact of onerous
leases going forward.
The discounted liability at 31 March 2018 is
£126 million (31 March 2017: £113 million); the
undiscounted liability as at 31 March 2018 was
£119 million (31 March 2017: £106 million).

Financial Statements
193
NDPBs and other designated bodies
Coal Authority
The Coal Authority provision relates
predominantly to the Authority’s responsibilities
for mine water treatment, public safety and
subsidence, subsidence pumping stations and
tip management. Significant uncertainties are
associated with estimation of likely costs in
respect of these liabilities. The discounted liability
at 31 March 2018 is £4,328 million (31 March
2017: £2,818 million). The undiscounted liability at
31 March 2018 is £1,902 million (31 March 2017:
£1,884 million). Further details are reported in the
Coal Authority Annual Report and Accounts.
Included in other provisions in note 19.2 for the
core Department is the Coal Health provision
(legacy ailments), which is subject to significant
uncertainty.
Early departure costs and restructuring
£72 million (31 March 2017: £109 million) of the
restructuring provision relates to site licence
companies and includes continuing annual
payments under early retirement arrangements
to individuals who retired early, or had accepted
early retirement, before 31 March 2018 and
will continue at least until the date at which the
individual would have reached normal retirement
age. The undiscounted equivalent is 31 March
2018 is £76 million (31 March 2017: £102 million).
Enterprise Capital Fund
The British Business Bank plc (BBB)
recognises a provision for loan commitments
relating to Enterprise Capital Fund (ECF)
investments which is included in other provisions.
The British Business Bank accepts a lower return
from ECF investments in order to encourage
private sector investors to invest. Although
BBB expects to make a positive return from
these investments, this return is less than that
required by the private sector. Accounting
standards require BBB to recognise a liability
when it makes a commitment to a fund. BBB
records this liability as a provision. When a
commitment is drawn, BBB subsequently
impairs the resulting investment and utilises
the provision by a corresponding amount.
This results in significant upfront expenditure
when new ECF commitments are entered into.
This expenditure gradually reverses over the
lifetime of the investment as the impairment is
reversed and does not relate to an underlying
loss on ECF investments.
The discounted liability at 31 March 2018 is
£184 million (31 March 2017: £144 million), and
the undiscounted liability at 31 March 2018 is
£207 million (31 March 2017: £165 million).

Annual report and accounts 2017-18
194
20 Retirement benefit obligations
The Department consolidates 9 defined benefit
pension arrangements from its designated
bodies including:
• Medical Research Council
• Nuclear Decommissioning Authority
• Nuclear site licence companies
All schemes are accounted for in accordance
with IAS 19 ‘Employee Benefits’. They are
subject to the UK regulatory framework and
under the scope of the scheme specific funding
requirement. The schemes’ trustees are
responsible for operating these defined benefit
plans and have a statutory responsibility for
ensuring the schemes are sufficiently funded to
meet current and future benefit payments.
Defined benefit scheme liabilities expose
the Departmental group to material financial
uncertainty, arising from factors such as
changes in life expectancy and in the amount of
pensions payable. Some scheme investments,
such as equities, should offer long-term growth
in excess of inflation, but can be more volatile in
the shorter term than government bonds.
The details of each scheme are discussed below.
Medical Research Council (MRC)
The MRC operates a defined benefit, final salary
pension scheme. A full actuarial evaluation was
undertaken as at 31 December 2016 which was
rolled forward by the actuary to determine the
approximate position as at 31 March 2018.
The key assumptions are discount rate of 2.6%
(2016-17: 2.5%) and rate of increase in pensions
of 2.25% (2016-17: 2.25%). A decrease of 0.5%
in the discount rate would lead to an increase
of approximately 11.0% in the total liability,
while a decrease of 0.5% in the rate of increase
in pensions would lead to an approximate
8.0% reduction.
Further details regarding the nature of the
benefits provided, regulatory framework, actuarial
assumptions, sensitivity analysis, key risks and
risk management policy including asset-liability
matching strategies, and any funding arrangements
or funding policy that may affect future contributions
can be found in the accounts of MRC.
Nuclear Decommissioning Authority (NDA)
Two defined benefit pension schemes relate
to the NDA – the Closed and Nirex sections of
the Combined Nuclear Pension Plan (CNPP).
Both are closed to new entrants. Full actuarial
evaluations were undertaken as at 31 March
2016. The actuaries rolled forward the results to
determine approximate positions as at 31 March
2018. Further details regarding the nature of the
benefits provided, regulatory framework, actuarial
assumptions, sensitivity analysis, key risks
and risk management policy including asset-
liability matching strategies, and any funding
arrangements or funding policy that may affect
future contributions can be found in the accounts
of NDA.
Nuclear site licence companies (SLCs)
There are 6 defined benefit final salary pension
schemes relating to the 4 SLCs comprising:
a) the LLWR section of the CNPP (for LLW
Repository Limited), b) the SLC section of the
Magnox Electric Group of the ESPS and the
Magnox Section of the CNPP (for Magnox
Limited), c) the Group Pension Scheme SLC
section of the CNPP and the Sellafield section
of the CNPP (for Sellafield Limited) and d) the
Dounreay Section of the CNPP (for Dounreay
Site Restoration Limited). All are closed to new
entrants. The most recent triennial actuarial
valuations were undertaken as at 31 March 2016
for all six SLCs schemes. The actuaries rolled
forward the results to determine approximate
positions as at 31 March 2018.
Further details regarding the nature of the
benefits provided, regulatory framework,
key risks and risk management policy including
asset-liability matching strategies, and any
funding arrangements or funding policy that
may affect future contributions can be found in
the CNPP Statement of Investment Principles
at https://www.cnpp.org.uk/document-library/,
and in the Electricity Supply Pension Scheme’s
Annual Reports at https://megtpensions.com/
finance-reports/.

Financial Statements
195
31 March 2018
Funded pension
schemes
31 March 2017
Funded pension
schemes
£m
£m
Present value of defined benefit obligation at 1 April
7,568
5,896
Interest cost
190
200
Current service cost
267
194
Past service cost
6
36
Benefits paid
(215)
(201)
Actuarial (gains)/losses arising from changes in financial assumption
(127)
1,633
Actuarial (gains)/losses on defined benefit obligation due to demographic
assumptions
(103)
(80)
Actuarial (gains)/losses arising from experience adjustments
20
(136)
Employee contributions
26
26
Present value of defined benefit obligation at 31 March
7,632
7,568
Fair value of assets at 1 April
6,691
5,608
Expected return on plan assets
170
192
Employer contributions
143
168
Benefits paid
(215)
(201)
Actuarial gains/(losses)
131
898
Employee contributions
26
26
Fair value of assets at 31 March
6,946
6,691
Net liability at 31 March
686
877
The decrease in the net liability at 31 March 2018 compared to 31 March 2017 is primarily due to an
increase in the discount rate applied to the defined benefit obligation for Magnox Limited and Sellafield
Ltd from 2.5% at 31 March 2017 to 2.6% at 31 March 2018.
Net (asset)/liability by scheme
31 March 2018
31 March 2017
Present
value of
defined
benefit
obligation
Fair value
of assets
Net
liability/
(asset)
Present
value of
defined
benefit
obligation
Fair value
of assets
Net
liability/
(asset)
£m
£m
£m
£m
£m
£m
Medical Research Council
1,460
1,582
(122)
1,464
1,467
(3)
SLC – LLWR section of CNPP
27
20
7
31
18
13
SLC – SLC section of Magnox Electric
Group of ESPS
3,185
3,140
45
3,292
3,148
144
SLC – Magnox section of CNPP
141
109
32
134
102
32
SLC – Group Pension Scheme SLC
section of CNPP
682
649
33
737
637
100
SLC – Sellafield section of CNPP
1,852
1,217
635
1,644
1,103
541
SLC – Dounreay section of CNPP
130
94
36
118
83
35
Nuclear Decommissioning Authority
155
135
20
148
133
15
Total net liability at 31 March
7,632
6,946
686
7,568
6,691
877

Annual report and accounts 2017-18
196
Asset allocation
31 March 2018
31 March 2017
restated
£m
£m
Equities
2,471
2,507
Property
698
636
Government bonds
1,678
1,573
Corporate bonds
626
493
Other growth assets
1,362
1,373
Other
111
109
Balance at 31 March
6,946
6,691
The Magnox schemes had a total asset balance of £3,249 million, of which £115.9 million of property
assets and £733.5 million of other growth assets were not quoted in an active market. The Sellafield
schemes had £1,866 million of total assets, all of which excluding the amount held in the Trustees’
bank account had a quoted market value in an active market. The MRC scheme’s total assets of
£1,582 million included £434 million of quoted equities and £128 million of quoted bonds.
Expected contribution over the next accounting period
It is possible that the actual amount paid might be different to the estimated amount. This may be
due to contributions, benefits payments or pensionable payroll differing from expected, changes to
schemes’ benefits or settlement/curtailment events that are currently unknown.
£m
Medical Research Council
27
SLC – LLWR section of CNPP
1
SLC – SLC section of Magnox Electric
Group of ESPS
39
SLC – Magnox section of CNPP
10
SLC – Group Pension Scheme SLC
section of CNPP
6
SLC – Sellafield section of CNPP
74
SLC – DSRL section of CNPP
7
Nuclear Decommissioning Authority
1
Total
165
Weighted average duration of the defined benefit obligation plans
Years
Medical Research Council
21
SLC – LLWR section of CNPP
20
SLC – SLC section of Magnox Electric
Group of ESPS
16
SLC – Magnox section of CNPP
22
SLC – Group Pension Scheme SLC
section of CNPP
20
SLC – Sellafield section of CNPP
20
SLC – DSRL section of CNPP
30
Nuclear Decommissioning Authority
23

Financial Statements
197
Major actuarial assumptions for SLC schemes
Dounreay Site
Restoration
Limited
LLW Repository
Limited
Magnox Limited
Sellafield Limited
2017-18
2016-17
2017-18
2016-17
2017-18
2016-17
2017-18
2016-17
Discount rate
2.6%
2.6%
2.6%
2.5%
2.6%
2.5%
2.6%
2.5%
Inflation (Retail Prices Index)
3.1%
3.2%
3.1%
3.2%
3.4%
3.4%
3.5%
3.2%
Life expectancy in years at 65,
currently aged 65 (male)
21.9
22.8
21.9
21.8
Life expectancy in years at 65,
currently aged 45 (male)
23.1
24.2
23.1
23.1
Life expectancy in years at 65,
currently aged 65 (female)
23.8
25.2
23.8
24.2
Life expectancy in years at 65,
currently aged 45 (female)
25.0
26.8
25.0
25.8
Life expectancy in years at 60,
currently aged 60 (male)
26.6
26.7
28.3
28.4
Life expectancy in years at 60,
currently aged 40 (male)
28.1
28.3
29.4
29.5
Life expectancy in years at 60,
currently aged 60 (female)
28.6
28.7
30.3
30.3
Life expectancy in years at 60,
currently aged 40 (female)
30.2
30.3
31.4
31.4
Sensitivity analysis for SLC schemes
Dounreay Site
Restoration
Limited
LLW
Repository
Limited
Magnox
Limited
Sellafield
Limited
£m
£m
£m
£m
0.1 percentage point decrease in annual discount rate
–
–
57
–
0.1 percentage point increase in inflation assumption
–
–
55
–
0.5 percentage point decrease in annual discount rate
23
3
–
272
0.5 percentage point increase in inflation assumption
22
4
–
309
1 year increase in life expectancy
3
1
115
92
The table shows the increase in liability that would result from changes in these actuarial assumptions.

Annual report and accounts 2017-18
198
21 Capital and other commitments
Total minimum payments in respect of capital, lease and other commitments
31 March 2018
31 March 2017
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Contracted capital commitments
21.1
5
1,912
123
2,095
Minimum future payments under:
Operating leases
21.2
213
333
282
353
Finance leases
–
30
–
3
PFI contracts and service concession
arrangements
2
2
5
5
Other financial commitments
21.3
2,928
3,370
3,178
3,612
Total
3,148
5,647
3,588
6,068
21.1 Capital commitments
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Contracted capital commitments not otherwise
included in these financial statements:
Property, plant and equipment
3
315
2
415
Intangible assets
2
28
1
40
Loans and investments
–
1,569
120
1,640
Total
5
1,912
123
2,095
Core Department
The core Department has not entered into any
significant capital commitments.
NDPBs and other designated bodies
Capital commitments as at 31 March 2018
include the following significant items:
• Property, plant and equipment commitments
for Biotechnology and Biological Sciences
Research Council (BBSRC) of £181 million
(31 March 2017: £225 million) at the BBSRC
Institute sites due in one to three years and for
Natural Environment Research Council (NERC)
of £60 million (31 March 2017: £93 million),
to build a new polar research vessel.
• Investment commitments of £1,139 million
(31 March 2017: £960 million) for the British
Business Bank plc (BBB) relating to undrawn
investment commitments, £234 million for
Northern Powerhouse Investment Limited
relating to capital calls to be utilised over the
next 8 years, £118 million for Midlands Engine
Investments Limited relating to capital calls to
be utilised over the next 9 years, £79 million
(31 March 2017: £99 million) for the BIS
(Postal Services Act 2011) Company Limited,
which has capital calls relating to investments
in respect of its private equity and property
funds financial instruments.

Financial Statements
199
21.2 Commitments under leases
21.2.1 Operating leases
Total future minimum lease payments under operating leases
are given in the table below for each of the following periods:
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Obligations under operating
leases comprise:
Land:
Not later than one year
–
1
–
1
Later than one year and not later than five years
–
2
–
2
Later than five years
–
20
–
19
–
23
–
22
Buildings:
Not later than one year
59
75
60
68
Later than one year and not later than five years
124
157
172
187
Later than five years
22
67
33
57
205
299
265
312
Other:
Not later than one year
5
7
7
8
Later than one year and not later than five years
3
4
10
11
8
11
17
19
Total
213
333
282
353
The core Department is allowed to sub-lease and can assign leases
subject to the lease provisions. Further information about finance
leases and sub‑lease arrangements of the Agencies, NDPBs and other
designated bodies can be found in the accounts of the relevant bodies.
Operating leases: Department as a lessor
Total future minimum lease receivables under operating leases
are given in the table below:
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Receivables under operating leases for the
following periods comprise:
Not later than one year
–
9
–
7
Later than one year and not later than five years
1
22
–
24
Later than five years
3
42
–
39
Total
4
73
–
70

Annual report and accounts 2017-18
200
21.3 Other financial commitments
The Departmental Group has entered into non-cancellable contracts (which
are not leases, PFI contracts or other service concession arrangements) for
subscriptions to international bodies and various other expenditures. Future
payments to which the Departmental Group is committed are as follows:
31 March 2018
31 March 2017
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Not later than one year
553
764
487
674
Later than one year and not later than five years
1,224
1,440
1,601
1,806
Later than five years
1,151
1,166
1,090
1,132
Total
2,928
3,370
3,178
3,612
21.3.1 International subscriptions
The financial commitments payable include subscriptions payable to
international bodies, analysed by the period in which the payments are due:
Organisation
Note Within 1 Year
Later than 1
year and not
later than 5
years
Later than
5 Years
Total
2017-18
31 March
2017
£m
£m
£m
£m
£m
International Atomic Energy
Agency
a
14
56
69
139
–
European Space Agency
b
244
682
–
926
1,142
Other subscriptions
9
24
29
62
35
Core Department and
Agencies total
267
762
98
1,127
1,177
European Organisation for
Nuclear Research (CERN)
c
146
89
–
235
214
Institut Laue-Langevin (ILL)
d
19
79
15
113
129
Other subscriptions
43
48
–
91
90
Departmental Group total
475
978
113
1,566
1,610
Notes:
The Departmental Group is required to subscribe to a number of bodies on
an on-going and continuous basis. These subscriptions are paid in Euros,
Swiss Francs and pounds sterling. The subscriptions described below are
paid in Euros or Swiss Francs and amounts paid are subject to fluctuations
due to exchange rate differences.
a) The core Department is responsible for paying the UK’s annual
subscriptions to the International Atomic Energy Agency (IAEA).
The IAEA is the UN-affiliated organisation responsible for ensuring
the safe, secure and peaceful use of civil nuclear technologies,
through monitoring nuclear safeguards, setting international standards
and guidance for nuclear safety and security promoting nuclear
applications for development. The core Department currently do not
have an end date for the membership. Subscriptions fees included in
the table above are for the next ten years up to 2028.

Financial Statements
201
b) The UK Space Agency pays international subscriptions to the European Space Agency (ESA)
three times a year and these amounts are agreed several years in advance. The payments reported
reflect existing commitments on forward exchange contracts placed with the Bank of England
to cover periods until 1 October 2021. The annual subscriptions are to be set at a minimum of
€300 million and will be aligned with the agreed ESA programmes activity. It is expected that these
amounts will be paid by means of forward exchange contracts or amounts translated on the date
of payment.
c) STFC shares the funding of the capital and running costs of CERN with other major scientific
nations. There is a notice of withdrawal period of 12 months after the end of the current
calendar year.
d) The UK, through STFC, has signed up to International Conventions, with respect to Institut Laue-
Langevin (ILL). The 5th protocol of the Intergovernmental Convention was signed in July 2013 and
will remain in force until 31 December 2023. Thereafter it shall be tacitly extended from year to year
unless any of the Governments gives written notification to the other Governments of its intention
to withdraw from the Convention. Any such withdrawal will take effect upon the expiry of two years
from the date of receipt of the notification by any of the other Governments or on such later date as
may be specified in the notification.
21.3.2 Other commitments
The financial commitments payable in future years include payments due under non-cancellable
contracts to the following organisations:
Organisation
Note Within 1 Year
Later than 1
year and not
later than 5
years
Later than
5 Years
31 March
2018
Total
2016-17
£m
£m
£m
£m
£m
Met Office
a
99
412
1,035
1,546
1,539
Ordnance Survey
b
51
–
–
51
203
Other commitments
136
50
18
204
259
Core Department
and Agencies total
286
462
1,053
1,801
2,001
Other commitments
3
–
–
3
2
Departmental Group total
289
462
1,053
1,804
2,003
The Departmental Group has entered into non-cancellable contracts with the above bodies. Contracts
are paid in Euros and pounds sterling. Where payments are made in Euros, there are fluctuations due
to exchange rate differences. The nature of the most significant contracts is described below:
a) The core Department has agreements with the Met Office (a BEIS-owned trading fund) to provide
meteorology services, including the Public Weather Service agreement which BEIS manages on
behalf of the government. This agreement is open ended but is reviewed on an annual basis.
b) The core Department has agreements with Ordnance Survey Limited (a Government-owned
company in which BEIS is the sole shareholder) to provide mapping data and access to its
database for the whole of government. The Public Sector Mapping agreement and the Open Data
agreement expire on 31 March 2021.

Annual report and accounts 2017-18
202
22 Financial instruments
The carrying amounts of financial instruments in each of the IAS 39 categories are as follows:
31 March 2018
31 March 2017 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Financial assets
Loans and receivables:
Cash and cash equivalents
17
1,246
2,034
1,192
1,819
Receivables (i)
14
1,374
2,001
641
1,273
Loans to public sector bodies (ii) & (iii)
10.3 & 16
1,238
943
991
832
Other financial assets
11.2
2
606
2
430
Total loans and receivables
3,860
5,584
2,826
4,354
Public dividend capital:
Public dividend capital
10.2
81
81
81
81
Total public dividend capital
81
81
81
81
Available for sale:
Repayable Launch Investments
11.1
1,047
1,047
1,205
1,205
Ordinary shares in public sector companies (iv)
10.1
880
1,337
664
1,086
Other financial assets
11.2
121
2,676
278
2,441
Total available for sale
2,048
5,060
2,147
4,732
Derivatives:
Forward contracts
78
86
95
107
Contracts for difference
9
–
(15,892)
(12,334)
Total derivatives
78
(15,806)
95
(12,227)
Fair value through profit or loss:
Other financial assets
11.2
–
1
–
2
Total fair value through profit or loss
–
1
–
2
Held to maturity:
Other financial assets
11.2
–
7
–
7
Total held to maturity
–
7
–
7
Financial liabilities
Financial guarantees
(61)
(61)
(61)
(61)
Payables (ii)
18
(1,335)
(2,175)
(1,228)
(1,968)
Total other financial liabilities
(1,396)
(2,236)
(1,289)
(2,029)
(i)
The amounts disclosed above as payables and receivables exclude any assets or liabilities which do not arise from a
contractual arrangement.
(ii)
Loans to public sector bodies comprises the loans detailed in Note 16 and Other loans and investments in Other public
sector bodies detailed in Note 10.3.
(iii)
Loans to public sector bodies in the core Department for 2017-18, excludes £63 million (2016-17 £58 million),
relating to the loan investments in the Northern Powerhouse Investment Fund and Midlands Engine Investment Fund,
these are accounted for at cost under IAS 27.
(iv) Ordinary shares in public sector companies excludes bodies that are consolidated in the Departmental Group, as these
are held at cost, see Note 10.1.

Financial Statements
203
IFRS 7 ‘Financial Instruments: Disclosure’
requires the disclosure of information which will
allow users of financial statements to evaluate
the significance of financial instruments on the
Departmental Group’s financial performance
and position and the nature and extent of its
exposure to risks arising from these instruments.
As the cash requirements of the Departmental
Group are largely met through the Estimates
process, financial instruments play a more
limited role in creating risk than would apply
to a non‑public sector body of a similar size.
The Departmental Group is however
exposed to credit, market, interest rate,
liquidity and commodity price risks
due to the specific programmes and
activities undertaken in pursuance of the
Departmental Group’s objectives.
Credit risk
Credit risk is the risk that one party to a financial
instrument will cause a financial loss for the
other party by failing to discharge an obligation.
The Departmental Group’s total maximum
exposure to credit risk as at 31 March 2018 is
£8,113 million (31 March 2017 £6,720 million).
The risk of non-payment is reflected in the
carrying amounts of the assets and liabilities,
where the Departmental Group is exposed to
credit risk.
Significant credit risks can be summarised
as follows:
Core Department
• Repayable Launch Investments – In the
event of an investee company failure,
the core Department may not recover its
initial investment in whole or in part. The core
Department seeks to offset this low probability
risk by analysing the financial health of any
applicant at the time of application for launch
investment and reviewing financial health as
part of the programme monitoring activity.
In addition, contracts aim to contain provisions
which will (as a minimum) not disadvantage the
core Department compared to other creditors
in the event of a corporate failure. The core
Department takes steps to monitor the
payments that become due to the companies
under launch investment contracts to ensure
they comply with the terms of the contracts.
Finally, the contracts also require the company’s
auditors to confirm that all payments made to
the core Department have been made correctly
and to identify any errors made.
• Investment funds – Investee companies
may not perform as expected and the
Departmental Group may not recover its initial
investment. The core Department minimises
the risk by monitoring the overall performance
of the funds and to secure value for the core
Department as an investor. This includes a full
evaluation of each business case submitted
prior to committing funds.
• Financial guarantees – Through the various
loan guarantee schemes the core Department
is exposed to the risk that a recipient of the
loan may default and the lending institution will
call upon the core Department to honour its
guarantee. The core Department minimises the
credit risk for its most significant guarantees,
the Enterprise Financial Guarantee (EFG) and
legacy Small Firms Loan Guarantee Scheme
(SFLGS), by devolving responsibility to the
banks to determine whether any business
applying for a loan is commercially viable.
The banks are required to apply normal
commercial practices. To establish that this
is the case, for EFG the core Department
undertakes an independent audit of the
lenders participating in the Scheme. This is
done by sampling and checking guarantees
granted and defaults arising using recognised
statistical sampling and auditing techniques
and by auditing individual default claims by
exception, using the participating banks
to determine whether any potential lender
applying for a loan is commercially viable.
Furthermore, any losses suffered on these
loans are shared between the Department
and the lending institution. The EFG is
also subject to a cap which limits the Core
Department’s exposure.
As at 31 March 2018 the core Department
has £630 million of guarantees outstanding
(31 March 2017: £684 million) which will expire
over the next 10 years as the underlying debt
matures. Due to the cap on payouts, the
maximum amount that could be paid out if
all loans defaulted is £239 million (31 March
2017: £201 million). However, not all loans are
expected to payout and the core Department
has estimated its liability to be £61 million
(31 March 2017: £61 million). In addition, the core
Department has estimated that it will have future
fees receivable of £27 million after allowing for
bad debts (31 March 2017: £27 million). Both the
liability for expected payouts and asset for
future fees are recognised on the Statement of
Financial Position.

Annual report and accounts 2017-18
204
NDPBs and other designated bodies
• The British Business Bank (BBB) investments
are assessed by BBB’s Valuation Committee.
BBB produces credit risk ratings for its
investments based upon a risk grading of the
financial obligor and the estimated Loss Given
Default on that investment. Risk drivers which
are assessed in setting the ratings include
the financial viability and lending safety of the
investment and, if available, the rating assigned
by an external credit agency. This is mitigated
by new product approval processes that
assess default and loss rates, due diligence of
delivery partners underwriting methods, and
portfolio monitoring and default models being
put in place.
Market risk
Market risk is the risk that fair values and future
cash flows will fluctuate due to changes in market
prices. Market risk generally comprises of:
a) Foreign currency risk

Core Department
The core Department is exposed to a small
amount of currency risk with respect to
Repayable Launch Investment contracts where
income due from aircraft or engine sales may
initially be based in US dollars, but it is minimal
in the context of the overall Repayable Launch
Investment portfolio. Otherwise the core
Department’s exposure to foreign currency
risk during the year was insignificant. Foreign
currency income was negligible, and foreign
currency expenditure was a small percentage
of total expenditure (less than 1%).
All material assets and liabilities are denominated
in pounds sterling.
Agencies
• Forward contracts – The UKSA pays an annual
subscription in Euros to the European Space
Agency and has entered into forward contracts
to mitigate the risk. These derivative contracts
have been designated as cash flow hedges.
At the reporting date the hedges met the IAS
39 effectiveness criteria.
NDPBs and other designated bodies
• Forward contracts – The Science and
Technology Facilities Council (STFC) and BIS
(Postal Services Act 2011) Company Limited
are subject to foreign currency risks and have
entered into forward contracts to help mitigate
these risks. These derivative contracts have
been designated as cash flow hedges by STFC
and at the reporting date the hedges met
the IAS 39 effectiveness criteria. BIS (Postal
Services Act 2011) Company Limited does not
apply hedge accounting.
• Cash and cash equivalents held in foreign
currency – BIS (Postal Services Act 2011)
Company Limited, the Medical Research
Council, STFC, the Natural Environment
Research Council and Nesta Trust are subject
to minor foreign currency risk through the
maintenance of bank accounts in foreign
currencies (predominantly in US dollars and
Euros) to deal with day-to-day overseas
transactions.
• Investments – At 31 March 2018 Enrichment
Holdings Limited (EHL) primary investment
was in URENCO Limited, a company valued
in Euros. A 5% movement in the EUR/GBP
foreign exchange rate would result in an
unrealised foreign exchange gain or loss of
£22 million (31 March 2017: £21 million).
b) Interest rate risk

Core Department
The core Department does not invest or access
funds from commercial sources, but it is exposed
to interest rate risk with respect to the SFLGS
and the EFG. For SFLGS and EFG, the core
Department is exposed to interest rate risk, as the
majority of the loan guarantees are provided
against variable rate loans. The banks’ usual
lending practices mean that fixed rate loans are
usually available only for small value short term
loans. To minimise the risk of default due to
interest rate rises, accompanied by a decline in
the economic environment, the core Department
relies on the lenders assessment using best
commercial practice to manage the risk of default.
NDPBs and other designated bodies
For BIS (Postal Services Act 2011) Company
Limited interest rate risk arises from the effects
of fluctuations in the prevailing levels of market
interest rates on the fair value of financial assets
and future cash flows. The Company holds
fixed interest securities that are exposed to fair
value interest rate risk. The Company also holds
floating rate securities that are exposed to cash
flow interest rate risk. The principal strategy is to
manage the fair value risk by holding the debt
securities until maturity unless opportunities exist
in the market for it to profit, for example, from any

Financial Statements
205
favourable interest rate movements. Interest rate
risk is not expected to have a significant impact.
BBB holds both fixed and variable rate
investments. Interest rate risk is regularly
monitored by each organisation to ensure
that the mix of fixed and variable borrowing is
appropriate. BBB does not use derivatives to
hedge interest rate risk.
The impact of interest rates affects the
discount rate used to arrive at the fair value
of the Contracts for Difference (CfD) liability
held by the Low Carbon Contracts Company
(LCCC). Changes in interest rates which affect
the discount rate would therefore affect the
Statement of Financial Position valuation.
However the Departmental Group is not
financially exposed to this risk because the
liability is funded through a levy on suppliers.
c) Other market risk

Core Department
The core Department is exposed to wider risks
relating to the performance of the economy
as a whole. The main risks resulting from a
downward movement in the economy include
failures of investee companies of investment
funds, loan defaults under the core Department’s
EFG Scheme and negative impacts on the core
Department’s Repayable Launch Investment
income and valuations from the potential resultant
decrease in demand in the aerospace industry.
The UK Green Investment Platform (UK GIP) is
exposed to market risk through the concentration
of investments in the clean energy sector. UK
GIP is also exposed to equity price risk due
to its investments in businesses developing
construction assets across its priority sectors.
The company intends to withdraw from the
investments when these assets are operational
in order to recycle their capital. The risk is
minimised by spreading investments across all
of its priority sectors.
The Nesta Trust is exposed to equity price
risk due to its investment of a portion of its
endowment assets in publicly listed equity
investments. Nesta Trust minimises this risk
by investing for the medium-to long-term,
diversifying its equity investments over a
number of managers with complementary
styles, and invests in investment funds with large
institutional investors. The performance of these
investment managers is monitored regularly.
EHL holds a one third stake in URENCO Limited.
The other, equal shareholders, are effectively
the Dutch government (through Ultra-Centrifuge
Nederland Limited), and German utilities (through
Uranit UK Limited). URENCO Limited’s principal
activity is the provision of a service to enrich
uranium to provide fuel for nuclear power utilities.
Any change to this specialised market, such as
a change in a country’s energy policy, will impact
the value of EHL’s investment. EHL regularly
monitors the performance of URENCO Limited.
Inflation risk
The CfD valuation is based on models which use
assumptions about future prices. The amounts
payable under the CfD contracts will be affected
by the indexation of strike prices to reflect actual
inflation and an inflation risk arises from the
possibility of differences between the assumed
inflation in the model and in the actual contracts.
Inflation rates may not continue at the relatively low
levels experienced in recent years; the Departmental
Group is not financially exposed to this risk because
the liability is funded through a levy on suppliers.
Liquidity risk
Liquidity risk is the risk that an entity will
encounter difficulty in meeting obligations
associated with financial liabilities.
The core Department and its Agencies
In common with other government departments,
the future financing of its liabilities is to be
met by future grants of Supply, voted annually
by Parliament. There is no reason to believe
that future approvals will not be forthcoming,
therefore, on this basis the liquidity risk to the
core Department and its Agencies is minimal.
NDPBs and other designated bodies
Information about the Departmental Group’s
objectives, policies and processes for managing
and measuring risk can be found in the
Governance Statement.
Commodity price risk
Commodity price risk is the risk or uncertainty
arising from possible price movements.
The amounts payable under the CfD contracts
are exposed to price risk through the fluctuations
in future actual wholesale electricity prices,
specifically, on how they will differ from the
current forecast of future prices in the central
scenario. However the LCCC and the core
Department are not financially exposed to this
risk because the liability is funded through a levy
on suppliers.

Annual report and accounts 2017-18
206
Financial instruments: fair value hierarchy
The table below analyses financial instruments
carried at fair value, by valuation method.
The different levels have been defined as follows:
– Level 1 – uses quoted prices (unadjusted) in
active markets for identical assets or liabilities;
– Level 2 – uses inputs for the assets or liabilities
other quoted prices, that are observable either
directly or indirectly;
– Level 3 – uses inputs for the assets or liabilities
that are not based on observable market data,
such as internal models or other valuation
method.
The following table presents the Departmental
Group’s financial assets and liabilities that are
measured at fair value at 31 March 2018 and
31 March 2017:
31 March 2018
31 March 2017 restated
Note Level 1 Level 2
Level 3
Total Level 1 Level 2 Level 3
Total
£m
£m
£m
£m
£m
£m
£m
£m
Assets
Available for sale
Equity investments
Ordinary shares in public sector bodies
10.1
–
1,337
–
1,337
–
1,086
–
1,086
Ordinary shares in listed equities
11.2
269
–
–
269
266
–
–
266
Ordinary shares in unlisted
private equities
11.2
–
9
308
317
–
14
429
443
Debt and venture capital investments
Repayable Launch Investments
11.1
–
–
1,047
1,047
–
–
1,205
1,205
Gilts and bonds
11.2
59
–
–
59
46
–
–
46
Property related holdings
11.2
–
–
42
42
–
–
65
65
Investment funds
11.2
–
–
1,321
1,321
–
–
1,245
1,245
Other investments
11.2
8
456
204
668
7
350
19
376
Total available for sale assets
336
1,802
2,922
5,060
319
1,450
2,963
4,732
Derivatives
Forward contracts
–
109
–
109
–
112
–
112
Total derivatives used for hedging
–
109
–
109
–
112
–
112
Fair value through profit or loss
Ordinary shares in listed equities,
investment funds and other investments
11.2
1
–
–
1
2
–
–
2
Total fair value through profit or loss
1
–
–
1
2
–
–
2
Total assets
337
1,911
2,922
5,170
321
1,562
2,963
4,846
Derivatives
Forward contracts
–
(23)
–
(23)
–
(5)
–
(5)
Contracts for difference
9
–
– (15,892) (15,892)
–
– (12,334) (12,334)
Financial liabilities through profit
or loss
–
(23) (15,892)
(15,915)
–
(5) (12,334) (12,339)
Total liabilities
–
(23) (15,892) (15,915)
–
(5) (12,334) (12,339)
There were no transfers between level 1 and 2
during the year.
Specific valuation techniques used to value
financial instruments include:
– Quoted market prices or dealer quotes for
similar instruments;
– The fair value of interest rate swaps is
calculated as the present value of the
estimated future cash flows based on
observable yield curves.
– The fair value of forward foreign exchange
contracts is determined using forward
exchange rate at the reporting date,
with the resulting value discounted back
to present value;

Financial Statements
207
– Other techniques, such as discounted cash
flow analysis or for non-quoted ordinary shares
that are not actively traded the net assets of
the company are used. These are classified as
level 3.
The following table presents the changes in level
3 instruments for the year ended 31 March 2018,
excluding the CfDs which are disclosed in note 9.
Ordinary
shares in un-
listed private
equities
Repayable
Launch
Investments
Property
related
holdings,
investment
funds
and other
financial
assets
Total
£m
£m
£m
£m
Opening balance
429
1,205
1,327
2,961
Additions
7
–
650
657
Repayments/disposals
(94)
(103)
(409)
(606)
Gains and losses recognised in CSoCNE
(34)
(55)
(1)
(90)
Closing balance
308
1,047
1,567
2,922
The following table presents the changes in level
3 instruments for the year ended 31 March 2017,
excluding the CfDs which are disclosed in note 9.
Ordinary
shares in un-
listed private
equities
Repayable
Launch
Investments
Property
related
holdings,
investment
funds
and other
financial
assets
Total
£m
£m
£m
£m
Opening balance
470
1,389
1,299
3,158
Additions
13
–
1,056
1,069
Repayments/disposals
(114)
(144)
(93)
(351)
Reclassifications to non-current asset held for sale
–
–
(1,009)
(1,009)
Gains and losses recognised in CSoCNE
60
(40)
76
96
Closing balance
429
1,205
1,329
2,963
The most significant individual valuation using
level 3 inputs in the Departmental Group is
Repayable Launch Investments; sensitivity
analysis is detailed in note 11.1.
Maturity profiles – discounted cashflows
The maturity profile of the discounted
cashflows for the CfDs excluding Hinkley Point C
is shown below.
<1 year
2-5 years
>5 years
Total
£m
£m
£m
£m
As at 31 March 2017
295
3,613
8,426
12,334
As at 31 March 2018
581
4,596
10,715
15,892

Annual report and accounts 2017-18
208
23 Contingent liabilities disclosed under IAS37
The Departmental Group has the following most significant contingent liabilities. Other liabilities are
disclosed in our partner organisation accounts.
Basis of Recognition
Description
Unquantifiable
Core Department – Assurance
to FRC’s funding
The core Department has provided assurance to Financial Reporting Council (FRC)
in respect of providing grant where FRC’s general voluntary funding falls or current
statutory exemption from liability nears expiry. In the course of the financial year, new
legislative measures were effected to prevent the statutory exemption from liability
from expiring.
Core Department – Coal
Industry Act 1994
Responsibility for compensation claims relating to personal injuries suffered by former
British Coal mineworkers between 1947 and 31 December 1994 transferred to the
Department on 1 January 1998 by a restructuring scheme under the Coal Industry
Act 1994. The timing and amounts of any future liabilities are uncertain except where a
provision has been made in the accounts. The future liabilities will depend on the nature
of any injury and whether the courts decide that compensation is due.
Core Department – Deed
relating to the British Coal
Staff Superannuation Scheme
(BCSSS) under Paragraph
2(9) of Schedule 5 to the Coal
Industry Act 1994
Government Guarantees were put in place on 31 October 1994, the day the Scheme
was changed to reflect the impact of the privatisation of the coal industry. They are
legally binding contracts between the Trustees and the Secretary of State for the
Department for Business, Energy and Industrial Strategy.
The Guarantees ensure that the benefits earned by Scheme members during their
employment with British Coal, and any benefit improvements from surpluses which
were awarded prior to 31 October 1994, will always be paid and will be increased
each year in line with the Retail Prices Index. If at any periodic valuation, the assets of
the Guaranteed Fund were to be insufficient to meet its liabilities, the assets must be
increased to bring the Fund back into balance. This is a long-term contingent liability
dependent on the performance of the schemes’ investments and their mortality
experience. Further details regarding the Schemes and the notional sub-funds can be
found in note 14.
Core Department – Indemnity
to Public Appointment
Assessors
The Cabinet Secretary has provided a government-wide indemnity to Public
Appointments Assessors (PAAs). This will ensure that PAAs will not have to meet any
personal civil liability incurred in the execution of their PAA functions.
Core Department – Nuclear
agreements and treaties
The core Department has a range of civil nuclear liabilities arising through its association
with the United Kingdom Atomic Energy Authority and British Nuclear Fuels Limited
as well as ensuring that the government complies with its obligations under the
various international nuclear agreements and treaties. The amount and timing of this
overarching liability is not quantifiable.
Core Department – Site
restoration liabilities inherited
from British Coal
The core Department inherited liabilities from British Coal to reimburse certain third
parties for costs incurred meeting statutory environmental standards in the restoration
of particular coal-related sites. In addition to specific claims provided for (this is included
in Other in note 19.2), it remains possible that the Department will be held responsible
for further environmental liabilities. The timing and amounts of any liability are uncertain.
BBSRC – Indemnity to
Roslin Institute
An indemnity has been given by Biotechnology and Biological Sciences Research
Council (BBSRC) to the Roslin Institute for any costs that arise as a result of past actions
of the Institute prior to its transfer to the University of Edinburgh in 2008. A further
indemnity has been given to any fall in grant income of the Institute as a result of the
transfer. The maximum settlement BBSRC will fund reduces each year and is limited to
claims made up to May 2023.

Financial Statements
209
Basis of Recognition
Description
Coal Authority – Restructuring
Scheme
For the Coal Authority, where liabilities transferred under the various Coal Authority
Restructuring Schemes (CARS) have crystallised due to planning conditions,
agreements, claims etc. a provision has been made in these financial statements. It has
not, however, been possible to quantify those contingent liabilities that may arise in the
future. It is expected that any costs will be covered by future allocations of grant in aid.
Coal Authority – Subsidence
damage and public safety
liabilities
Licensees of mining operations are required to provide security to the Coal Authority
to cover the anticipated future costs of settling subsidence damage liabilities within
their areas of responsibility. Outside of the areas of responsibility of the holders of the
licences under part II of the Coal Industry Act 1994, the Coal Authority is responsible for
making good subsidence damage. Where an area of responsibility is extinguished this
would transfer to the Coal Authority who would become responsible for the discharge
of outstanding subsidence liabilities. The Coal Authority also has an ongoing liability to
secure and keep secured the majority of abandoned coal mines. In all cases the liability
for operating collieries is the responsibility of the licensees/lessees and security is held to
address those liabilities. These liabilities have been provided for within the Public Safety
and Subsidence provision based on analysis of trends and claims experience. However,
it is possible that significant, unexpected events outside this provision may materialise.
It is expected that any deficit will be covered by future allocations of grant in aid.
In addition to the contingent liabilities outlined above the following should also be noted:
Environmental Information Regulations 2004 - The Coal Authority is aware of potential
legal proceedings in respect of past fees paid for Mining Information. In the eventuality
of receiving formal notification to commence legal proceedings, the Coal Authority will
strongly defend its position.
Coal Authority – Legal claims
The Coal Authority is subject to various claims and legal actions in the ordinary course
of its activities for which provision is made in the accounts where appropriate on the
basis of information available. The Coal Authority does not expect that the outcome of
the above issues will materially affect its financial position.
CNPA – Legal claims
The Civil Nuclear Police Authority (CNPA) has a number of potential liabilities in respect
of claims from employees which depend on actual or potential proceedings. The timing
and amounts of any payments are uncertain. These liabilities have not been provided
for as CNPA believes the claims are unlikely to be successful or to lead to a transfer of
economic benefit.
NDA – Potential treatment of
Inventories
At March 2018 the Nuclear Decommissioning Authority (NDA) held inventories of
reprocessed uranic material. These materials are currently held at nil value due to
uncertainty over their future use which may result in as-yet unquantified liabilities
for NDA.
NDA – Pension schemes
Whilst not the lead employer, the NDA is the lead organisation and has ultimate
responsibility for certain nuclear industry pension schemes, including the Combined
Nuclear Pension Plan, the Magnox section of the Electricity Supply Pension Scheme,
and the Group Pension Scheme. Provisions for known deficits are included within
Nuclear Provisions. However, movements in financial markets may adversely impact
the actuarial valuations of the schemes, resulting in an increase in scheme deficits and
consequent increase in nuclear provision.
Sellafield – Contamination
At 31 March 2018, Sellafield had contingent liabilities incurred in the ordinary course of
business arising out of guarantees and other transactions in respect of which, in the
opinion of the Directors, no material losses are expected to arise. Any liabilities that
did arise on such guarantees would ultimately be recovered from the NDA. In addition,
on 11 May 2018 the Office for Nuclear Regulation notified Sellafield of its intention to
prosecute Sellafield under Section 2 (1) of the Health and Safety at Work Act, ‘General
duties of employers to their employees’. This relates to an incident that occurred
on 5 February 2017 in the Special Nuclear Materials operating unit on the Sellafield
site. The incident resulted in personal contamination to one of Sellafield’s employees.
Sellafield has been issued with a summons to appear at Workington Magistrates Court
on 20 July 2018. Sellafield is currently considering the evidence and it is likely that the
case will take several months to resolve.

Annual report and accounts 2017-18
210
Basis of Recognition
Description
UKSA – Dilapidation
In 2013-14 the UK Space Agency (UKSA) entered into an operating lease with NATS
(En Route) Plc for office accommodation. At the end of the lease term in December
2030, the landlord has the contractual right to enforce the Agency to pay for costs of
dilapidation. However, due to the specialized nature of the asset, the expectation is
that the landlord will continue using the asset in its current state and therefore will not
choose to exercise this option. In the event of the lease contract being terminated by
the landlord before the end of the lease term, UK Space Agency will be compensated.
The likelihood of outflow of economic benefit is therefore assessed as not probable.
UKSA – Outer Space Act
1986
The UKSA has an obligation, governed by international (United Nations) convention,
to third parties if they are accidentally damaged by UK space activities. Due to its
unprecedented nature, a cost cannot be reliably estimated. In March 2015 the Outer
Space Act 1986 was amended to cap licensees’ previously unlimited liability for third
party costs at 60 million euros for the majority of missions, for the duration of the
licensed activity. This amendment was designed to adequately balance the risk to the
UK Government whilst ensuring UK space operators remain competitive internationally.
Others
There are a number of potential liabilities for the Department in respect of claims
from suppliers, employees and third parties which depend on actual or potential
proceedings. The timing and amounts of any liabilities are uncertain.
Quantifiable
Core Department –
Guarantees to British
Business Bank
(£241 million)
The core Department guarantees British Business Bank under the Enterprise Financial
Guarantee (EFG) and legacy Small Firms Loan Guarantee Scheme (SFLGs) to facilitate
lending to viable businesses, with a maximum obligation being subject to a cap,
which at 31 March 2018 is £241 million.
Under the BBB’s Help to Grow financial guarantee programme, the Bank has entered
in to financial guarantee agreements of £60 million. The Bank has guaranteed 75% of
eligible lending to SMEs under these agreements and a counter guarantee is in place
that guarantees 50% of the Bank’s 75% of eligible lending. As at 31 March 2018 the
amount lent under these financial guarantee agreements was £1.8 million (2016-17:
£0.6 million).
BBSRC – Contamination
(£3 million)
As part of a Sale Agreement relating to a previous BBSRC site, BBSRC agreed to
indemnify the purchaser against contamination resulting from dangerous substances.
The indemnity was over a 10-year period commencing in 2013-14 and was capped at
£3 million.
BBSRC – Exit costs
(£31 million)
Prior to 31 March 2018, some staff at BBSRC strategically funded institutes were on
BBSRC terms and conditions. Whilst their direct salary costs are paid by the institutes,
BBSRC is liable for any exit costs for these staff. The date and number of staff to
take exit packages in any one year is unknown; however, if all staff were to take exit
packages, the maximum liability is estimated at £31 million, with the amount declining
on an annual basis up to March 2025.
Core Department – Ofgem
administration costs
from the buy-out fund
(£3.6-£3.8 million)
The core Department, the Scottish Government and the Northern Ireland Executive
have previously undertaken to support Ofgem’s costs for administering the Renewables
Obligation scheme (around £3.6 – £3.8 million) if there is insufficient money in both
the buy-out fund and late payment fund to cover these costs. The size of the 2016-
17 buy-out fund will not be known until October 2018. It is dependent in part by the
availability and price of Renewable Obligation Certificates (ROCs) – if there is a surplus
of ROCs, suppliers may be more inclined to meet their obligations by submitting ROCs
but ultimately much depends on supplier behaviour which is difficult to predict. BEIS will
have an indication of how many ROCs are available and whether there is likely to be a
surplus after the end of the obligation year (31 March 2018) but will not know the size of
the buy-out fund until October 2018.
Core Department – Wave
Hub transfer
(£5 million)
The core Department has indemnified Cornwall Council in respect of the transfer of
Wave Hub up to a maximum amount of £5 million. This obligation expires in 2028 due to
the limitation period under the signed contract.
Innovate UK –
Decommissioning costs
(£2.6 million)
As at 31 March 2018 Innovate UK has a single contingent liability. The liability may arise
if Innovate UK has to provide a grant to Narec (Natural Renewable Energy Centre) in
order for it to be able to decommission a weather monitoring platform in the North Sea.
This is currently collecting data to support the development of an offshore wind test
site. This may take place anytime between 3 and 25 years from now dependent on the
development of the site, at an estimated cost of £2.6m.

Financial Statements
211
Basis of Recognition
Description
MRC – Dilapidation
(£1.8 million)
Medical Research Council (MRC) has identified a contingent liability of £1.8 million
(31 March 2017: £1.8 million) for dilapidation work. This may be required at the end of
property leases which are due to expire within the next three years.
STFC – Decommissioning
costs (£1.7 million)
The Science and Technology Facilities Council (STFC) has a contingent liability for
European Synchrotron Radiation Facility (ESRF) decommissioning costs associated
with the dismantling of the facility and infrastructures. Decommissioning occurs on
winding up of ESRF. If exit by the UK (or any other Member) results in ESRF being
wound up, the Members are required to arrange for decommissioning of ESRF’s plant
and buildings and to meet the costs of doing so in proportion to their share of capital at
the time of dissolution. The contingent liability is estimated to be £1.7 million.
STFC – Reprocessing
and staff commitments
(£13.7 million)
STFC is responsible for Institut Laue-Langevin (ILL) staff related commitments and costs
associated with reprocessing fuel elements. The contingent liability is estimated to be
£13.7 million (31 March 2017: £16 million).
24 Contingent assets
Basis of Recognition
Description
Unquantifiable
Coal Authority – Restructuring
Schemes
By virtue of the seventh and ninth Coal Authority Restructuring Schemes (CARS 7
and 9), the Coal Authority is the beneficiary of restrictive covenants and clawback
provisions relating to land and properties sold by the British Coal Corporation. In the
event that the purchasers are able to retrospectively secure added value by obtaining
planning consent for alternative uses, the Authority will receive a share of the added
value. Quantification of this asset is not possible.
Quantifiable
Core Department – Deed
Relating to the British Coal
Staff Superannuation Scheme
(BCSSS) under Paragraph 2(9) of
Schedule 5 to the Coal Industry
Act 1994 (£1.7 billion)
Within 12 months of 31 March 2033, the trustee of the BCSSS shall pay to the ‘the
Guarantor’ (the core Department) any surplus remaining on the scheme net of any
amount retained for the obligation. The value of the surplus will depend on the value
of scheme assets in relation to outstanding obligations. Based on the Government
Actuary’s Department’s estimate of a £1.7 billion surplus as at 31 March 2015,
the Department considers a receipt from the scheme to be probable.

Annual report and accounts 2017-18
212
25 Related-party transactions
The core Department is the parent of the bodies
listed in note 27 – these bodies are regarded as
related parties and various material transactions
have taken place during the reporting period
between members of the Departmental Group.
The related parties of the consolidating bodies
are disclosed in their respective accounts.
The core Department is also the sponsor of
Companies House, UK Intellectual Property
Office, the Met Office (Trading Funds), Ordnance
Survey, NPL Management Limited, NNL Holdings
Limited and British Nuclear Fuels Limited.
The core Department has had various
material transactions with other Government
departments, Government bodies and devolved
administrations comprising the Northern Ireland
Executive, Scottish Government and the Welsh
Government. The most significant of these
transactions have been with HM Treasury,
Post Office, HM Treasury’s consolidated fund,
UK Green Investment Bank, Department for
Education, UK Space Agency, Engineering and
Physical Sciences Research Council, Office
of Gas and Electricity Markets, Met Office,
Department for International Trade, Department
for Environment, Food and Rural Affairs,
Ministry of Defence and Environment Agency.
No minister, board member, key manager of the
group or other related party have undertaken any
material transactions with the core Department
during the year. Details of the Department’s
ministers and senior managers are shown in the
Remuneration Report.
Professor Dame Ann Dowling, Non-Executive
Director on the BEIS Departmental Board is an
unpaid President and Chairman of the Board of
Trustees of the Royal Academy of Engineering.
The Royal Academy of Engineering received
£23 million in grants from the core Department
during the year.
Professor Dame Ann Dowling and her husband
are employees of the University of Cambridge.
The University of Cambridge received payments
of £56 million from Medical Research Council
during the year.
In the course of allocating funding during the
year, the seven research councils entered
into material transactions with various Higher
Education Institutions. Where these bodies
have board members who are also members of
university councils, each body operates a policy
that precludes interested parties from voting on
the funding to the university in which they have
an interest. Further details of the transactions
can be found in the statutory accounts of the
individual bodies.

Financial Statements
213
26 Restatement of Statement of Financial Position and
Statement of Comprehensive Net Expenditure as a
result of changes to the Departmental boundary and
other restatements
Changes to the Departmental boundary
In 2016-17 the Start-Up Loans Company was
retrospectively reclassified to central government,
to take effect from the date of the company’s
inception, 25 June 2012. This has been
reflected on the Designation and Amendment
Order in 2017-18, and the prior year figures
have been restated to reflect the change in the
Departmental boundary.
This change to the Departmental boundary
has resulted in an increase in the Departmental
Group’s net assets of £104 million and £68 million
in 2016-17 and 2015-16 respectively.
Machinery of Government (MoG) restatements
On 1 April 2017, European Region Action
Scheme for the Mobility of University Students
(ERASMUS) programme transferred from the
Department to the Department for Education
(DfE). The Departmental Group’s comparative
net expenditure and net assets were not restated
due to the Machinery of Government change
being immaterial to both the Department and
DfE. Had the Departmental Group’s comparative
net expenditure been restated this would
have resulted in a reduction in the core and
Departmental Group’s net expenditure for 2016-
17 of £9.6m and a £0.2m increase in the core
and Departmental Group’s net assets.
Prior period adjustments
In the year to 31 March 2018 it was identified
that the Dounreay Site Restoration Limited
(DSRL) Section of the Combined Nuclear
Pension Plan (CNPP), which is a defined
benefit pension scheme, should have been
recognised in the Departmental Group’s
accounts. An independent actuary was
commissioned to provide the IAS 19 disclosures
report, conforming to requirements specified
in International Financial Reporting Standards,
specifically IAS 19 ‘Employee Benefits’.
As this is the first year that the DSRL Section
has been separately classified on the
Consolidated Statement of Financial Position,
the actuary’s IAS 19 report included the
comparator information in respect of the year
to 31 March 2017. The Consolidated Statement
of Financial Position for 2016-17 has been
restated to include the prior year defined
benefit obligation figure of £35 million, while the
corresponding amount has been accounted for
as a receivable from NDA. This resultant intra-
Group receivable has been eliminated against
the NDA Decommissioning Provision, applying
the same consolidation treatment as for the other
Site Licence Companies. There is no impact
on the Departmental Group’s net assets or net
expenditure for 2016-17. Further information
about this pension restatement can be found in
the note 20.
Changes in accounting policy
No changes in accounting policies were adopted
by the FReM in 2017-18.

Annual report and accounts 2017-18
214
Impact of restatements on opening balances for the Departmental Group at 31 March 2017
Nature of restatement
Balance at 31 March
2017 per 2016-17
published accounts
Changes in the
boundary
Restated balance at
31 March 2017
£m
£m
£m
Consolidated Statement of
Comprehensive Net Expenditure
Net expenditure for the period
14,842
(36)
14,806
Other comprehensive net income
and expenditure
(140)
–
(140)
Total comprehensive expenditure
14,702
(36)
14,666
Consolidated Statement of
Financial Position
Non-current assets
12,656
105
12,761
Current assets
6,484
3
6,487
Current liabilities
(9,490)
(4)
(9,494)
Non-current liabilities
(181,650)
–
(181,650)
General fund
175,252
(104)
175,148
Revaluation reserve
(2,813)
–
(2,813)
Non-current assets held for sale
revaluation reserve
(15)
–
(15)
Charitable funds
(319)
–
(319)
Non-controlling interests
(105)
–
(105)
Statement of Parliamentary Supply
Resource DEL
1,972
(27)
1,945
Capital DEL
10,835
14
10,849
Resource AME
3,523
41
3,564
Capital AME
(15)
–
(15)
Net outturn for the year
16,315
28
16,343
Impact of restatements on opening balances for the Departmental Group at 1 April 2016
Nature of restatement
Balance at 31 March
2015 per 2015-16
published accounts
Changes in the
boundary
Restated balance at
31 March 2016
£m
£m
£m
Consolidated Statement of Financial Position
Non-current assets
14,106
68
14,174
Current assets
3,414
5
3,419
Current liabilities
(7,279)
(5)
(7,284)
Non-current liabilities
(180,316)
–
(180,316)
General fund
173,156
(68)
173,088
Revaluation reserve
(2,685)
–
(2,685)
Charitable funds
(311)
–
(311)
Non-controlling interests
(85)
–
(85)

Financial Statements
215
27 List of bodies within the Departmental Group
The table below shows the list of BEIS
organisations that are included in the
Government Resources and Accounts Act 2000
(Estimates and Accounts) Order 2017, known
as the Designation Order. The individual Annual
Report and Accounts for each of these bodies
can be found on their own websites or via the
Inside Government website (https://www.gov.
uk/government/organisations/department-for-
business-energy-and-industrial-strategy).
The bodies whose accounts have been
consolidated within the Departmental Group
accounts are shown in section (a) of the table.
Bodies within the Departmental Group but not
consolidated, such as where net assets are not
considered material to the Departmental Group
accounts, are indicated separately in section (b)
of this table.
As a result of changes made in the 2017-18
Designation Order, some additional bodies
are now included in the Departmental Group
accounts boundary. Where boundary changes
have an impact on previously reported financial
results, these are shown in note 26.
Designated Body
(linked bodies are indicated in italics below
their parent body)
Status
Website
(further information about linked bodies or those
closed during the year is also included)
(a) Bodies consolidated in Departmental Group accounts for 2017-18
Executive Agencies
Insolvency Service
Executive Agency
gov.uk/government/organisations/insolvency-
service
UK Space Agency
Executive Agency
gov.uk/government/organisations/uk-space-
agency
NDPBs and other designated bodies
Advisory Conciliation and Arbitration Service4
NDPB
acas.org.uk
Central Arbitration Committee
Linked but
independent
institution of ACAS
Consolidated by ACAS
Certification Office for Trade Union and
Employers’ Associations
Linked but
independent
institution of ACAS
Consolidated by ACAS
The Arts and Humanities Research Council4,5
NDPB
ahrc.ukri.org
The Biotechnology and Biological Sciences
Research Council4,5
NDPB
bbsrc.ukri.org
BIS (Postal Services Act 2011) Company
Limited
Limited Company
owned by BEIS
beta.companieshouse.gov.uk/
company/xx-xxxx-xxxx
British Business Bank plc
Public Limited
Company owned by
BEIS
british-business-bank.co.uk
British Business Bank Investments Ltd
Limited Company
Consolidated by British Business Bank plc
British Business Finance Ltd
Limited Company
Consolidated by British Business Bank plc
British Business Financial Services Ltd
Limited Company
Consolidated by British Business Bank plc
British Business Aspire Holdco Ltd
Limited Company
Consolidated by British Business Bank plc
Capital for Enterprise Fund Managers Limited
Limited Company
Consolidated by British Business Bank plc
Capital for Enterprise (GP) Limited
Limited Company
Consolidated by British Business Bank plc
Capital for Enterprise Limited
Limited Company
Consolidated by British Business Bank plc
The Start-Up Loans Company
Limited Company
Consolidated by British Business Bank plc
Civil Nuclear Police Authority4
NDPB
gov.uk/government/organisations/civil-nuclear-
police-authority

Annual report and accounts 2017-18
216
Designated Body
(linked bodies are indicated in italics below
their parent body)
Status
Website
(further information about linked bodies or those
closed during the year is also included)
Coal Authority4
NDPB
gov.uk/government/organisations/the-coal-
authority
Committee on Fuel Poverty
NDPB
gov.uk/government/organisations/committee-
on-fuel-poverty
Costs are included in the core Department’s
expenditure
Committee on Radioactive
Waste Management
NDPB
gov.uk/government/organisations/committee-
on-radioactive-waste-management
Competition Service
NDPB
catribunal.org.uk/244/Competition-Service.html
Competition Appeal Tribunal
NDPB
catribunal.org.uk
The Copyright Tribunal
NDPB
gov.uk/government/organisations/copyright-
tribunal
No accounts produced as costs are included
in the core Department’s expenditure. It is
funded by BEIS and operated by UK Intellectual
Property Office
Cornwall and Isles of Scilly
Investments Limited
Limited Company
owned by BEIS
https://british-business-bank.co.uk/ourpartners/
cornwall-isles-scilly-investment-fund-ciosif/
Council for Science and Technology
Expert Committee
gov.uk/government/organisations/council-for-
science-and-technology
No accounts produced as costs are included in
the core Department’s expenditure
Diamond Light Source Limited
Limited Company
diamond.ac.uk
Dounreay Site Restoration Limited
Limited Company
dounreay.com
Site Licence Company – private company,
which operates sites on behalf of, and under
contract from the NDA
The Economic and Social Research Council4,5
NDPB
esrc.ukri.org
The Engineering and Physical Sciences
Research Council4,5
NDPB
epsrc.ukri.org
Enrichment Holdings Ltd
Limited Company
owned by BEIS
This is a special purpose vehicle for the
Government’s investment in URENCO Limited
Enrichment Investments Limited
Limited Company
Consolidated by Enrichment Holdings Limited
Electricity Settlements Company Ltd
Limited Company
owned by BEIS
emrsettlement.co.uk/
Fleetbank Funding Limited
Limited Company
owned by BEIS
This is a vehicle for the Government to facilitate
the Enable Loan Guarantee Scheme
The Financial Reporting Council Limited
Limited Company
frc.org.uk
Harwell Science and Innovation Campus
Public Sector Limited Partnership
Limited Partnership
Joint venture owned by STFC and UK Atomic
Energy Authority
Industrial Development Advisory Board
Expert Committee
gov.uk/government/organisations/industrial-
development-advisory-board
No accounts produced. Funded by BEIS and
operated by the Insolvency Service. Costs are
included as part of the core Department
LLW Repository Limited
Limited Company
llwrsite.com
Site Licence Company – private company,
which operates sites on behalf of, and under
contract from the NDA

Financial Statements
217
Designated Body
(linked bodies are indicated in italics below
their parent body)
Status
Website
(further information about linked bodies or those
closed during the year is also included)
Low Carbon Contracts Company Ltd
Limited Company
owned by BEIS
lowcarboncontracts.uk/
Low Pay Commission
NDPB
gov.uk/government/organisations/low-pay-
commission
No accounts produced as costs are included
in the core Department’s expenditure
Magnox Limited
Limited Company
magnoxsites.com
Site Licence Company – private company,
which operates sites on behalf of, and under
contract from the NDA
Medical Research Council4,5
NDPB
mrc.ukri.org
Midlands Engine Investments Limited
Limited Company
owned by BEIS
british-business-bank.co.uk/ourpartners/
midlands-engine-investment-fund/
The Natural Environment Research Council4,5
NDPB
nerc.ukri.org
The NESTA Trust
Charitable Trust
www.nesta.org.uk
Northern Powerhouse Investments Limited
Limited Company
owned by BEIS
british-business-bank.co.uk/ourpartners/
northern-powerhouse-investment-fund/
Nuclear Decommissioning Authority4
NDPB
gov.uk/government/organisations/nuclear-
decommissioning-authority
Radioactive Waste Management Limited
Limited Company
Consolidated by Nuclear Decommissioning
Authority
Sellafield Limited
Limited Company
sellafieldsites.com/
Site Licence Company – private company, which
operates sites on behalf of, and under contract
from the NDA
Nuclear Liabilities Financing Assurance Board
Expert Committee
gov.uk/government/organisations/nuclear-
liabilities-financing-assurance-board
Costs are included in the core Department’s
expenditure.
Office of Manpower Economics4
Part of the core
Department
gov.uk/government/organisations/office-of-
manpower-economics
No accounts produced as costs are included
in the core Department’s expenditure
Oil and Gas Authority
Limited Company
owned by BEIS
ogauthority.co.uk/
Postal Services Holding Company Limited
Limited Company
owned by BEIS
This is a vehicle for the Government’s
investment in Royal Mail Plc and Post
Office Limited
Regulatory Policy Committee
NDPB
gov.uk/government/organisations/regulatory-
policy-committee
No accounts produced as costs are included
in the core Department’s expenditure
The Science and Technology Facilities
Council (STFC)4,5
NDPB
stfc.ukri.org
STFC Innovations Limited
Limited Company
Consolidated by STFC
South Tees Site Company Limited
Limited Company
owned by BEIS
https://www.southteesdc.com/about-us/south-
tees-site-company-ltd/
This is a vehicle for managing the Government
investment in the South Tees Site

Annual report and accounts 2017-18
218
Designated Body
(linked bodies are indicated in italics below
their parent body)
Status
Website
(further information about linked bodies or those
closed during the year is also included)
Innovate UK (trading name of The Technology
Strategy Board)5
NDPB
https://www.gov.uk/government/organisations/
innovate-uk
UK Climate Investments LLP
Limited Partnership
between BEIS
and UK Green
Investment Bank
greeninvestmentbank.com/funds/international/
UK Climate Investments Indigo Limited
Limited Company
Consolidated by the UK Climate
Investments LLP
UK Climate Investments VC Limited
Limited Company
Consolidated by the UK Climate
Investments LLP
UK Green Infrastructure Platform Limited2
Public Limited
Company owned
by BEIS
Investment vehicle managed by UK Green
Investment Bank Limited on behalf of BEIS.
See GIB website below.
UK Green Investment Bank Limited1,3
Public Limited
Company owned
by BEIS
greeninvestmentgroup.com
Aviva Investors Realm Energy Centres
Limited Partnership1
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
UK Energy Efficiency Investments 1 L.P.¹
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
Energy Saving Investments L.P.¹
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Bank Financial
Services Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Rhyl Flats Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Sustainable Waste and Energy
Investments L.P.¹
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
UK Waste Resources and Energy
Investments L.P.¹
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
UK Green Community Lending Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Rampion Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Gwynt y Mor Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Climate International
Limited1
Limited Company
Consolidated by UK Green Investment
Bank Limited
The Recycling and Waste L.P.¹
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
Green Investment Bank Offshore Wind
Fund LP¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Offshore Wind B L.P.¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Co-investment
Lyle Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment FCG Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment LID Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited

Financial Statements
219
Designated Body
(linked bodies are indicated in italics below
their parent body)
Status
Website
(further information about linked bodies or those
closed during the year is also included)
UK Green Investment Lyle Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Offshore Wind C L.P.¹
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Offshore Wind Co-
Investment L.P.¹
Limited Partnership
Consolidated by UK Green Investment
Bank Limited
UK Green Investment OSWF Lyle Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment (OSW) GP Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Green Investment Sheringham
Shoal Limited1
Limited Company
Consolidated by UK Green Investment
Bank Limited
GLID Wind Farms TopCo Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
Lyle JV Holdings Limited¹
Limited Company
Consolidated by UK Green Investment
Bank Limited
UK Shared Business Services Limited
Limited Company
uksbs.co.uk
United Kingdom Atomic Energy Authority4
NDPB
gov.uk/government/organisations/uk-atomic-
energy-authority (corporate)
ccfe.ac.uk (fusion research)
AEA Insurance Limited
Limited Company
Consolidated by United Kingdom Atomic
Energy Authority
(b) Bodies not consolidated in Departmental Group accounts for 2017-18
Aerospace Technology Institute
Limited Company
ati.org.uk/
Turnover and net assets are not material to
Departmental Group accounts
British Hallmarking Council
NDPB
gov.uk/government/organisations/british-
hallmarking-council
Turnover and net assets are not material to
Departmental Group accounts
Committee on Climate Change4
NDPB
theccc.org.uk/about/
Turnover and net assets are not material to
Departmental Group accounts
Daresbury SIC (PubSec) LLP
Limited Liability
Partnership
https://beta.companieshouse.gov.uk/company/
OC360004
A joint venture between the Science and
Technology Facilities Council and Halton
Borough Council. Turnover and net assets are
not material to Departmental Group accounts
Daresbury Science & Innovation
Campus Limited
Company Limited
by Guarantee
www.sci-techdaresbury.com
A joint venture between the Science and
Technology Facilities Council and Langtree.
Turnover and net assets are not material to
Departmental Group accounts
East Midlands Early Growth Fund Limited
Limited Company
owned by BEIS
Recorded as investment in core Department
accounts. Turnover and net assets are not
material to Departmental Group accounts

Annual report and accounts 2017-18
220
Designated Body
(linked bodies are indicated in italics below
their parent body)
Status
Website
(further information about linked bodies or those
closed during the year is also included)
Groceries Code Adjudicator
Office Holder and
Corporation Sole
gov.uk/government/organisations/groceries-
code-adjudicator
Turnover and net assets are not material
to Departmental Group accounts
NDA Archives Limited
Limited Company
gov.uk/government/organisations/nuclear-
decommissioning-authority
Turnover and net assets are not material
to Departmental Group accounts
NW VCLF HF LLP
Limited Liability
Partnership
Recorded as investment in Core Department
accounts. Turnover and net assets are not
material to Departmental Group accounts.
Pubs Code Adjudicator
Office Holder and
Corporation Sole
gov.uk/government/organisations/pubs-code-
adjudicator
Turnover and net assets are not material
to Departmental Group accounts
Research Sites Restoration Limited
Limited Company
Dormant – Site Licence Company
No costs or activities incurred in 2017-18 as the
activities transferred to Magnox in 2016-17
Small Business Commissioner
NDPB
https://www.smallbusinesscommissioner.gov.
uk/
Turnover and net assets are not material to
Departmental Group accounts
Notes:
1.
These entities have been classified as assets held for sale up to 17 August 2017, the date HM Government sold the
Green Investment Bank Limited and its related subsidiaries to the private sector, in accordance with Annex H of the
Accounts Direction 2017-18 issued by HM Treasury on 19 December 2017.
2.
The Green Infrastructure Platform Limited has been consolidated from 17 August 2017, the date HM Government
purchase the entity as part of the sale of the Green Investment Bank Limited, in accordance with Annex H of the
Accounts Direction 2017-18 issued by HM Treasury on 19 December 2017.
3.
UK Green Investment Bank plc changed its name to UK Green Investment Bank Limited before it was sold. This was
updated as part of Amendment Order 2017-18.
4.
Entities fall in scope of the Trade Union (Facility Time Publication Requirements) Regulations 2017. Disclosure regarding
Facility Time can be found in the relevant accounts.
5.
These entities have combined to form United Kingdom Research and Innovation (UKRI) on 30 March 2018 and began
operations on 1 April 2018 (see note 28).

Financial Statements
221
28 Events after the Reporting Period
Creation of UK Research and Innovation
United Kingdom Research and Innovation (UKRI)
was formed on 30 March 2018 and began
operations on 1 April 2018. UKRI brings together
the assets, liabilities and functions of the following
organisations into one unified body:
• Arts and Humanities Research Council
• Biotechnology and Biological Sciences
Research Council
• Economic and Social Research Council
• Engineering and Physical Sciences
Research Council
• Medical Research Council
• Natural Environment Research Council
• Science and Technology Facilities Council
• Innovate UK
• The England-only responsibilities of Higher
Education Funding Council for England
(HEFCE) in relation to research and
knowledge exchange
UKRI was established under the Higher
Education and Research Act 2017 and
was created following a report by Sir Paul
Nurse, the President of the Royal Society,
who recommended the merger in order to
increase integrative cross-disciplinary research.
Transfer of Geospatial contracts to the
Cabinet Office
From 1 April 2018 the Geospatial contracts
transferred from the Secretary of State for
Business, Energy and Industrial Strategy to
the Secretary of State for the Cabinet Office.
The programmes encompass:
• Public Sector Mapping Agreement
• Postcode Address File
• Open Source Data Agreement
A budget of £86 million for 2018-19 will be
transferred with these programmes. The total
commitments related to the contracts as at
31 March 2018 of £91 million was included in
other commitments (note 21.3.2).
28.1 Date Accounts authorised for issue
BEIS’s Accounting Officer has authorised these
Accounts to be issued on the same day as they
were certified.

Blyth wind farm: The UK has been at the forefront of the global move towards clean
growth, with projects such as the Blyth wind farm in the north East of England
Trust
Statement

Trust Statement
223
Accounting Officer’s foreword
to the Trust Statement
Scope
The Department for Business, Energy and
Industrial Strategy is responsible for collection
and allocation of receipts from:
• the EU Emissions Trading Scheme (EU ETS)
• the Carbon Reduction Commitment (CRC)
Scheme
• the Climate Change Agreements (CCA)
Scheme
• the Energy Savings Opportunity Scheme
(ESOS)
The core Department is also responsible for
expenses incurred in the collection of these
receipts; the revenue and expenditure; and the
cash flows.
The Departmental Trust Statement reports the:
• revenues, expenditure, assets and liabilities
relating to proceeds received from the UK
auctions of European Allowances under Phase
III of the EU ETS and Aviation allowances of the
EU ETS for the financial year 2017-18. These
amounts are collected by the Department for
payment into the Consolidated Fund
• revenues and assets relating to the receipts
of CRC Allowances under the CRC Energy
Efficiency Scheme Order (2010) as amended
by CRC Energy Efficiency Scheme Order
(2013) for the financial year 2017-18. These
amounts are collected by the Department for
payment to the Consolidated Fund
• revenues and assets relating to the receipts
of CCA Buy-out payments for the Target 2
reporting period
• civil penalties levied against participants
in the EU ETS, CRC, ESOS and CCA
Schemes. These amounts are collected
by the Department for payment to the
Consolidated Fund
From 1 April 2016, the responsibility for
accounting for the Petroleum Licensing regime
receipts transferred to the Oil and Gas Authority
(OGA). The OGA prepares a separate Trust
Statement for the Petroleum Licences. The OGA
Trust Statement is published as part of the OGA’s
Annual Report. Included in the Department’s
Trust Statement at 1 April 2016 is the transfer
of the Petroleum Licences net assets of
£19.216 million to OGA. The Department’s Trust
Statement prior year comparatives do not include
any other income or expenditure relating to the
Petroleum Licensing regime.
This statement is also prepared to provide
disclosure of any material expenditure or income
that has not been applied to the purposes
intended by Parliament or material transactions
that have not conformed to the authorities which
govern them.

Annual report and accounts 2017-18
224
The EU Emissions Trading
Scheme (EU ETS)
Background
The EU Emissions Trading System is designed
to reduce greenhouse gas (GHG) emissions at
the lowest cost to the economy. It also aims to
provide greater certainty that the UK and the EU
will meet emission reduction targets.
The EU ETS includes approximately 11,000
power stations and industrial plants across the
EU, as well as airlines. Around 1,000 of these
are sited in the UK and comprise power stations,
oil refineries, offshore oil and gas platforms and
industries that produce iron and steel, cement
and lime, paper, glass, ceramics and chemicals.
Other organisations may also be covered by
the EU ETS, including universities and aviation
operators, although there is an opt-out for
hospitals and smaller emitters.
The EU ETS works on a ‘cap and trade’
basis: there is a ‘cap’ or limit set on the
total greenhouse gas emissions allowed by
participants covered by the System. This cap is
converted into tradable emission allowances.
Tradable emission allowances are allocated to
participants in the market; in the EU ETS this is
done via a mixture of free allocation and auctions.
One allowance gives the holder the right to emit
one tonne of CO2 (or its equivalent). Participants
covered by the EU ETS must monitor and report
their emissions each year and surrender enough
allowances to cover their annual emissions.
Participants who are likely to emit more than
their allocation have a choice between taking
measures to reduce their emissions or buying
additional allowances, either from installations
who will emit less, from the secondary carbon
market or from Member State-held auctions.
The carbon price signifies the amount
participants in the EU ETS are willing to pay per
EU allowance (EUA) which is based on demand
and supply. There are currently separate Aviation
Allowances (EUAAs) for airline operators.
The first phase of the EU ETS ran from 2005 to
2007 and the second phase ran from 2008 to
2012 to coincide with the first Kyoto Commitment
Period. The current phase of the EU ETS (2013
to 2020) builds upon the previous two phases
and was significantly revised to make a greater
contribution to tackling climate change.
In the current phase (Phase III) there is a single
EU-wide cap. Each Member State was required
to submit a list of all the participants that will be
included in Phase III, setting out its proposed
levels of free allocation in accordance with the
revised ETS Directive.
For Phase III at least 50% of allowances
are auctioned across the EU, a far greater
percentage than in the previous phases.
This includes full auctioning for the power
generation sector in the UK and most Member
States, and for all Member States by 2020.
The UK appointed ICE Futures Europe to
conduct auctions of EU ETS Phase III EUAs
and EUAAs on behalf of the Department from
November 2012. The contract with ICE was
then extended by a further two years (the
maximum allowed for in the EU Auctioning
Regulation), until 9 November 2017. Following
an open-competition through the Official Journal
of the European Union to re-procure the UK’s
auction platform upon expiry of the original
contract, ICE Futures Europe were awarded
a new contract to conduct UK auctions from
10 November 2017. The full schedule for Phase
III auctions is available on the ICE emissions
auctions web pages at www.theice.com/
emissions/auctions
The UK held 23 auctions of EUA allowances in
2017-18. A total of 92.228 million allowances were
auctioned successfully.
There was one EUAA auction of 725,500
allowances held in 2017-18. This was held on
the 11 October 2017 and covered the 2017
compliance year. The auction cleared successfully.
Future developments
Phase IV of the EU ETS (which runs from 2021 to
2030) has now been agreed within the European
Union, and work on accompanying implementing
legislation is now underway.
No decision has yet been made on the UK’s
long-term participation, or otherwise, in the
EU ETS following the UK’s exit from the EU.
The Government is considering all factors,
in consultation with stakeholders.
As the Clean Growth Strategy sets out we remain
firmly committed to carbon pricing as an emissions
reduction tool whilst ensuring energy and trade
intensive businesses are appropriately protected
from any detrimental impacts on competitiveness,
and we will seek to ensure that our future approach
is at least as ambitious as the existing scheme and
provide a smooth transition for the relevant sectors.

Trust Statement
225
Financial Summary
The UK held 23 European Union Allowance
(EUA) auctions and 1 European Union Aviation
Allowance (EUAA) auction. This yielded a total
income of £571 million (2016-17: £387 million)
– as shown in note 2.2 of the Trust Statement.
All auctions were wholly competitive auctions.
The total income was passed to the Consolidated
Fund within a few days of each auction. Auctions
were completed in Euros and converted to
sterling. Exchange rate differences amounted
to £424,000 (2016-17: £211,000). The exchange
differences are recognised in the Statement of
Revenue, Other Income and Expenditure.
The Environmental Agency, as regulator, imposed
137 civil penalties amounting to £1,892,941
(2016-17: 54 penalties totalling £970,000).
Most of the penalties relate to non-compliance
in meeting installation targets under the UK small
emitter opt-out scheme, for those who have
opted-out of the main requirements of the ETS.
The opt-out requires that installations must keep
their emissions below a set target. A penalty
is charged for every tonne of CO2 above the
emission target. Some of these penalties
(for example on aviation) relate to previous
compliance years.
OPRED (Offshore Petroleum Regulator for
Environment and Decommissioning) also issued
7 penalties in 2017-18, amounting to £127,643
(2016-17: 9 penalties totalling £1.5 million).
The offshore industry is regulated by OPRED,
a discrete directorate within BEIS. The sanctions
relate to a backlog of failures to surrender
sufficient allowances and to comply with a
permit condition. OPRED expects the number
of penalties to increase as they identify more
compliance issues. The relevant Civil Sanctions
Guidance has been published alongside the
civil penalties. The costs associated with
administering the scheme were borne by the
Department – shown in note 3 and included
within the Department’s Accounts
Carbon Reduction
Commitment (CRC) Scheme
Background
The CRC Energy Efficiency Scheme (CRC) is a
mandatory UK-wide trading scheme that was
brought into law via the CRC Energy Efficiency
Scheme Order 2010 (SI 2010/768) (the ‘CRC
Order’) and simplified via the CRC Energy
Efficiency Scheme Order 2013 (SI 2013/1119).
The scheme is designed to incentivise large
public and private sector organisations to take
up cost-effective energy efficiency opportunities
through the application of a range of drivers
and thereby drive down the carbon emissions
throughout the UK. The CRC Scheme is
designed to tackle the four main barriers to the
take up of energy efficiency highlighted by the
Carbon Trust report in 2005, namely insufficient
financial incentives to reduce emissions,
uncertain reputational benefits of demonstrating
leadership, split incentives between landlord and
tenants and organisational inertia.
The CRC is designed to improve energy
efficiency and thereby reduce emissions primarily
from large non-energy intensive organisations
in the private and public sectors. The sectors
being targeted include large retail organisations,
banks, large offices, universities, large hospitals,
large local authorities and central government
departments.
The Environment Agency in its role of UK
Scheme Administrator, administers the scheme’s
registry on behalf of the Department and the
Devolved Administrations. Participants use it
to report annually their energy supply data and
purchase and surrender allowances as required
each compliance year. The Environment Agency
along with the devolved scheme regulators,
namely Scottish Environment Protection
Agency, Northern Ireland Environment Agency
and Natural Resources Wales, are responsible
for the audit and enforcement of the scheme,
including the issue of Civil Penalties as
required. The Environment Agency report to the
Department who are responsible for the overall
monitoring and reporting of CRC, ensuring that
the figures recorded in the Trust Statement are
complete and correct.
The scheme started in April 2010 with a four-year
introductory phase. The second phase of the
scheme commenced in 2014 and will run until
2019. There are around 2,000 participants in the
scheme for the second phase.
The CRC is designed to tackle the barriers to
energy efficiency in three ways. Firstly, the CRC
has standardised and structured reporting
requirements which require participants to
monitor and report their emissions; secondly it
has a reputational driver through the publication
of data, and thirdly its financial element which
requires participants to buy allowances for the
carbon they emit. This brings the cost-benefits

Annual report and accounts 2017-18
226
of energy efficiency to the attention of Finance
Directors and aims to make it a boardroom issue.
In Phase II there are 2 allowance sales each
year, a forecast sale in April for the compliance
period starting that month and a compliance
sale in October for the previous compliance year.
The allowance price in the forecast sale is set at
a lower price than that in the later buy-to-comply
sale for the same compliance year. This is to
incentivise participants to better forecast their
energy use in order that they can, if they wish,
make use of the cheaper forecast sale price.
In addition, there is a special allocation sale
that runs from November to the following April
for use where participants are found to need to
purchase additional allowances to comply with
the scheme. The special allocation allowance
price is set at the same value as the equivalent
compliance buy to comply price.
This financial year 2017-18 saw the fourth
forecast sale for Phase II of the scheme
(for compliance year 2017-18) and second the
buy-to-comply sale for Phase II of the scheme
(for compliance year 2016-17).
For the current phase, the following prices have
been announced:
CRC Scheme
Year
Forecast
Sale Price
Compliance
Sale Price
2014-15
£15.60
£16.40
2015-16
£15.60
£16.90
2016-17
£16.10
£17.20
2017-18
£16.60
£17.70
2018-19
£17.20
£18.30
Future developments
As part of the Budget in March 2016,
the Government announced the decision to
close CRC following the 2018-19 compliance
year, with no purchase of allowances required
to cover emissions for energy supplied from
April 2019. Government stated that organisations
will report under the CRC for the last time by the
end of July 2019, with a surrender of allowances
for emissions from energy supplied in the
2018‑19 compliance year by the end of October
2019. The government stated that it will work
with the devolved administrations on scheme
closure arrangements.
Financial Summary
This financial year 2017-18 saw the 4th forecast
sale for Phase II of the scheme. Allowance
sales under the CRC generated £580 million
(2016-17: £750 million). There were 5 civil
penalties levied against CRC participants.
The civil penalties amounted to £49,000 (2016-
17: £59,420). The costs incurred in administering
the CRC Scheme were borne by the Department
as shown in note 3 and included within the
Department’s Accounts.

Trust Statement
227
Climate Change Agreements (CCA)
Background
Climate Change Agreements (CCAs) are
voluntary agreements that allow eligible
energy-intensive sectors to receive up to 90%
reduction in the Climate Change Levy (CCL)
if they sign up to stretching energy efficiency
targets agreed with Government. The CCA
scheme was launched on 1 April 2013 and
covers 53 industrial sectors. The scheme runs
until 2023 and if all sectors meet their targets
from 2013 to 2020 against agreed baselines,
the scheme is estimated to deliver an overall 11%
energy efficiency improvement and savings to
participants on the CCL of around £300 million
each year.
The CCA generates 3 potential money streams:
Charging Income
Paid by CCA participants to the Administrator on
an annual basis, in accordance with a charging
scheme established under paragraph 52C
Finance Act 2000, Schedule 6 (as amended by
Finance Act 2012). These monies are retained by
the Environment Agency and will not feature in
the Trust Statement.
Civil Penalties
Payments received by the Administrator for minor
infractions, passed by the Department to the
Consolidated Fund in accordance with powers
given in 52F Finance Act 2000, Schedule 6
(as amended by Finance Act 2012). The amounts
are specified in The Climate Change Agreements
(Administration) Regulations 2012.
Buy-out Payments
Payments made by participants at the end of
each 2-year target period in cases where CCA
targets are not met. For the first two target
periods for the scheme up to 31 December
2016, payments were calculated on the basis
of £12 per tonne of CO2 by which the target is
exceeded. From 1 January 2017, this has been
increased to £14 per tonne of CO2, for which
the powers are given in 52F Finance Act 2000,
Schedule 6 (as amended by Finance Act 2012).
The amount is specified in The Climate Change
Agreements (Administration) Regulations 2012
(as amended in 2016).
The collection of buy-out payment income
commenced in 2015-16 in respect of the first
Target Reporting Period and will continue for
both buy-out payments and civil penalties,
until the scheme ends in 2023. The income
distribution is explained under the section on
Financial Review.
Future developments
The CCA scheme is scheduled to continue until
the end of 2023.
Financial Summary
In 2017-18, the income from buy-out payments
generated £22.966 million (£94,000 in 2016-17),
– as shown in note 2.3 of the Trust Statement.
The Target Reporting Period II deadline was
1st May 2017, therefore, the primary buy-out
payments were made in June 2017, in order to
achieve compliance by 5 July 2017. The lower
income in relation to prior year comparatives is
explained by the fact that 2016-17 was a period
of secondary reporting for target reporting period I,
where participants make further top-up buy-out
payments after an audit or they receive a refund if
they have been overpaid.

Annual report and accounts 2017-18
228
Energy Savings Opportunity
Scheme (ESOS)
Background
The Energy Savings Opportunity Scheme is an
energy assessment scheme, mandatory for all
large undertakings in the UK. The Government
established ESOS in response to the
requirements of Article 8 (4-6) of the EU Energy
Efficiency Directive (2012/27/EU).
Qualifying organisations must have carried out
audits of the energy used by their buildings,
industrial processes and transport to identify
cost-effective energy saving measures by
5 December 2015 and every 4 years thereafter,
until 5 December 2027.
The Department’s analysis estimates around
7,500 Ultimate Parent organisations will
participate in the scheme. ESOS is estimated
to deliver a net benefit to the UK of £1.6 billion
(over 15 years). Most of these savings would be
felt by businesses through lower energy bills.
This benefit would be realised if each participant
in the scheme makes an average reduction of
0.7% as a result of implementing cost-effective
energy efficiency opportunities identified
through audits.
The Environment Agency and equivalent
regulators in the devolved administrations are
responsible for ensuring ESOS compliance.
Participants who fail to comply with the
scheme could be fined up to £50,000 by the
Environment Agency.
There are currently no charges for registering
with the scheme, however penalties for non-
compliance will be issued for those who do not
comply. The first penalties under ESOS were
imposed in March 2018
Future developments
The ESOS scheme is tabled to operate for
four compliance periods so far completing on
5 December 2027.
Financial Summary
The income stream consists of non-compliance
penalties. The first tranche of penalties were
issued in March 2018. This comprised 5
penalties totalling £17,110 income.
Remote Contingent Liabilities
Audited information
On 29 March 2017, the UK Government
submitted its notification to leave the EU in
accordance with Article 50. The triggering of
Article 50 starts a two-year negotiation process
between the UK and the EU. Any subsequent
changes in legislation, regulation and funding
arrangements are subject to the outcome of
the negotiations. As a result, an unquantifiable
contingent liability is disclosed. In accordance
with accounting standards, no contingent assets
can be recognised.
Further information on the core Department’s
remote contingent liability relating to the UK
leaving the EU is detailed on page 114.
Auditors
These financial statements have been audited,
under the Exchequer and Audit Departments Act
1921, by the Comptroller and Auditor General,
who is appointed under statute and reports to
Parliament. The audit opinion is on pages 231
to 233. The auditor’s notional remuneration is
included within the Department’s Accounts.
There were no fees in respect of non-audit work.
Basis for preparation
The HM Treasury Accounts Direction, issued
in accordance with Section 2 of the Exchequer
and Audit Departments Act 1921 requires the
Department to prepare the Trust Statement to
give a true and fair view of the state of affairs
relating to the collection and allocation of the
carbon allowance auction receipts for the EU
Emissions Trading Schemes, the allowances
sales from the CRC scheme, buy-out payments
from the CCA Scheme and civil penalties
receivable under the EU ETS, CRC, CCA and
ESOS schemes. Regard is given to all relevant
accounting and disclosure requirements given
in Managing Public Money and other guidance
issued by HM Treasury.

Trust Statement
229
Accounting judgements
As the Accounting Officer, it is my responsibility
to apply suitable accounting policies in the
preparation of the Trust Statement. Revenues are
recognised in the period in which the event that
generates the revenue takes place, consequently
the anticipated proceeds from future auctions
and licences as detailed in note 2 are not
recognised as assets within this statement.
All the transactions within the Trust Statement
reflect transactions that have taken place.
Events after the
reporting period
Details of events after the reporting period are
given in note 10 to the Trust Statement.
Governance Statement
The Department’s Governance Statement,
covering both the Accounts and the Trust
Statement, is included in the Governance section
of this report.
Alex Chisholm
Permanent Secretary and
Principal Accounting Officer
3 July 2018

Annual report and accounts 2017-18
230
Statement of the Accounting Officer’s
responsibilities in respect to the
Trust Statement
Under section 2 of the Exchequer and Audit
Departments Act 1921, HM Treasury has directed
the Department for Business, Energy and
Industrial Strategy to prepare for each financial
year a Trust Statement in the form and on the
basis set out in the Accounts Direction.
HM Treasury has appointed the Permanent
Secretary as Accounting Officer of the
Department for Business, Energy and Industrial
Strategy with overall responsibility for preparing
the Trust Statement and for transmitting it to the
Comptroller and Auditor General.
The Accounting Officer is responsible for
ensuring that: there is a high standard of financial
management, including a sound system of internal
control; that financial systems and procedures
promote the efficient and economical conduct
of business and safeguard financial propriety
and regularity; that financial considerations are
fully taken into account in decisions on policy
proposals; and that risk is considered in relation
to assessing value for money.
The Accounting Officer is responsible for
the fair and efficient administration of the EU
ETS including conducting the auction of EU
Allowances in the UK for Phase III of the Scheme
and Aviation allowances of the EU ETS, collection
of the proceeds and onward transmission of
the funds in their entirety to the Consolidated
Fund. The Accounting Officer is also responsible
for the collection of CRC Allowances and CCA
buy-out payments for onward transmission to
the Consolidated Fund and, the collection of civil
penalties levied under the EU ETS, CCA, CRC,
and ESOS schemes for onward transmission
to the Consolidated Fund.
The responsibilities of the Accounting Officer,
including responsibility for the propriety and
regularity of the public finances for which an
Accounting Officer is answerable, for keeping
proper records and for safeguarding the
Department’s assets, are set out in Managing
Public Money published by HM Treasury.
The Trust Statement must give a true and fair view of:
• the statement of affairs of the EU ETS, CCA
Schemes and penalties issued under the EU
ETS, ESOS, CCA and CRC Schemes
These streams of income are recognised on an
accruals basis;
• the state of affairs of the CRC Allowance
Scheme sales which are recognised on a cash
received basis
• the revenue collected, and expenditure
incurred together with the net amounts
surrendered to the Consolidated Fund
In preparing the Trust Statement, the
Accounting Officer is required to comply with
the requirements of the Government Financial
Reporting Manual 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
• make judgements and estimates on a
reasonable basis
• state whether applicable accounting standards
as set out in the Government Financial
Reporting Manual have been followed, and
disclose and explain any material departures
in the accounts
• prepare the Trust Statement on a going-
concern basis
Accounting Officer’s confirmation
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.
The annual report and accounts as a whole is fair,
balanced and understandable. I take personal
responsibility for the annual report and accounts
and the judgements required for determining that
it is fair, balanced and understandable.
Alex Chisholm
Permanent Secretary and
Principal Accounting Officer
3 July 2018

Trust Statement
231
The Trust Statement Audit Report of the
Comptroller and Auditor General to the
House of Commons
Opinion on financial statements
I have audited the financial statements of the
Department for Business, Energy and Industrial
Strategy Trust Statement (“the Trust Statement”)
for the year ended 31 March 2018 under the
Exchequer and Audit Departments Act 1921.
The financial statements comprise the Statement
of Revenue, Other Income and Expenditure,
the Statement of Financial Position, the
Statement of Cash Flows and the related notes,
including the significant accounting policies.
These financial statements have been prepared
under the accounting policies set out within them.
In my opinion:
• the Trust Statement gives a true and fair view
of the state of affairs of balances stemming
from: the collection of EU Emissions Trading
Scheme (ETS) auction receipts; Carbon
Reduction Commitments (CRC) allowance
sales; Climate Change Agreements (CCA)
receipts; and EU ETS, CRC, CCA, and Energy
Savings Opportunity Scheme (ESOS) civil
penalties as at 31 March 2018 and of the net
revenue for the year then ended
• the financial statements have been properly
prepared in accordance with the Exchequer
and Audit Departments Act 1921 and
HM Treasury directions issued thereunder
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.
Basis of opinions
I conducted my audit in accordance with
International Standards on Auditing (ISAs)
(UK) and Practice note 10 ‘Audit of Financial
Statements of Public Sector Entities in the
United Kingdom’. My responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of my certificate.
Those standards require me and my staff to
comply with the Financial Reporting Council’s
Revised Ethical Standard 2016. I am independent
of the Department in accordance with the ethical
requirements that are relevant to my audit and
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.
Responsibilities of the Accounting Officer
for the audit of the financial statements
As explained more fully in the Statement of the
Accounting Officer’s responsibilities in respect
to the Trust Statement, the Accounting Officer
is responsible for the preparation of the financial
statements and for being satisfied that they give
a true and fair view.
Auditor’s responsibilities for the audit
of the financial statements
My responsibility is to audit and report on
the Trust Statement in accordance with the
Exchequer and Audit Department Act 1921.
An audit involves obtaining evidence about
the amounts and disclosures in the financial
statements sufficient to give reasonable
assurance that the financial statements are free
from material misstatement, whether caused by
fraud or error. Reasonable assurance is a high
level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when
it exists. Misstatements can arise from fraud or
error and are considered material if, individually
or in the aggregate, they could reasonably be
expected to influence the economic decisions
of users taken on the basis of these financial
statements.

Annual report and accounts 2017-18
232
As part of an audit in accordance with ISAs (UK),
I exercise professional judgment and maintain
professional scepticism throughout the audit.
I also:
• identify and assess the risks of material
misstatement of the financial statements,
whether due to fraud or error, design and
perform audit procedures responsive to
those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis
for my opinion. The risk of not detecting a
material misstatement resulting from fraud
is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override
of internal control
• obtain an understanding of internal control
relevant to the audit in order to design audit
procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness
of the Department for Business, Energy and
Industrial Strategy’s internal control
• evaluate the appropriateness of accounting
policies used and the reasonableness of
accounting estimates and related disclosures
made by management
• conclude on the appropriateness of
management’s use of the going concern
basis of accounting and, based on the
audit evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast significant doubt
on the Department’s ability to continue as a
going concern. If I conclude that a material
uncertainty exists, I am required to draw
attention in my auditor’s report to the related
disclosures in the financial statements or,
if such disclosures are inadequate, to modify
my opinion. My conclusions are based on the
audit evidence obtained up to the date of my
auditor’s report. However, future events or
conditions may cause the entity to cease to
continue as a going concern
• evaluate the overall presentation, structure and
content of the financial statements, including
the disclosures, and whether the consolidated
financial statements represent the underlying
transactions and events in a manner that
achieves fair presentation.
I communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit and
significant audit findings, including any significant
deficiencies in internal control that I identify
during my audit.
I am required to obtain evidence sufficient to
give reasonable assurance that 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.
Other Information
The Accounting Officer is responsible for
the other information. The other information
comprises information included in the
Accounting Officer’s Foreword to the Trust
Statement and Statement of the Accounting
Officer’s responsibilities in respect to the Trust
Statement, other than the financial statements
and my auditor’s report thereon. My opinion
on the financial statements does not cover
the other information and I do not express
any form of assurance conclusion thereon.
In connection with my audit of the financial
statements, my responsibility is to read the other
information and, in doing so, consider whether
the other information is materially inconsistent
with the financial statements or my knowledge
obtained in the audit or otherwise appears to
be materially misstated. If, based on the work
I have performed, I conclude that there is a
material misstatement of this other information,
I am required to report that fact. I have nothing
to report in this regard.
Opinion on other matters
In my opinion:
• the information given in the Accounting
Officer’s Foreword to the Trust Statement
and Statement of the Accounting Officer’s
responsibilities in respect to the Trust
Statement for the financial year for which the
financial statements are prepared is consistent
with the financial statements

Trust Statement
233
Matters on which I report by exception
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 or returns adequate for my audit have not
been received from branches not visited by my
staff; or
• the financial statements are not in agreement
with the accounting records and returns; or
• I have not received all of the information and
explanations I require for my audit; or
• the Governance Statement does not reflect
compliance with HM Treasury’s guidance.
Report
I have no observations to make on these financial
statements.
Sir Amyas C E Morse
Comptroller and Auditor General
6 July 2018
National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

Annual report and accounts 2017-18
234
Statement of Revenue,
Other Income and Expenditure
for the year ended 31 March 2018
2017-18
2016-17
Revenue
Note
£’000
£’000
Licence fees and taxes
Carbon Reduction Commitment allowance sales
2.1
580,201
750,179
EU Emissions Trading Scheme auction income
2.2
570,688
387,264
Climate Change Agreements buy-out payments income
2.3
22,966
94
Total licence fees and taxes
1,173,855
1,137,537
Fines and penalties
Civil penalties – EU Emissions Trading scheme
2.4
2,021
2,472
Civil penalties – Energy Savings Opportunity Scheme
2.4
17
–
Civil penalties – Carbon Reduction Commitment Scheme
2.4
49
59
Total fines and penalties
2,087
2,531
Total revenue and other income
1,175,942
1,140,068
Expenditure
EU Emissions Trading Scheme costs
3.1
(432)
(218)
Credit losses – debts written off
3.2
(972)
–
Total expenditure
(1,404)
(218)
Net revenue for the Consolidated Fund
1,174,538
1,139,850
Transfer of Petroleum Licence Net Assets to OGA
–
(19,216)
Net Revenue for the Consolidated Fund
1,174,538
1,120,634
There were no recognised gains or losses accounted for outside the above
Statement of Revenue, Other Income and Expenditure.
The notes on pages 237 to 242 form part of this statement.

Trust Statement
235
Statement of Financial Position
as at 31 March 2018
31 March 2018
31 March 2017
Note
£’000
£’000
Current assets
Receivables and accrued fees
4
1,471
2,453
Cash and cash equivalents
5
23,921
17,087
Total current assets
25,392
19,540
Current liabilities
Payables
6
(404)
(518)
Total current liabilities
(404)
(518)
Net current assets
24,988
19,022
Total net assets
24,988
19,022
Represented by:
Balance on Consolidated Fund Account
7
24,988
19,022
The notes on pages 237 to 242 form part of this statement.
Alex Chisholm
Permanent Secretary and
Principal Accounting Officer
3 July 2018

Annual report and accounts 2017-18
236
Statement of Cash Flows
for the year ended 31 March 2018
2017-18
2016-17
Note
£’000
£’000
Net cash flows from operating activities
A
1,175,406
1,140,126
Cash paid to the Consolidated Fund
7
(1,168,572)
(1,136,546)
Cash for Petroleum Licences paid to Consolidated Fund
–
(15,177)
Increase/(decrease) in cash in this period
B
6,834
(11,597)
Notes to the Statement of Cash Flows
2017-18
2016-17
Note
£’000
£’000
A: Reconciliation of Net Cash Flow to Movement in Net Funds
Net Revenue for the Consolidated Fund
1,174,538
1,120,634
Non-cash movement – Transfer of petroleum licences to OGA
7
–
19,216
(Increase)/decrease in receivables and accrued fees
4
982
(242)
Increase/(decrease) in payables
6
(114)
518
Net cash flows from operating activities
1,175,406
1,140,126
B: Analysis in changes in Net Funds
Increase/(decrease) in cash in this period
6,834
(11,597)
Net Funds as at 1 April (net cash at bank)
5
17,087
28,684
Net Funds as at 31 March (closing balance)
5
23,921
17,087

Trust Statement
237
Notes to the Trust Statement
1 Statement of Accounting
Policies
1.1
Basis of Accounting
The Trust Statement is prepared in
accordance with the accounts direction
issued by HM Treasury under section 2
of the Exchequer and Audit Departments
Act 1921. The Trust Statement is prepared
in accordance with the accounting
policies detailed below. These have been
agreed between the Department for
Business, Energy and Industrial Strategy
(the Department) and HM Treasury and
have been developed in accordance
with International Financial Reporting
Standards (IFRS) and other relevant
guidance. The accounting policies have
been applied consistently in dealing with
items considered material in relation to
the accounts.
The income and associated expenditure
contained in the Departmental Trust
Statement are those flows of funds which
the Department administers on behalf of
the Consolidated Fund.
The financial information in the Trust
Statement is rounded to the nearest £’000.
The Trust Statement is presented in
pounds sterling, which is the functional
currency of the Department.
1.2
Accounting convention
The Trust Statement has been prepared
in accordance with the historical cost
convention.
1.3
Revenue recognition
Revenue is recognised when it can be
measured reliably and it is probable that
the economic benefits will flow to the
Exchequer. It is measured at the fair value
of amounts received or receivable, net of
repayments.
EU ETS receipts represent proceeds from
the auction of carbon allowances under
Phase III and aviation allowances of the
EU ETS. Revenue is recognised at the
close of each competitive auction, when
the revenue can be measured reliably.
Revenue in respect of CRC allowance
sales is recognised on a cash received
basis by agreement with HM Treasury.
Revenue in respect of CCA buy-out
payments is recognised on an accruals
basis, albeit the recognition point is when
the income is received.
Revenue in respect of civil penalties is
recognised when the penalty is imposed.
In 2017-18, civil penalties for the ESOS
are recognised for the first time.
CRC participants may request refunds
for over-surrendered allowances
(note 9 Contingent Liabilities refers).
These are accounted for in the period in
which the refund request is authorised
and processed.
1.4
Financial instruments
A financial instrument is any contract that
gives rise to a financial asset of one entity
and a financial liability or equity instrument
of another entity. Financial assets and
financial liabilities are recognised in the
Statement of Financial Position when
the Department becomes a party to the
contractual provisions of an instrument.
1.5
Financial assets
The Department classifies financial assets
into the following categories:
• Loans and receivables
• Cash and cash equivalents
Loans and receivables comprise:
• for EU ETS the amounts due from
Primary Participants in respect of
established auction liabilities for which,
at the financial year end, payments had
not been received; the amounts due
are measured at fair value calculated at
the close of each auction and have a
maturity of less than three months; and
civil penalties levied against participants
in the EU ETS, ESOS, CCA and CRC
Schemes, amounts for which have not
been received at the financial year end

Annual report and accounts 2017-18
238
The carrying amount of these assets
approximates to their fair value.
Cash and cash equivalents comprises
current balances with banks and other
financial institutions, which are readily
convertible to known amounts of cash
and which are subject to insignificant
risk of changes in value and have an
original maturity of three months or less.
The carrying amount of these assets
approximates to their fair value.
1.6
Financial liabilities
The Department classifies financial liabilities
into the following 2 categories:
• Financial liabilities at fair value through
profit or loss
• Other financial liabilities
The categorisation depends on the
purpose for which the financial liability is
held or acquired. Management determines
the categorisation of financial liabilities
at initial recognition and re-evaluates this
designation at each reporting date.
For the purposes of this Trust Statement
the Department holds financial liabilities in
the following category:
• Other financial liabilities
Other financial liabilities comprise
• Payables in the Statement of Financial
Position. Payables are amounts
established as due at the reporting
date, but where payment is made
subsequently
Since these balances are expected to be
settled within 12 months of the reporting
date there is no material difference
between fair value, amortised cost and
historical cost.
1.7
Foreign currency
Transactions that are denominated in a
foreign currency are translated into sterling
at the rate of exchange ruling on the date
of each transaction. Monetary assets and
liabilities denominated in foreign currency
at the year-end are translated at the rates
ruling at that date unless a forward rate
has been fixed with the Bank of England.
All translation differences are included in
the Statement of Revenue, Other Income
and Expenditure for the period.
1.8
Applicable accounting standards
issued but not yet adopted and FReM
changes for 2018-19
IFRS 15 ‘Revenue from Contracts
with Customers’ IFRS 15 ‘Revenue from
Contracts with Customers’ replaces IAS
18 ‘Revenue’ and IAS 11 ‘Construction
Contracts’ and will be adopted by the
public sector from 1 April 2018. The FReM
extends the definition of a contract under
IFRS 15 para 9 to include legislation and
regulations which enable an entity to obtain
revenue that is not classified as a tax by
the Office of National Statistics (ONS).
As both EU-ETS auction income and CRC
allowances sales are classified as taxes
by ONS and CCA income is expected to
meet the definition of a tax under ONS’s
guidance, IFRS 15 will not be applicable to
the material revenue streams of the BEIS
Trust Statement.
Income from these schemes will continue
to be recognised under the current revenue
recognition policies when IFRS 15 is
adopted on 1 April 2018. This will result
in no material difference to the income
recognition.

Trust Statement
239
2 Revenue
2.1
Carbon Reduction Commitment
Allowance sales
2017-18
2016-17
£’000
£’000
Allowance sales
580,201
750,179
Total
580,201
750,179
2.2
EU Emissions Trading Scheme
auction income
2017-18
2016-17
£’000
£’000
Phase III Auctions Income
565,933
382,461
Aviation Auctions Income
4,755
4,803
Total
570,688
387,264
Auctions under Phase III of the scheme were held
from November 2012, and aviation allowance
auctions were held from September 2014.
For further details please see the Foreword.
Dates for the carbon allowances auctions under
Phase III and aviation allowances of the EU ETS,
along with the number of units to be auctioned
are available on the Intercontinental Exchange
website on the auction calendar link at
www.theice.com/emissions/auctions
2.3
Climate Change Agreement income
2017-18
2016-17
£’000
£’000
Buy-out payment income
receivable
22,966
94
Total
22,966
94
In 2017-18, the income from buy-out payments
generated £22.966 million (£94,000 in 2016-
17). This is due to the primary reporting period
being invoked for Target Reporting Period ll.
The income relating to buy-out payments for the
prior year comparatives is lower since 2016-17
was a period of secondary reporting for Target
Reporting Period I, where participants make
further top-up buy-out payments after an audit or
they receive a refund if they have been overpaid.
2.4
Civil penalties
2017-18
2016-17
£’000
£’000
Levied under EU ETS
Scheme
2,021
2,472
Levied under ESOS
Scheme
17
–
Levied under CRC
Scheme
49
59
Total
2,087
2,531
There were 144 civil penalties totalling
£2,020,584 (2016-17: 64 penalties totalling
£2,471,990), levied under the EU ETS scheme for
the year under review. CRC penalties of £49,000,
were recognised in 2017-18, (2016-17, £59,420).
5 penalties totalling £17,110 were recognised for
the first time for the ESOS scheme in 2017-18.

Annual report and accounts 2017-18
240
3 Expenditure and
disbursements
3.1
Costs incurred in the collection
of receipts
2017-18
2016-17
£’000
£’000
Foreign currency
translation costs (EU ETS)
424
211
Interest charges on Euro
auction bank account
(EU ETS)
8
7
Total
432
218
3.2
Credit losses
2017-18
2016-17
£’000
£’000
De-recognition due to
successful appeal –
EU ETS Penalties
969
–
De-recognition of CRC penalty
3
–
Total
972
–
2 EU ETS penalties were successfully appealed
and were written back in 2017-18.
No disbursements are now paid out via the
BEIS Trust Statement. However, the Department
incurred expenditure of £606,340 (2016-17:
£664,175) in administering EU ETS and £430,037
(2016-17: £657,787) in respect of the CRC
Scheme. Expenditure to administer the CCA
scheme totalled £363,124. (2016-17: £457,610).
Expenditure incurred administering the ESOS
scheme in 2017-18 amount to £1,190,555
(2016-17: £nil). Expenditures on EU ETS, ESOS,
CRC and CCA are included in the Department’s
Accounts because there is no express statutory
provision for these costs to be deducted from
the revenue collected and paid over to the
Consolidated Fund.
4 Receivables and
accrued fees
2017-18
2016-17
£’000
£’000
Civil Penalties receivable
1,471
2,453
Total
1,471
2,453
Civil penalties receivable represent the amounts
due from the participants where invoices for
payment have been issued but not paid for at the
year end.
5 Cash and cash
equivalents
2017-18
2016-17
£’000
£’000
Balance as at 1 April
17,087
28,684
Net change in cash and
cash equivalent balances
6,834
(11,597)
Balance at 31 March
23,921
17,087
The following balances at
31 March were held at:
Government Banking
Service
23,921
17,087
Total
23,921
17,087

Trust Statement
241
6 Payables
2017-18
2016-17
£’000
£’000
Other
404
518
Total
404
518
7 Balance on the
Consolidated Fund
Account
2017-18
2016-17
£’000
£’000
Balance on the consolidated
Fund as at 1 April
19,022
34,934
Net revenue for the
Consolidated Fund
1,174,538
1,139,850
Transfer of Petroleum
licences to OGA
–
(19,216)
Less amounts paid to the
Consolidated Fund
(1,168,572)
(1,136,546)
Balance on the
Consolidated Fund
as at 31 March
24,988
19,022
8 Financial instruments
8.1
Classification and categorisation
of financial instruments
note
2017-18
2016-17
£’000
£’000
Financial assets:
Cash
5
23,921
17,087
Civil penalties
receivable
4
1,471
2,453
Total loans and
receivables
25,392
19,540
Financial
liabilities:
Other Payables
6
(404)
(518)
Total other
financial
liabilities
(404)
(518)
8.2
Risk exposure to financial instruments
EU Emissions Trading Scheme
The EU Emissions Trading Scheme is exposed
to foreign currency risk due to the timing
difference in recognising the proceeds at the
auction exchange rate and the date at which the
proceeds are converted into Sterling, which is
one day after the close of the auction; this results
in either an exchange loss or gain. As shown in
note 3.1 there was an exchange loss incurred this
financial year of £424,000 (2016-17: £211,000).
The scheme is not exposed to interest rate or
liquidity risk and its exposure to market risk is
limited due to there being a current demand for
carbon allowances.
The civil penalties imposed under the EU ETS
scheme are subject to credit risk, but this risk
is assessed by management as minimal due
to the nature of the participants in the scheme.
However 2 aviation civil penalties were written
off in 2017-18 (note 3.2) as the companies
successfully appealed the penalties.
CRC Scheme
The allowance sales under the Carbon Reduction
Commitment are subject to credit risk, but this
risk is assessed by management as low. This is
borne out in the results from previous years of
the scheme.
The civil penalties imposed under the CRC
scheme are subject to credit risk, but this risk is
assessed by management as minimal due to the
nature of the participants in the scheme.
CCA Scheme
The buy-out payment revenue collected under
the CCA scheme is subject to credit risk, but
this risk is assessed by management as low,
due to the nature of participants in the scheme.
All fees under the regime are received in sterling
minimising any other risks.
Information which will allow Trust Statement
users to evaluate the significance of financial
instruments on the Department’s financial
performance and position and the nature and
extent of the Department’s exposure to other
risks arising from financial instruments can be
found in note 22 to the Department’s Accounts.

Annual report and accounts 2017-18
242
9 Contingent Liability
A contingent liability exists for refunds the
Department may have to pay to participants
in the CRC Energy Efficiency Scheme who
have over-surrendered allowances. This is
as a result of legislation included in the CRC
Order 2013, which came into force in May
2013. The refunds are contingent upon
participants being able to prove that the over-
surrender was due to a reporting error and
must be agreed by the Secretary of State.
The Department is unable to quantify the
amount of future refunds, but based on the most
recent information available from the scheme
administrators, the refunds are not expected
to be significant. Future refunds will be paid as
and when they fall due out of future scheme
receipts. The Department has issued guidance
to participants detailing the refund process.
Furthermore, for the CCA scheme a contingent
liability also exists in the secondary reporting
phase of each Target Reporting Period. This is
where a participant has undergone review
or audit procedures and it is deemed they
have overpaid. Thus, the participant is due a
refund. The department must retain sufficient
funds in order to satisfy this requirement of the
CCA scheme.
10 Events after the
reporting period
There were no significant events after the
reporting period that require disclosure.
The Accounting Officer has duly authorised the
issue of the Trust Statement on the date of the
Comptroller and Auditor General’s audit certificate.
Annex D
Accounts Direction given by HM Treasury in
accordance with section 2 of the Exchequer
and Audit Departments Act 1921
1. This direction applies to those government
departments listed in appendix 2.
2. The Department shall prepare a Trust
Statement (“the Statement”) for the financial
year ended 31 March 2018 for the revenue
and other income, as directed by the
Treasury, collected by the department as
an agent for others, in compliance with
the accounting principles and disclosure
requirements of the edition of the Government
Financial Reporting Manual by HM Treasury
(“FReM”) which is in force for 2017-18.
3. The Statement shall be prepared, as
prescribed in Appendix 1, so as to give a true
and fair view of (a) the state of affairs relating
to the collection and allocation of taxes,
licence fees, fines and penalties and other
income by the Department as agent and of
the expenses incurred in the collection of
those taxes, licence fees, fines and penalties
insofar as they can properly be met from that
revenue and other income; (b) the revenue
and expenditure; and (c) the cash flows for
the year then ended.
4. The Statement shall also be prepared so
as to provide disclosure of any material
expenditure or income that has not been
applied to the purposes intended by
Parliament or material transactions that
have not conformed to the authorities which
govern them.
5. When preparing the Statement,
the Department shall comply with the
guidance given in the FReM (Chapter 8).
The Department shall also agree with
HM Treasury the format of the Principal
Accounting Officer’s Foreword to the
Statement, and the supporting notes, and the
accounting policies to be adopted, particularly
in relation to revenue recognition. Regard
shall also be given to all relevant accounting
and disclosure requirements in Managing
Public Money and other guidance issued by
HM Treasury, and to the principles underlying
International Financial Reporting Standards.

Trust Statement
243
6. Compliance with the requirements of
the FReM will, in all but exceptional
circumstances, be necessary for the
accounts to give a true and fair view.
If, in these exceptional circumstances,
compliance with the requirements of the
FReM is inconsistent with the requirement
to give a true and fair view, the requirements
of the FReM should be departed from
only to the extent necessary to give a true
and fair view. In such cases, informed
and unbiased judgement should be
used to devise an appropriate alternative
treatment which should be consistent with
both the economic characteristics of the
circumstances concerned and the spirit
of the FReM. Any material departure from
the FReM should be discussed in the first
instance with HM Treasury.
7. The Statement shall be transmitted to the
Comptroller and Auditor General for the
purpose of his examination and report by
a date agreed with the Comptroller and
Auditor General and HM Treasury to enable
compliance with the administrative deadline
for laying the audited accounts before
Parliament before the Summer Recess.
8. The Trust Statement, together with this
direction (but with the exception of the related
appendices) and the Report produced by
the Comptroller and Auditor General under
section 7(2) of the Government Resources
and Accounts Act 2000 shall be laid
before Parliament at the same time as the
Department’s Resource Accounts for the
year unless the Treasury have agreed that the
Trust Statement may be laid at a later date.
Ian Bulmer
Deputy Director, Government Financial
Reporting Her Majesty’s Treasury
Appendix 1 to Annex D
Trust Statement for the year ended
31 March 2018
1. The Trust Statement shall include:
• a Foreword by the Principal
Accounting Officer
• a Statement of the Principal Accounting
Officer’s Responsibilities
• a Governance Statement
• a Statement of Revenue, Other Income
and Expenditure
• a Statement of Financial Position
• a Cash Flow Statement
• such notes as may be necessary
to present a true and fair view
2. The notes shall include among other items:
• the accounting policies, including the
policy for revenue recognition and
estimation techniques and forecasting
techniques together with statements
explaining any significant uncertainty
surrounding estimates and forecasts
• a breakdown of material items within the
accounts
• any assets, including intangible assets and
contingent liabilities
• summaries of losses, write-offs and
remissions
• post balance sheet events
• any other notes agreed with HM Treasury
and the National Audit Office
Appendix 2 to Annex D
Application of the accounts direction
Sponsoring
Department
Income
Stream
Responsible
Entity
Department for
Business, Energy
and Industrial
Strategy
EU Emissions
Allowance
BEIS
Fines and
Penalties
BEIS
CRC
Allowances
BEIS
CCA Buy-Out
Payments
BEIS

East Devon: We will ensure that local areas continue
to receive flexible funding for their local needs.
Annexes

Annexes
245
Annex A: Our major projects
and programmes
BEIS had 8 major projects listed in the Government Major Projects Portfolio (GMPP) as at September 2017 –
summarised in table below. BEIS also had 3 major projects which left the GMPP between September 2016 and
September 2017 – shaded below. Transparency data on project cost and delivery confidence are published annually
alongside the Infrastructure and Projects Authority’s Annual Report.
Project
Description
Geological Disposal
Facility (GDF)
Programme
To site and construct a safe, secure and environmentally responsible permanent
geological disposal facility for higher-activity radioactive waste in the UK,
excluding Scotland.
Heat Networks
Investment Project
To provide £320m of time-limited capital support to help create a sustainable heat
network market in England & Wales.
Local Land Charges
(LLC) Programme
Deliver a single LLC Register Service for England to provide a national resilient service,
consistency of customer experience and fees, implementing the powers granted to
HM Land Registry under the Infrastructure Act 2015.
Magnox and Research
Sites Restoration
Limited (RSRL) Parent
Body Organisation
(PBO) Competition
To secure a reduction in the cost to deliver the outcomes of the Magnox Optimised
Decommissioning Plan and the Optimised Research Sites Restoration Limited (RSRL)
baseline by securing a new Parent Body Organisation for the Magnox and RSRL Site
Licence Companies.
New Polar
Research Vessel
Royal Research Ship Sir David Attenborough will replace two existing polar research/
supply vessels with one dual purpose ship. Single ship option planned to save £102m
over 30 years. The ship is due to be delivered in September 2018 and will enter service
in 2020 after completing a trials and test programme.
Sellafield Model Change
Creating the environment for success at Sellafield by moving from a Parent Body
Organisation model to a Subsidiary model.
Smart Metering
Implementation
Programme
Enable consumers to save energy and money and to benefit from smarter energy
systems by ensuring that every household and small business has been offered a smart
meter by the end of 2020.
UK Research &
Innovation (UKRI)
Implementation
Programme
Establishment of UKRI to strengthen the focus on promoting economic growth;
facilitate greater co-ordination of strategic research and innovation; increase the impact
and commercialisation of research; and deliver growth of disciplinary expertise and
capacity and capability for multi and interdisciplinary research UKRI was established on
30 March 2018.
Financial Investment
Decision Enabling for
Hinkley Point C
To avert an investment hiatus in the deployment of low carbon electricity generation
caused by the announced reform of the electricity market, in the period between the
publication of the Electricity Market Reform (EMR) white paper and the full implementation
of the EMR Contracts for Difference (CfD).
Francis Crick Institute
To establish a new research institution, with the construction of a new facility located
close to St Pancras station, London. The Francis Crick Institute is a joint venture between
the UK’s largest biomedical research and academic institutions: the Medical Research
Council (MRC), Cancer Research UK (CRUK), the Wellcome Trust, University College
London, Kings College, London and Imperial College, London.
Project Eagle
The Shareholder Executive is taking forward consideration of a sale of Government’s
one-third shareholding in URENCO, a uranium enrichment company.

Annual report and accounts 2017–18
246
Annex B: Other annual report data
Correspondence
We aim to respond to 80% of our correspondence within 15 working days.
In 2017-18, we received 10,042 written enquiries from ministers and the
public. We responded to 77% of cases within 15 working days. The table
shows our monthly performance.
Monthly performance
Our advertising campaigns
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
200
400
600
800
1000
1200
1400
1600
1800
2000
April
May
June
July
August
September
October
November
December
January
February
March
72%
82%
86%
73%
75%
81%
83%
72%
76%
72%
75%
83%
Volume
Target Met %

Annexes
247
BEIS delivered a joint £1.5 million communications
campaign with the Gender Equalities Office to
raise awareness to employees and employers of
the Government’s Shared Parental Leave scheme
and increase its uptake among parents.
The campaign was launched in February and
aimed at around 2 million new and prospective
parents in England, Scotland and Wales.
It included advertising online, on social media
and on posters at major city transport hubs.
Other activity included delivering key messages
in partnerships with online bloggers as well
as through tailored articles in Shortlist and
Stylist magazines.
The aim of the campaign was to spark
conversations between parents about sharing
parental leave and encourage employers to
promote SPL in the workplace. Help and support
was available on the campaign website www.
gov.uk/sharetheleave, which also featured case
studies of parents who have already taken SPL.
The campaign prompted a national conversation,
with extensive coverage in national print,
broadcast and online media, driving around
150,000 visits to the website.
Complaints to the
parliamentary ombudsman
No of complaints accepted for investigation
5
Investigations fully upheld
0
Investigations partly upheld
0
Investigations not upheld
5
Data has been obtained from the Parliamentary
Ombudsman complaints report 2016-17,
the latest available.
BEIS works on a two stage complaints
process managed within the Enquiry Unit
team. We aim to respond to formal complaints
within 20 working days. Every complaint was
answered within this timeframe in the 16/17 year.
Our complaints procedure is published online:
https://www.gov.uk/government/organisations/
department-for-business-energy-and-industrial-
strategy/about/complaints-procedure

Annual report and accounts 2017–18
248
Table 1 – Public spending
This table provides a summary of departmental net expenditure using the same headings as voted within the Estimate.
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Resource DEL
Deliver an ambitious industrial strategy
300,436
288,168
438,821
425,590
382,886
155,108
160,600
Maximise investment opportunities
and bolster UK interests
7,535
3,980
19,368
25,651
40,218
63,000
65,000
Promote competitive markets and
responsible business practices
85,943
70,324
71,495
73,792
86,230
93,557
94,840
Delivering affordable energy for
households and businesses
45,947
355,160
342,329
36,365
32,381
54,304
54,499
Ensuring that our energy system
is reliable and secure
22,151
18,822
11,560
5,823
4,201
13,447
11,827
Taking action on climate change
and decarbonisation
76,446
115,824
95,211
27,236
91,076
36,158
40,201
Managing our energy legacy safely
and responsibly
336,433
318,312
306,343
291,203
265,752
252,879
230,630
Science and Research
(15,051)
10,819
13,540
(1,985)
5,088
–
3,620
Capability
370,967
408,745
361,322
307,082
320,301
473,333
391,032
Government as Shareholder
387,362
243,220
199,823
156,140
112,900
128,274
136,345
Deliver an ambitious industrial strategy
(ALB) net
–
–
–
5,433
15,172
–
–
Promote competitive markets and
responsible business practices (ALB) net
59,821
49,766
49,295
48,127
51,648
53,653
53,693
Ensuring that our energy system is reliable
and secure (ALB) net
–
(280)
674
1,707
(1,628)
1
–
Taking action on climate change
and decarbonisation (ALB) net
3,710
4,416
4,894
2,399
4,834
3,473
2,611
Managing our energy legacy safely
and responsibly (ALB) net
29,121
23,188
46,977
39,234
34,711
22,958
22,874
Science and Research (ALB) net
49,225
41,696
88,406
257,413
234,283
224,133
319,039
Capability (ALB) net
68,597
59,268
39,218
39,818
33,635
9,800
9,800
Government as Shareholder (ALB) net
72,153
16,238
(30,023)
(56,431)
(73,072)
(30,303)
(44,477)
NDA and SLC expenditure
1,413,249
1,431,342
1,414,542
1,287,445
1,254,752
1,362,000
1,437,000
Nuclear Decommissioning Authority
Income (CFER)
(892,139)
(1,008,787)
(974,558)
(1,026,768)
(1,176,795)
(976,000)
(978,000)
Annex C: Common core tables

Annexes
249
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Nuclear Safeguards Development
–
–
–
–
1,189
(2,275)
–
Electricity Market Reform
(4,851)
–
–
–
–
–
–
Total Resource DEL
2,417,055
2,450,221
2,499,237
1,945,274
1,719,762
1,937,500
2,011,134
Of which:
Staff costs
527,935
518,385
548,832
523,874
533,290
*
*
Purchase of goods and services
2,279,269
2,200,717
2,116,691
1,996,182
1,944,289
*
*
Income from sales of goods and services
(1,027,176)
(1,157,876)
(1,144,381)
(1,172,788)
(1,079,179)
(1,019,703)
(1,026,542)
Current grants to local government (net)
7,253
18,354
25,513
12,055
9,587
7,745
11,980
Current grants to persons and non-profit
bodies (net)
167,028
585,126
548,517
178,351
135,838
253,919
209,540
Current grants abroad (net)
44,913
31,427
41,307
58,511
59,465
88,955
91,194
Subsidies to private sector companies
–
–
246,476
274,038
526,638
88,000
84,000
Subsidies to public corporations
350,250
230,402
183,035
145,239
95,170
60,000
50,000
Net public service pensions2
27,640
(7)
–
–
(9)
–
–
Rentals
(63,075)
(63,400)
(47,642)
41,330
49,177
41,440
38,412
Depreciation1
304,701
293,609
268,978
355,397
266,467
279,303
283,669
Take up of provisions
(25)
23
(30)
780
(165)
–
–
Change in pension scheme liabilities
37
12
35
128
1,372
170
170
Other resource
(201,695)
(206,551)
(288,094)
(467,823)
(822,178)
(152,184)
(158,115)
Resource AME

Deliver an ambitious industrial strategy
(142,334)
(93,804)
(7,428)
215,413
17,448
(46,575)
(76,737)
Maximise investment opportunities
and bolster UK interests
–
3,881
(457)
1,844
1,586
2,000
–
Promote competitive markets and
responsible business practices
68,858
74,000
102,008
133,000
7,000
94,000
150,000
Ensuring that our energy system
is reliable and secure
(1,484)
342,599
(309,667)
(3,204)
(415)
(4,140)
(27)
Taking action on climate change
and decarbonisation
–
497,618
841,397
(1,337,205)
–
–
–
Managing our energy legacy safely
and responsibly
(396,981)
(96,723)
(308,924)
(258,615)
(885,264)
(182,953)
(162,470)
Science and Research
34,544
87,581
49,871
41,888
45,578
60,150
85,000
Capability
(34,742)
(29,793)
(21,783)
(6,012)
13,557
(19,813)
(19,771)

Annual report and accounts 2017–18
250
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Government as Shareholder
(21,894)
25,524
(60,526)
(12,313)
(73,714)
16,544
5,673
Renewable Heat Incentive
52,367
158,946
372,420
545,426
687,275
900,000
1,010,000
Deliver an ambitious industrial strategy
(ALB) net
3,208
(4,159)
7,741
(10,853)
4,962
15,700
(11,300)
Promote competitive markets and
responsible business practices (ALB) net
(561)
(243)
(161)
(59)
87
785
181
Taking action on climate change and
decarbonisation (ALB) net
–
1,987,931
9,281,975
1,065,496
3,558,227
–
–
Managing our energy legacy safely and
responsibly (ALB) net
378
(65,835)
1,906,630
2,025
1,507,140
8,831
29,315
Science and Research (ALB) net
(25,416)
48,830
107,287
91,411
94,536
21,300
8,985
Capability (ALB) net
(113)
–
2
(400)
–
2
–
Government as Shareholder (ALB) net
(130,671)
(148,034)
(56,337)
14,081
(25,628)
(27,038)
(20,591)
Nuclear Decommissioning Authority
5,309,642
5,644,353
89,797,932
2,850,516
69,911,856
3,005,000
1,069,000
Nuclear Decommissioning Authority
Income (CFER)
(898)
–
–
–
–
–
–
Government as Shareholder
316,071
239,776
254,256
231,511
259,815
350,000
212,000
Government as Shareholder
77,341
–
–
–
–
–
–
Total Resource AME
5,107,315
8,672,448
101,956,236
3,563,950
75,124,046
4,193,793
2,279,258
Of which:
Staff costs
–
–
–
–
–
*
*
Purchase of goods and services
127,354
19,776
23,450
36,665
101,425
*
*
Income from sales of goods and services
(10,578)
(152)
–
–
–
–
–
Current grants to persons and non-profit
bodies (net)
448,509
392,622
429,826
429,011
353,221
555,880
499,737
Subsidies to private sector companies
52,367
158,943
372,420
545,426
687,275
900,000
1,010,000
Rentals
–
(139)
(81)
(718)
(2,456)
–
–
Depreciation1
53,750
2,653,848
10,126,954
100,581
4,397,424
24,338
37,625
Take up of provisions
5,400,115
6,022,459
91,967,474
2,984,041
71,236,030
3,178,949
1,229,507
Release of provision
(448,607)
(407,513)
(692,733)
(352,371)
(316,703)
(333,343)
(294,386)
Change in pension scheme liabilities
12,337
29,627
19,199
20,375
34,554
–
–
Unwinding of the discount rate on pension
scheme liabilities
1,464
43,398
37,423
38,095
36,924
–
80

Annexes
251
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Release of provisions covering payments
of pension benefits
(27,758)
–
–
–
–
–
–
Other resource
(501,638)
(240,421)
(327,696)
(237,155)
(1,403,648)
(134,798)
(204,208)
Total Resource Budget
7,524,370
11,122,669
104,455,473
5,509,224
76,843,808
6,131,293
4,290,392
Of which:
Depreciation1
358,451
2,947,457
10,395,932
455,978
4,663,891
303,641
321,294
Capital DEL

Deliver an ambitious industrial strategy
9,744
(345,273)
289,783
371,491
214,936
128,174
59,955
Maximise investment opportunities and
bolster UK interests
374,500
190,635
319,887
303,527
289,791
284,000
270,000
Promote competitive markets and
responsible business practices
446
47
(12,700)
376
2,375
–
–
Delivering affordable energy for
households and businesses
81,312
137,266
131,102
42,201
43,633
42,580
58,009
Ensuring that our energy system
is reliable and secure
–
1,158
5,071
(548)
60
319
319
Taking action on climate change
and decarbonisation
48,575
47,620
54,871
39,569
51,578
254,855
244,681
Managing our energy legacy safely
and responsibly
6,883
7,103
5,017
7,747
7,944
–
–
Science and Research
474,623
597,152
518,629
2,596,657
2,634,812
919,950
1,752,287
Capability
26,178
11,027
11,929
10,181
18,777
226,354
141,637
Government as Shareholder
121,200
106,569
227,462
8,535
38,701
13,970
9,331
Deliver an ambitious industrial strategy
(ALB) net
–
–
–
5
32
–
–
Promote competitive markets and
responsible business practices (ALB) net
1,543
1,559
940
1,027
1,377
–
–
Ensuring that our energy system
is reliable and secure (ALB) net
–
2,207
975
1,005
–
–
–
Taking action on climate change
and decarbonisation (ALB) net
–
4,004
959
601
39
260
60
Managing our energy legacy safely
and responsibly (ALB) net
3,497
5,895
12,243
8,778
13,559
15,939
15,123
Science and Research (ALB) net
6,053,238
6,133,277
6,260,785
4,257,684
4,761,522
7,030,739
6,734,609
Capability (ALB) net
7,257
773
641
480
43
–
–

Annual report and accounts 2017–18
252
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Government as Shareholder (ALB) net
603,759
616,035
595,189
1,229,109
334,300
637
352,558
NDA and SLC expenditure
1,697,841
1,845,932
1,827,695
1,970,695
2,051,013
1,851,000
1,927,000
Nuclear Decommissioning Authority
Income (CFER)
(337)
(2,916)
(51,639)
–
–
–
(176,000)
Total Capital DEL
9,510,259
9,360,070
10,198,839
10,849,120
10,464,492
10,768,777
11,389,569
Of which:
Staff costs
481,265
499,390
480,109
477,642
481,092
*
*
Purchase of goods and services
598,356
604,949
648,188
400,772
570,893
*
*
Income from sales of goods and services
(107,129)
(122,637)
(131,102)
(258,776)
(276,222)
(117,169)
(112,625)
Current grants to persons and non-profit
bodies (net)
4,248,076
4,465,923
4,666,325
3,098,274
3,582,865
5,860,452
6,555,940
Current grants abroad (net)
321,542
317,714
302,460
317,400
330,130
304,799
309,220
Subsidies to public corporations
(452)
(1,238)
(2,655)
224,350
98,737
–
–
Capital support for local government (net)
77,095
21,570
54,528
42,270
41,473
42,000
57,500
Capital grants to persons & non-profit
bodies (net)
1,247,048
968,596
999,113
424,678
482,446
836,580
840,166
Capital grants to private sector companies
(net)
93,124
131,354
155,115
239,455
21,138
414,072
365,778
Capital grants abroad (net)
362,976
203,769
425,981
525,993
483,289
296,838
282,254
Capital support for public corporations
118,832
90,278
170,203
147,126
81,835
38,010
50,290
Purchase of assets
1,958,591
2,071,328
2,059,177
2,243,477
2,412,651
2,126,922
2,139,381
Income from sales of assets
(84,335)
(37,628)
(92,106)
(65,827)
(142,274)
–
(176,000)
Net lending to the private sector
and abroad
322,515
519,050
630,964
1,124,835
253,812
92,546
201,483
Other capital
(127,245)
(372,348)
(167,461)
1,907,451
2,042,627
36,565
128,974
Capital AME

Deliver an ambitious industrial strategy
–
(35,000)
–
–
–
–
–
Maximise investment opportunities and
bolster UK interests
(19,723)
17,413
2,310
–
–
–
–
Managing our energy legacy safely
and responsibly
(490,707)
(620,294)
61,891
(38,273)
611,792
(41,157)
(45,742)
Science and Research
–
–
–
834
864
–
–
Government as Shareholder
(763,521)
291,559
210,202
129,181
(1,909)
–
–
Renewable Heat Incentive
13,770
1,697
(22)
–
–
–
–

Annexes
253
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Deliver an ambitious industrial strategy
(ALB) net
–
7,159
17,299
84,842
(3,474)
1,000
40,000
Science and Research (ALB) net
(1,108)
(71,497)
(55,972)
(61,156)
(63,845)
–
–
Government as Shareholder (ALB) net
(1,063,420)
(1,206,678)
(430,678)
(129,935)
(119,122)
(109,240)
(77,070)
Government as Shareholder (CFER)
(1,979,829)
–
–
–
(1,621,078)
–
–
Government as Shareholder (ALB) net
–
–
(1,434,995)
–
–
–
–
Total Capital AME
(4,304,538)
(1,615,641)
(1,629,965)
(14,507)
(1,196,772)
(149,397)
(82,812)
Of which:
Staff costs
–
(25,110)
(16,992)
(18,461)
(18,719)
–
–
Purchase of goods and services
–
–
–
834
(7,325)
–
–
Capital grants to persons & non-profit
bodies (net)
13,770
1,697
(22)
–
–
–
–
Capital grants to private sector companies
(net)
(1,003,821)
(500,441)
(12,798)
(4,819)
(184,787)
–
–
Capital grants abroad (net)
(19,723)
17,413
2,310
–
–
–
–
Capital support for public corporations
(763,521)
292,000
53,248
134,000
36,000
–
–
Purchase of assets
3,334
79
350
54,158
318
–
–
Income from sales of assets
(111,446)
(264,404)
(32,150)
15
–
–
–
Net lending to the private sector
and abroad
(2,218,695)
(1,070,518)
(1,753,009)
(141,781)
(1,638,862)
(159,240)
(88,070)
Other capital
(204,436)
(66,357)
129,098
(38,453)
616,603
9,843
5,258
Total Capital Budget
5,205,721
7,744,429
8,568,874
10,834,613
9,267,720
10,619,380
11,306,757
Total departmental spending3
12,371,640
15,919,641
102,628,415
15,887,859
81,447,637
16,447,032
15,275,855
Of which:
Total DEL
11,622,613
11,516,682
12,429,098
12,438,997
11,917,787
12,426,974
13,117,034
Total AME
749,027
4,402,959
90,199,317
3,448,862
69,529,850
4,020,058
2,158,821
1.
Includes impairments.
2.
Pension schemes report under FRS 17 accounting requirements. These figures therefore include cash payments made and contributions received,
as well as certain non-cash items.
3.
Total departmental spending is the sum of the resource budget and the capital budget less depreciation. Similarly, total DEL is the sum of the resource budget
DEL and capital budget DEL less depreciation in DEL, and total AME is the sum of resource budget AME and capital budget AME less depreciation in AME.
* Figures for Plans for staff costs and purchase of goods and services, which include assumptions on future price and pay movements, are redacted in line with HMT guidance.

Annual report and accounts 2017–18
254
Notes:
The large increase in spend in 2014-15 and 2015-16 on Delivering affordable energy for households and businesses Resource DEL is due to the Government
Electricity Rebate.
Resource DEL expenditure for Nuclear Safeguards Development is shown separately in 2017-18 as this expenditure was funded through a Contingencies Fund
advance, pending passage of the Nuclear Safeguards Bill through Parliament. Repayment of that advance in 2018-19 will be made against Managing our energy
legacy safely and responsibly Resource DEL, offset by the credit shown against Nuclear Safeguards Development. Repayment of a similar advance for Electricity
Market Reform in 2013-14 for expenditure funded through a Contingencies Fund advance in 2012-13 which was pending passage of the Energy Bill through
Parliament, was made against Ensuring that our energy system is reliable and secure Resource DEL, offset by the credit shown against Electricity Market Reform.
The increase in spend in 2016-17 and 2017-18 against Science and Research Capital DEL and decrease against Science and Research (ALB) Capital DEL
reflects the reclassification of expenditure for the Higher Education Funding Council for England (HEFCE) for Science and Research following the Machinery
of Government transfer of HEFCE to the Department for Education. With effect from 2018-19 this expenditure falls under Research England as part of UKRI,
under Science and Research (ALB).
The figure for Depreciation in Resource AME in 2014-15, 2015-16, 2016-17 and 2017-18 includes the movement in fair value for Contracts for Difference,
shown against Taking action on climate change and decarbonisation and Taking action on climate change and decarbonisation (ALB).
The figures for Science and Research (ALB) include the expenditure of Innovate UK, which are shown in the Statement of Parliamentary Supply against Deliver
an ambitious industrial strategy (ALB).
The large increases in take up of provisions within Resource AME in 2015-16 and 2017-18 is due to negative movements in the long-term discount rate for
provisions. This largely impacts the lines for Nuclear Decommissioning Authority and Managing our energy legacy safely and responsibly (ALB).
The receipt against Government as Shareholder (CFER) Capital AME reflects the proceeds from the sale of the Green Investment Bank.
Table 2 – Administration budgets
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Resource DEL
Deliver an ambitious industrial strategy
2,662
1,935
583
–
–
–
–
Promote competitive markets and
responsible business practices
(528)
796
818
827
814
840
840
Managing our energy legacy safely
and responsibly
–
–
–
(3,801)
–
–
–
Science and Research
53
58
59
–
2
–
3,620
Capability
335,497
345,965
327,944
288,546
280,222
316,714
309,161
Government as Shareholder
3,465
3,108
3,885
4,299
3,876
4,644
4,644

Annexes
255
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
outturn
2018-19
plans
2019-20
plans
£000
£000
£000
£000
£000
£000
£000
Promote competitive markets and
responsible business practices (ALB) net
12,206
10,102
8,630
7,362
8,735
8,580
8,620
Taking action on climate change and
decarbonisation (ALB) net
3,710
4,043
3,752
3,535
3,447
3,472
2,611
Managing our energy legacy safely
and responsibly (ALB) net
4,629
5,536
10,191
12,104
7,044
4,400
4,900
Science and Research (ALB) net
618
7,305
4,685
986
3,371
4,097
95,407
Capability (ALB) Net
68,597
59,268
39,218
39,818
33,635
9,800
9,800
Government as Shareholder (ALB) net
4,626
267
251
162
27
186
187
NDA and SLC expenditure
41,790
37,110
34,992
38,195
42,121
51,000
55,000
Nuclear Decommissioning Authority
Income (CFER)
(1,875)
–
–
–
–
–
–
Electricity Market Reform
(200)
–
–
–
–
–
–
Total administration budget
475,250
475,493
435,008
392,033
383,294
403,733
494,790
Of which:

Staff costs
349,871
341,753
365,590
329,069
326,207
*
*
Purchase of goods and services
191,654
179,482
145,800
159,274
154,657
*
*
Income from sales of goods and services
(115,081)
(123,790)
(135,538)
(37,585)
(31,151)
(32,909)
(40,452)
Current grants to persons and non-profit
bodies (net)
(439)
30
29
38
493
(12,119)
(3,639)
Current grants abroad (net)
36
18
108
106
170
–
–
Subsidies to private sector companies
–
–
–
–
9
–
–
Net public service pensions
1,219
(7)
–
–
(9)
–
–
Rentals
20,131
27,074
31,852
30,117
34,299
25,985
25,120
Depreciation
33,203
30,738
29,956
27,034
22,901
34,764
34,754
Take up of provisions
–
(12)
2
–
(50)
–
–
Change in pension scheme liabilities
(12)
(65)
25
106
184
–
–
Other resource
(5,332)
20,272
(2,816)
(116,126)
(124,416)
(6,076)
(9,867)
* Figures for Plans for staff costs and purchase of goods and services, which include assumptions on future price and pay movements, are redacted in line with HMT guidance.

Annual report and accounts 2017–18
256
Annex D: Glossary
ACAS: Advisory, Conciliation and Arbitration Service
AFS: Available for Sale
AHRC: Arts and Humanities Research Council
AME: Annual Managed Expenditure
ARAC: Audit and Risk Assurance Committee
BAES: BAE Systems
BBB: British Business Bank Plc
BBIL: British Business Investments Ltd
BBSRC: Biotechnology and Biological Sciences
Research Council
BEIS: Our Department, the Department for Business,
Energy and Industrial Strategy
BFP: Business Finance Partnership
BIS: Department for Business, Innovation and Skills,
one of our predecessor departments
BNFL: British Nuclear Fuels Ltd
BVCA: British Venture Capital Association
CAT: Competition Appeal Tribunal
CAV: Connected Autonomous Vehicles
CCA: Climate Change Agreements
CCL: Climate Change Level
CCUS: International Carbon, Capture & Storage
CERN: European Organisation for Nuclear Research
CETV: Cash Equivalent Transfer Value
CFD: Contracts for Difference
CFP: Committee on Fuel Poverty
CNPA: Coal Nuclear Police Authority
CNPP: Civil Nuclear Pension Plan
CRC: Carbon Reduction Commitment
CSOPS: Civil Servant and Other Pension Scheme
DDM: Dynamic Dispatch Model
DECC: Department for Energy and Climate Change,
one of our predecessor departments
Defra: Department for Food, Environment and Rural Affairs
DEL: Departmental Expenditure Limit
DfE: Department for Education
DTUS: Departmental Trade Union Side
ECF: Enterprise Capital Fund
EDFE: EDF Energy Nuclear Generation Limited
EFG: Enterprise Financial Guarantee
EHL: Enrichment Holdings Limited
EII: Energy Intensive Industries
EMR: Electricity Market Reform
EPSRC: Economic and Physical Sciences
Research Council
ERDF: European Regional Development Fund
ESA: European Space Agency
ESC: Electricity Settlements Company
ESO: European Southern Observatory
ESOS: Energy Savings Opportunity Scheme
ESRC: Economic and Social Research Council
EUA: European Union Allowance
EUAA: European Union Aviation Allowance
EUETS: EU Emissions Trading Scheme
EUV: Existing-use Value
FDP: Funded Decommissioning Programme
FIDeR: Financial Investment Decision Enabling for
Renewables
FLS: Future Leaders Scheme
FRC: Financial Reporting Council
FReM: Government Financial Reporting Manual
FVPTL: Fair Value for Profit and Loss
GCRF: Global Challenges Research Fund
GDF: Geological Disposal Facility
GDPR: General Data Protection Regulation
GGC: Government Greening Commitments
GHG: Greenhouse Gas
GIB: Green Investment Bank Ltd
GMPP: Government Major Projects Portfolio
GPA: Government Property Agency
GRAA: Greenhouse Resources and Accounts Act
HMT: Her Majesty’s Treasury
HPC: Hinkley Point C
HPDS: High Potential Development Scheme
IAEA: International Atomic Energy Agency
IDB: Inter-American Development Bank
IDP: Individual Development Programme
IFRS: International Financial Reporting Standards
INSS: Insolvency Service
IRR: Internal Rate of Return
ISCF: Industrial Strategy Challenge Fund
ITER: International Thermonuclear Experimental Reactor
JET: Joint European Torus
JPA: Joint Procurement Agency
KPI: Key Performance Indicators
LCC: Local Land Charges
LCCC: Low Carbon Contracts Company Ltd
LOLE: Loss of Load Expectation
LTP: Life Time Plan
MEIL: Midlands Engine Investment Ltd
MRC: Medical Research Council
MRCPS: Medical Research Council Pension Scheme
NAO: National Audit Office
NDA: Nuclear Decommissioning Authority
NDC: Nationally Determined Contributions
NDPB: Non-Departmental Public Bodies
NERC: Natural Environment Research Council

Annexes
257
NESTA: National Endowment for Science,
Technology and the Arts
NGC: Nominations and Governance Committee
NIF: National Insurance Fund
NMDF: National Battery Manufacturing
Development Facility
NNHL: National Nuclear Holdings Ltd
NPIL: Northern Powerhouse Investment Ltd
NPLML: NPL Management Ltd
OCI: Other Comprehensive Income
ODA: Official Development Assistance
OGA: Oil and Gas Authority
ONS: Office for National Statistics
OPRED: Offshore Petroleum Regulator for Environment
and Decommissioning
OSL: Ordnance Survey Limited
PBL: Parliamentary Business and Legislation Committee
PBO: Parent Body Organisation
PCFP: Parliamentary Contributory Pension Fund
PCSPS: Principal Civil Service Pension Scheme
PDC: Public Dividend Capital
PES: Public Expenditure System
PEVC: International Private Equity and Venture Capital
PFRC: Performance Finance and Risk Committee
PHS: Postal Services Holding Company Ltd
PIC: Projects and Investment Committee
PID: Project Initiation Documents
PNC: Police National Computer
PO’s: Partner Organisations
POC: People and Operations Committee
POL: Post Office Ltd
PPE: Property, Plant and Equipment
PV: Present Value
QA: Quality Assurance
R&D: Research and Development
RMPP: Royal Mail Pension Plan
RPC: Regulatory Policy Committee
RPS: Redundancy Payment Services
RSRL: Research Sites Restoration Limited
RWM: Committee on Radioactive Waste Management
SCS: Senior Civil Service
SDG: Sustainable Development Goals
SDP: Single Departmental Plans
SFLGC: Small Firms Loan Guarantee Scheme
SI: Statutory Instrument
SIP: UK Sustainable Infrastructure Programme
SLC: Site Licence Company
SLS: Senior Leaders Scheme
SME: Small and Medium enterprise engagement
SoCNE: Statement of Comprehensive Net Expenditure
SoFP: Statement of Financial Position
SoPS: Statement of Parliamentary Statement
SOSIA: Secretary of State Investor Agreement
SPRC: Strategic Policy Review Committee
SRMC: Short Run Marginal Cost
STFC: Science and Technology Facilities Research Council
STSC: South Tees Site Company Ltd
SULC: Start Up Loans Company
TCD: Target Commissioning Date
TCW: Target Commissioning Window
TLM: Transmission Loss Multiplier
TME: Total Managed Expenditure
UKAEA: UK Atomic Energy Authority
UKGIP: UK Green Infrastructure Platform Ltd
UKIIF: UK Innovation Investment Fund
UKRI: UK Research and Innovation
UKSA: UK Space Agency
UKSBS: UK Shared Business Services Ltd
VAT: Value Added Tax
WTC: Waste Transfer Contract