BEIS annual report and accounts 2016 to 2017 (web-optimised 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
2016–17

CORRECTION SLIP 1
Title: BEIS Annual Report and Accounts 2016-17
Session: 2017/18
HC 202
Print ISBN: 9781474143059
Web ISBN: 9781474143066
Ordered by the House of Commons to be printed 19 July 2017
Correction:
There are two rows missing from the bottom of the table on page 158.
The two rows should read:
Low carbon price assumption: Favourable changes: nil, Unfavourable
changes: 6,480
High carbon price assumption: Favourable changes: 6,340,
Unfavourable changes: nil

CORRECTION SLIP 2
Title: BEIS Annual Report and Accounts 2016-17
Session: 2017/18
HC 202
Print ISBN: 9781474143059
Web ISBN: 9781474143066
Ordered by the House of Commons to be printed 19 July 2017
Correction:
Page 81 shows ethnicity data for BEIS as follows:
16% BAME 16% Prefer not to say
35% White 33% Unknown
The corrections data should state:
9% BAME 3% Prefer not to say
51% white 37% unknown

2016–17
Annual report
and accounts
For the year ended 31 March 2017
Accounts presented to the House of Commons pursuant to Section 6(4) of the Government
Resources and Accounts Act 2000
Annual Report presented to the House of Commons by Command of Her Majesty
Ordered by the House of Commons to be printed on 19 July 2017
HC 202

© Crown copyright 2017
This publication is licensed under the terms of the Open Government
Licence v3.0 except where otherwise stated. To view this licence,
visit nationalarchives.gov.uk/doc/open-government-licence/version/3
or write to the Information Policy Team, The National Archives, Kew,
London TW9 4DU, or email: xxx@xxx.xx.
Cover Image: UK from the International Space Station at night © ESA/NASA
p246 Image: Visit England, p32 Image: © VisitBritain/Michael Turtle
This publication is available at www.gov.uk/government/publications
Any enquiries regarding this publication should be sent to us at:
1 Victoria Street, London. SW1H 0ET
Tel: xx-xxxx-xxxx Email: xxx@xxx.xx
Print ISBN 9781474143059
Web ISBN 9781474143066
ID xx-xxxx-xxxx
Printed on paper containing 75% recycled fibre content minimum
Printed in the UK by the Williams Lea Group on behalf of the
Controller of Her Majesty’s Stationery Office
This is part of a series of departmental publications which,
along with the Main Estimates 2017-18 and the document Public
Expenditure: Statistical Analyses 2017, present the Government’s
outturn for 2016-17 and planned expenditure for 2017-18.

Performance report
5
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
How we were formed
10
How we are organised
11
Our highlights this year
12
Where we spent our money in 2016-17
14
Our performance
16
Our aims and achievements
16
Principal risks and uncertainties
26
Looking ahead
30
Accountability report
32
Directors’ report
33
Financial review
33
Departmental board and leadership team
44
Statement of Accounting Officer’s responsibilities
49
Governance statement
50
Sustainability report
74
Staff report
78
Remuneration report
86
Parliamentary accountability and audit report
98
Financial statements
118
Trust statement
218
Annexes
240
Annex A: Our major projects and programmes
241
Annex B: Other Information
243
Annex C: Expenditure Tables
244
Annex D: Glossary
253

Annual report and Accounts 2016–17
6
Foreword by the Secretary of State
It’s a great pleasure to
introduce the first annual
report of the Department
for Business, Energy and
Industrial Strategy.
As the first Secretary of State
for this new department, I’m
immensely grateful for the
hard work and dedication of
its staff. Over the last 12 months they’ve joined
together as one team to deliver a truly ambitious
programme.
The core purpose of BEIS is to put industrial
strategy at the heart of economic policy.
It’s a mission that encompasses the whole
department. Indeed, the scope of the strategy
extends across Whitehall and beyond, with
BEIS as the focal point.
The industrial strategy green paper was
published by the Department in January.
I’ve been hugely encouraged by the scale
and breadth of the response to the consultation.
From the beginning, we promised to engage
with every part of the country and every sector
of the economy – and we have. We are therefore
well placed to build the industrial strategy with,
and not just for, British industry.

One of our early breakthroughs was securing
more money for British science and innovation.
At the last Autumn Statement, the Chancellor
announced the biggest increase in public R&D
investment since 1979. As a country we cannot
afford to lag behind in the race for the future.
That is why, looking further ahead, our target is
now to match – and then exceed – the current
level of R&D investment among advanced
industrial nations.
Getting the best value from these resources
is even more important. This is the purpose of
the Higher Education and Research Act, which
became law in April. It brings together the 7
Research Councils and other funding bodies into
a single, strategic agency called UK Research
and Innovation. UKRI will encourage collaborative
research across the sciences, and closer
cooperation between researchers, innovators
and entrepreneurs.
Science and technology is the basis for
economic progress – and also for the action we
need to take on climate change. Over the past
year, the UK has ratified the Paris Agreement and
passed the fifth carbon budget. BEIS itself was
created to align economic and environmental
objectives. By working with industry partners,
on projects from Hinkley Point C in Somerset
to the Siemens wind turbine factory in Hull we
are showing that investment in clean energy is
also investment in jobs, skills and local growth.
This department’s second year will be just as
important as its first. In particular, we will work to
secure a business-friendly Brexit, endeavouring
to represent British enterprise and British workers
on this and every other issue.
The Rt Hon Greg Clark MP
Secretary of State for Business,
Energy and Industrial Strategy

Performance report
7
Following the creation of the
Department in July 2016, we
have made good progress
against our four headline
objectives: to deliver an
ambitious industrial strategy;
to maximise investment
opportunities and bolster
UK interests; to promote
competitive markets and
responsible business practices; and to ensure
the UK has a reliable, low-cost and clean
energy system. We have also built a strong
new department, well equipped to deliver on
our ambitious agenda.
This report highlights the key achievements
during 2016-17 towards these four objectives.
In January, we launched an industrial strategy
green paper to consult on proposals for a
modern industrial strategy. As well as receiving
nearly 1,900 responses, Ministers and officials
engaged extensively with stakeholders through
workshops, roundtables and other events,
gathering insights which will shape our industrial
strategy going forward. We also announced
additional investment in sectors including
advanced materials and life sciences, and we
increased our support for science, research and
innovation, with an additional £4.7 billion to be
invested over the next 4 years.
We have continued our support for businesses
and employees, making £250 million of Start
Up loans available since 2012 and announcing
£400 million for the British Business Bank to
invest in innovative firms planning to scale up.
We have seen a further increase to the National
Living Wage, rising to £7.50 in April 2017, and
a doubling of female representation in
boardrooms, up 26% compared to 2011.
Report of the Permanent Secretary
To boost our economy and increase the security
of our energy supply, we gave the go–ahead
to build the first new nuclear power station
in a generation at Hinkley Point C. We are
continuing to take action to reduce energy bills
for consumers, and, as of March 2017, there
were nearly 7 million meters operating under
our Smart Meter Programme. We have shown
our continued commitment to tackling climate
change, passing the UK’s fifth carbon budget
into law, and ratifying the Paris Agreement, which
committed signatories to limit global warming to
well below 2°C, and to a long-term goal of net
zero emissions by the end of the century. This
year also saw the first coal-free day in Britain
since the 1880s.
Following the result of the EU referendum,
we know that there will be new opportunities
and challenges ahead. We are continuing
to engage with businesses and consumers
to ensure that we represent their views and
maintain business confidence throughout the
negotiations. Alongside this, we are preparing for
the significant domestic and legislative changes
required to ensure a smooth exit from the EU.
Internally, following the Machinery of Government
change, we worked quickly to create a single,
fully functioning department of state with a
unified identity, budget and systems, whilst
continuing to make efficiency savings. We
have achieved a lot in a short time and we are
ensuring that we have strong leadership and
the right people and skills to deliver our vision
and objectives.
As our identity, culture and ways of working
take root, we are continuing to transform our
Department, to ensure that we remain high-
performing and impactful, delivering successful
outcomes for business and consumers.
Alex Chisholm
Principal Accounting Officer
and Permanent Secretary

Teeside Wind Farm, North Sea
Performance
Report

Performance report
9
Overview
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
We exist to drive forward the changes which will build an economy
that works for everyone, so that there are great places in every part
of the United Kingdom for people to work and for businesses to invest,
innovate and grow.
What we are aiming to achieve
BEIS ministers set out 4 overarching objectives for our Department
to provide a framework for delivering the Government’s priorities:
We will deliver these objectives by:
Delivering an ambitious
industrial strategy
Maximising investment
opportunities and
bolstering UK interests
Building a new,
high-performing
department of state
Promoting competitive
markets and
responsible business
practices
Ensuring the UK has a
reliable, low-cost and
clean energy system

Annual report and Accounts 2016–17
10
How we were formed
On 14 July 2016, the Prime Minister, Theresa
May, created the Department for Business,
Energy and Industrial Strategy (BEIS) and
appointed Rt Hon Greg Clark MP as Secretary
of State.
The announcement was part of a reorganisation
of central government in response to changing
priorities following the referendum vote in
favour of leaving the European Union and the
subsequent change in political leadership.
BEIS brings together the business and science
policy portfolios of the Department for Business,
Innovation and Skills (BIS) and the full policy
portfolio of the Department of Energy and
Climate Change (DECC), building the links
between industry, energy and climate change
and enabling a united focus on markets,
investors and consumers.
The elements of the BIS portfolio that were
not transferred to BEIS comprised:
• post-18 education and skills policies, which
were transferred to the Department for
Education, giving that department complete
oversight of education policies.
• offender learning, which was transferred
to the Ministry of Justice; and
• international trade policies from BIS and the
Foreign and Commonwealth Office, which
were brought together to form the Department
for International Trade.
Transfer of policy responsibilities
The Department
of Energy &
Climate Change
Science and Innovation
Business and Enterprise
Competitiveness
Labour Markets
Offender Learning
Higher Education
Further Education
Apprenticeships
The Department
for Business,
Energy and
Industrial Strategy
To The
Department
for Education
To The Department
for International Trade
To The Ministry
of Justice
The Department
for Business,
Innovation and Skills
International Trade
Energy
Decarbonisation

Performance report
11
How are we organised
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.
Ministers look to the core Department’s
Accounting Officer, the Permanent Secretary,
to delegate within the Department to deliver their
decisions and to support them in policy-making
and managing public funds.
Public sector bodies are classified based on the
level of control the core Department has over
them. 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 its
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 found in our Accounting Officer System Statement, published separately.
Core Department and agencies
The Copyright Tribunal
Council for Science and Technology
Industrial Development Advisory Board
Insolvency Practitioners Tribunal
Low Pay Commission
Office of Manpower Economics
Regulatory Policy Committee
UK Space Agency
Government Office for Science
The Insolvency Service
Consolidated Departmental group
Advisory, Conciliation and Arbitration Service
BIS (Postal Services Act 2011) Company
British Business Bank
Civil Nuclear Police Authority
Coal Authority
Committee on Fuel Poverty
Committee on Radioactive Waste Management
Competition Appeal Tribunal
Competition Service
Electricity Settlements Company
Enrichment Holdings
Fleetbank Funding
The Financial Reporting Council
Low Carbon Contracts Company
Midlands Engine Investments
The NESTA Trust
Northern Powerhouse Investments
Nuclear Decommissioning Authority
Nuclear Liabilities Financing Assurance Board
Oil and Gas Authority
Postal Services Holding Company
South Tees Site Company
Innovate UK
UK Green Investment Bank
UK Shared Business Services
United Kingdom Atomic Energy Authority
UK Atomic Energy Authority
Harwell Science and Innovation Campus Public
Sector
UK Climate Investments
Research Councils
The Arts and Humanities Research Council
The Biotechnology and Biological Sciences
Research Council
The Economic and Social Research Council
The Engineering and Physical Sciences
Research Council
The Medical Research Council
The Natural Environment Research Council
The Science and Technology Facilities Council
Nuclear site licence companies
Dounreay Site Restoration
LLW Repository
Magnox
Sellafield
Wider Departmental group
Ordnance Survey
National Physical Laboratory
Companies House
UK Intellectual Property Office
Met Office
Competition and Markets Authority
HM Land Registry
Gas and Electricity Markets Authority (Ofgem)
National Physical Laboratory
Nuclear Liabilities Fund

Annual report and Accounts 2016–17
12
The announcement to create BEIS was made on
14 July 2016. We immediately set about creating
a fully functioning department of state which has
a real impact for consumers and business.
The first wave of scientists moved into the new Francis
Crick Institute in London. They will investigate the
biological processes that could lead to the creation
of pioneering drugs and treatments for illnesses such
as cancer, stroke and motor neurone disease.
We gave the go-ahead to build the first nuclear
power station in a generation. When it becomes
operational it will provide 7% of the UK’s
electricity, providing reliable, low carbon energy
to 6 million homes for 60 years.
We published Lord Davies’ final report on gender
balance in Britain’s boardrooms. It found that, since
his first report in 2011, female representation has
doubled to 26%. We have continued this work,
publishing the Hampton-Alexander review this year.
We set out our approach and the early actions
we have committed to take to secure the UK’s
long-term competitiveness, improve our national
productivity and deliver growth across the whole
country.
On 1 April 2017, around 1.7 million workers aged
25 and over benefited from a 4.2% pay rise: a 30p
increase on their hourly wage to £7.50. For full-time
workers (38 hours), this would amount to just under
£600 per year.
Our highlights this year
14th July
2016
Low carbon energy for
6 million
homes
Raised the National
Living Wage to
£7.50
Francis Crick Institute
opened, supporting
1,250
scientists
26%
female
representation
in Britain’s boardrooms
Publication of our
industrial
strategy
green paper

Performance report
13
When the world came together in Paris last year
to reach this ambitious deal, the UK played a
major role. This year, we ratified this landmark
agreement, continuing our commitment to
tackling climate change.
We continue to tackle financial wrongdoing. The
Insolvency Service disqualified 1,214 directors and
made 430 referrals to prosecuting authorities this year.
We also fast-tracked the investigation into the
circumstances surrounding BHS going into
administration.
We’re carrying out the largest reform of the
research and innovation landscape in over 30
years and investing at record levels. This year we
announced an additional £4.7 billion of funding
between now and 2020-21.
Research funded by the National Environment
Research Council (NERC) found evidence that the
ozone layer above Antarctica is healing. In the
1980s, NERC-funded scientists were the first to
notice that ozone levels over the continent were
dropping, leading to the international agreement to
phase out production of the substances responsible.
Tim Peake returned to Earth after spending 186
days on the International Space Station, carrying
out research and essential maintenance on
this unique spacecraft. Tim was the first British
European Space Agency astronaut.
The British Business Bank launched the £400
million Northern Powerhouse Investment Fund,
aimed at boosting the North of England’s
economy and helping the region’s businesses
realise their growth potential.
£400
million
Northern Powerhouse
Investment Fund
1,214
director
disqualifications
Healing the
ozone
layer
186
days in
space
Ratification of the
Paris
Agreement
An additional
£4.7
billion
for research and development

Annual report and Accounts 2016–17
14
The core Department’s gross expenditure for
the year was £13.8 billion, as seen in the primary
statements that start on page 119. Of this, £3.4
billion related to the Research Councils and £3.2
billion to the Nuclear Decommissioning Authority
(NDA). The remaining expenditure was split
across:
• grant-in-aid to other Partner Organisations;
• programme costs to deliver the Department’s
priorities; and
• internal and other costs.
The NDA recognised income of £1 billion from
its commercial activities, reducing the net cost
of funding by the Department. The income mainly
arose from management of spent fuel and waste
(including reprocessing). The Department also
received £55 million relating to the Regional
Venture Capital Fund and a payment of £51
million from surpluses in the Mineworkers’
Pension Scheme.
The diagram opposite represents the funding
costs of each core Department business.
The significant items (more than £250 million)
of expenditure recorded in the core Department
were:
£1,992 million – funding for the Higher
Education Funding Council for England for
Science and Research;
£545 million – delivering the Renewable Heat
Incentive, a scheme to encourage homes and
businesses to install heating systems using
renewable heat sources;
£373 million – grants to the UK Space Agency
£333 million – International Climate Finance
Official Development Assistance, as part of
the Government’s commitment to spend 0.7%
of Gross National Income on overseas aid;
£265 million – support for energy intensive
industries;
More details on expenditure can be found
in the financial statements from page 119.
Where we spent our
money in 2016-17
Notes:
1. A number of the Department’s partner organisations were funded through cash grant-in-aid from
the core Department – see Note 4.4 in the accounts.
2. Other programme costs include expenditure on a number of smaller schemes and staff costs that
fall within programme.
3. Non-cash programme costs includes an increase in the value of provisions of £72 million, together
with depreciation and amortisation costs and other non-cash charges – see Note 4.3 in the accounts.

Performance report
15
Grant-in-aid
Funding payments to Partner Organisations
Programme delivery
Grants and the purchase of goods and services
Internal & other costs
Administration and non-cash costs, for example provisions and depreciation
Where the core Department
spent its money in 2016–17
£13,824m
Innovate UK
£761m
Research
Councils
£3,352m
Nuclear
Decommissioning
Authority
£3,210m
Acas
£45m
Other
£62m
HEFCE
science and
research
£1,992m
Other science
and research
£568m
Renewable
Heat Incentive
£545m
UK Space
Agency
£373m
International
Climate Fund
£333m
Energy Intensive
Industries support
£265m
Redundancy
Payments Service
£232m
Regional
Growth Fund
£241m
Post Office
£220m
Paternity pay
£133m
Insolvency
Service
£75m
Other
£755m
Administration
£370m
Non-cash
programme costs
£284m

Annual report and Accounts 2016–17
16
Deliver an ambitious
industrial strategy
We are delivering a modern
industrial strategy to build
on our strengths now and
for the future, to close the
gap between our best performing companies,
industries, places and people and those that are
less productive, and make the UK one of the
most competitive places in the world to start
and grow a business.
We are designing and delivering
the Government’s industrial strategy
to secure the UK’s long-term competitiveness,
improve our productivity and deliver growth
around the whole country.
In January, we launched a green paper on
industrial strategy that set out an approach,
and series of actions, for addressing long-
term challenges to the UK economy. Between
then and April, we consulted individuals and
organisations from all over the country and
received nearly 1,900 responses. Informed by
these insights, we will be setting out the next
steps on our industrial strategy later this year.
We are investing in science, research and
innovation by carrying out the largest reform
of the research and innovation landscape in over
30 years, bringing the 9 existing UK research and
innovation funding bodies together into a single
entity called UK Research and Innovation (UKRI).
This is an ambitious undertaking; it requires
effective programme management to deliver. We
have established the programme in compliance
with Government major project guidelines to
help ensure successful delivery and manage
risks. UKRI will be responsible for spending over
£6 billion annually and will have a lead role in
advising ministers on the additional £4.7 billion
increase in R&D funding for the period 2017-18
to 2020-21 as announced in the 2016 Autumn
Statement.
Our performance
Our aims and achievements
Following the creation of BEIS in July 2016,
the Secretary of State set out his vision for
the Department. This section sets out the
key achievements made in 2016-17 towards
the Department’s four strategic objectives
and towards building a new, high-performing
department of state.
Our objectives in 2016-17:
We will deliver our objectives by:
Delivering an ambitious
industrial strategy
Maximising investment
opportunities and
bolstering UK interests
Building a new,
high-performing
department of state
Promoting competitive
markets and responsible
business practices
Ensuring the UK has
a reliable, low–cost and
clean energy system

Performance report
17
UKRI will provide a single voice and coherent
strategic approach for public investment in
research and innovation. It is intended to remove
structural barriers, supporting multi-disciplinary
research; improve collaboration between
research and business; and catalyse a more
effective approach to addressing future societal
challenges.
We have further increased our support for
science, research and innovation by:
• providing £100 million for new testing
infrastructure for connected and autonomous
vehicles (CAVs); and
• opening the £650 million Francis Crick Institute
in London, supported by £350 million of
government investment.
Increased public investment in research and
development has been mirrored in the private
sector, with expenditure by UK businesses
on research and development also continuing
to increase.
Expenditure on research and
development in UK businesses1
(at constant prices)
We are cultivating world-leading sectors
by supporting successful UK industries such
as automotive, life sciences, and aerospace,
and emerging sectors such as robotics and
autonomous systems. We also work closely
with our business partners to transform their
sectors, including exploring targeted ‘Sector
Deals’ for established industries, new entrants
and challenger businesses.
As part of our industrial strategy, we announced
£229 million of investment in the development
of cutting-edge advanced materials and a
new centre of excellence for life and physical
sciences. This funding comprises:
• £126 million in grants for the Henry Royce
Institute, the leading UK body for advanced
materials research and innovation; and
• £103 million investment in a new centre
of excellence at the Rosalind Franklin
Institute.
We are supporting businesses to start
and grow by working closely with partners
such as the British Business Bank to improve
awareness of and access to financial support,
and using the Challenger Business Programme
to identify and address barriers to expansion for
highly innovative businesses with high growth
potential.
Since 2012, we have made £250 million of
Start Up Loans available to get entrepreneurs
up and running. This year we also announced
the provision of £400 million for the British
Business Bank’s venture capital funds to support
innovative firms planning to scale up.
1
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/bulletins/
businessenterpriseresearchanddevelopment/2015
16
17
18
19
20
21
22
2011
2012
2013
2014
2015
£bn

Annual report and Accounts 2016–17
18
Maximising investment
opportunities and
bolstering UK interests
As outlined in the
Government’s Plan for Britain,
as we leave the EU we will
build a global, outward-looking Britain that is
confident on the world stage. We are working
to deliver the best results for the UK through
ever stronger global relationships and by building
business and investor confidence. In our work
to seek out and close investment deals we will
ensure our economy is resilient to unforeseen
economic shocks.
We are encouraging inward investment
through: fostering a competitive investment
environment for business and industry; working
to establish new partnerships globally to
accelerate growth and investment in existing
and emerging technologies; and building our
business intelligence capability to identify
opportunities or external investment in the UK.
We are working to ensure our economy
is resilient and best placed to seize
opportunities through:
• capturing opportunities presented by
internationally mobile investment;
• earlier identification and increased prevention
of risk through investigation of future trends
and enhanced business intelligence; and
• providing a more effective response to shocks
through targeted contingency planning.
2
https://www.gov.uk/government/publications/small-business-survey-2015-businesses-with-employees
The Small Business Survey 2015 was carried out between July 2015 and January 2016.
3
As above
4
https://www.gov.uk/government/collections/local-growth-deals
45% (2014: 51%)
of small business employers
expected their turnover
to increase over the next
12 months.2
26% (2014: 32%)
of small business employers
expected to employ more
people in 12 months’ time.3
We are driving growth across the country
by creating a framework to build on the particular
strengths of regions and localities, and to
address factors that hold them back.
This includes building a Northern Powerhouse,
backing regional strengths, supporting Local
Enterprise Partnerships, delivering more bespoke
Growth Deals4 with local councils, supporting
Business Improvement Districts, and establishing
the Productivity Council to encourage and
support UK businesses.
Alongside the Department for Communities and
Local Government, this year we announced
additional funding through Growth Deals for:
the Northern Powerhouse; London, the South
East and East of England; the South West;
and the Midlands.

Performance report
19
Business investment in the UK5
We are promoting the interests of UK
businesses and our other stakeholders
in the EU exit negotiations. The department is
responsible for a wide range of sectors as well as
individual and cross-cutting policy areas that will
be impacted by the decision to leave the EU. By
analysing the impacts and opportunities of an EU
exit, and working collaboratively, our Department
is ensuring that the views of businesses,
consumers, workers and other economic actors
are reflected in the Government’s negotiating
priorities and approach. In addition, we continue
to engage fully with ongoing EU business in
order to ensure that the negotiating outcomes
meet the needs of the UK economy as a whole
and the specific concerns of our stakeholders.
We are preparing for the domestic policy
changes required as a result of the EU exit.
We are working with the Department for
Exiting the European Union (DExEU) and
the Parliamentary Business and Legislation
Committee (PBL) to ensure that the Repeal Bill
and the wider legislative programme reflects
our needs.
We are maintaining a strong nuclear
safeguards regime outside of the European
Atomic Energy Community (Euratom). When
we triggered Article 50 we committed to leaving
Euratom as well as the EU – these are separate
treaties but they are legally entwined and share
5
https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/businessinvestment/octtodec2016revisedresults
a common EU budget and EU institutions. Our
objective in the negotiations will be to continue
a constructive relationship of full co-operation
with Euratom after we have left. We are confident
that the EU wants the same outcome. The
UK will continue to meet all its international
obligations in respect of nuclear safeguards and
non-proliferation, and it was announced in the
Queen’s Speech that the Government will bring
forward legislation to establish a UK nuclear
safeguards regime. This change should not have
any adverse impact on our existing nuclear fleet
or our nuclear new build programme.
We are building the profile of the UK on
the international stage through fostering
new international relationships to make it easier
for our businesses, researchers and innovators
to collaborate with international partners and
to establish our own trading arrangements
with the EU and the rest of the world. The UK’s
independent trade policy is being developed
to maximise the opportunities from new trading
arrangements with the rest of the world,
and to deliver the best outcomes for business
and consumers.
We are also continuing to play a leading role
in global efforts to tackle climate change by
effectively using UK climate finance to accelerate
a low carbon shift within developing countries.
For example, our Department’s climate finance
in 2016 directly supported:
• re-forestation efforts in the Colombian
Amazon;
• large scale solar and geothermal projects
rolled out in multiple countries; and
• loan schemes for energy efficiency
improvements and renewables for small
businesses in Africa and Asia.
In total, UK climate finance supported 21 million
people to cope with the effects of climate
change, improved access to clean energy
for 6.6 million people, and reduced or avoided
4.9 million tonnes of CO2. It continues to build
on these results year on year.
120
130
140
150
160
170
180
190
2011
2012
2013
2014
2015
2016
£bn

Annual report and Accounts 2016–17
20
Promoting competitive
markets and responsible
business practices
We are securing better
outcomes for consumers by
creating a more competitive
business environment. We are strengthening
the corporate governance framework to support
strong businesses that focus on long-term value
creation so they can thrive in a global economy,
and demonstrate their commitment to their
employees and to the communities in which they
operate. We are setting clearer expectations for
good business citizenship, and cracking down
on individuals and businesses that abuse the
system so that everyone – however big or small
– plays by the same rules. We are protecting
and enhancing workers’ rights, ensuring that in
a modern, flexible economy people are properly
protected at work.
We are reforming corporate governance
by consulting on reforms aimed at:
• strengthening shareholder control on executive
pay and increasing transparency on pay;
• strengthening employee and other stakeholder
voices in company boardrooms; and
• ensuring high standards of corporate
governance in the UK’s largest private
businesses.
We are also continuing to enhance transparency
over ownership of corporate entities, both
improving good governance and trust in business
and helping to tackle illicit finance.
In November, we published a green paper
on corporate governance reform, which was
followed by an extensive consultation exercise
on the potential options for reform.
This year, we launched the register of people with
significant control, listing the beneficial owners
of all companies and limited liability partnerships
registered in the UK. It is the first public register
of this scale and ambition in the world.
We are promoting fairness in the labour
market and improving working conditions
by reforming enforcement of the National
Minimum Wage and other employment rights.
We raised the National
Living Wage to
£7.50
This is 57% of median earnings.
We aim to increase the National
Living Wage to reach 60% of
median earnings by 2020, subject
to sustained economic growth.
In 2011, we published Lord Davies’ review,
Women on Boards, which recommended that
FTSE100-listed companies target 25% female
representation. Since then, female representation
on boards has more than doubled to 26%.
This year, we published the initial reports of:
• The Hampton-Alexander review into FTSE
women leaders, which sets a target for women
to hold one third of FTSE leadership positions
by 2020; and
• The Parker review into the ethnic diversity
of UK boards, which sets out practical issues,
objectives and timescales for progressive
business leaders.
The way people work in the UK is changing.
We recognise the importance of being open to
new and innovative ways of working, but it is also
crucial that workers receive a decent wage and
benefit from the right balance of flexibility, rights
and protections. In November, we launched
the Matthew Taylor review of employment
practices in the modern economy to consider
the implications of new forms of work and our
existing regulatory framework on employment.

Performance report
21
6
Current estimated figure. Final, validated figures will be
published this summer. Interim report available: https://
www.gov.uk/government/uploads/system/uploads/at­
tachment_data/file/610874/business-impact-target-in­
terim-report-16-17.pdf
7
http://www.doingbusiness.org/rankings
8
Economies are ranked by their ‘Distance to Frontier’
score. The score helps assess the absolute level of
regulatory performance over time. It measures the
distance of each economy to the “frontier,” which rep­
resents the best performance observed on each of the
indicators across all economies in the Doing Business
sample since 2005. The UK’s score improved from
82.73 in 2016 to 82.74 in 2017.
We are ensuring the UK has the right
regulatory frameworks to help meet
business and consumer needs through:
• tackling markets that are not working fairly
for consumers;
• empowering consumers to make changes;
• continuing the Government’s commitment to
regulate more efficiently by bringing into scope,
through legislation, the activities of a range
of regulators; and
As well as leading on better regulation for
Government as a whole, we are committed to
improving our own regulation and policies by
ensuring any new regulation we introduce is
effective, targeted and proportionate, and overall
costs to business are kept to a minimum.
In the 2015-2017 Parliament, we
reduced burdens to business by
£3.9 billion
6
In March 2016, the Government
set a cross-government
business impact target of £10
billion of savings to business
during the course of the
expected Parliament (2015-
2020) – our Department’s share
of this was £4 billion. For the
2015-2017 Parliament, the pro-
rated business impact target
would be £4.2 billion, of which
our share was £1.6 billion.
World Bank ‘Ease of Doing
Business’ Ranking:
7th
in 20177 (2016: 6th)
The UK improved overall ease
of doing business, remaining
firmly in the top 10 globally.8
In July, the Pubs Code came into force, giving
tenants more rights and greater protection when
dealing with large pub companies that own tied
pubs, including increased transparency about
the tied deals available, a fair rent assessment
and the right to move to a free-of-tie tenancy
in certain circumstances.
We are bringing forward proposals to
ensure that critical national infrastructure
is protected to safeguard national security.

Annual report and Accounts 2016–17
22
Ensuring the UK has
a reliable, low–cost and
clean energy system
We are ensuring that the UK
has a competitive and well-
functioning energy system
that will meet our needs for the future, by
upgrading and diversifying our energy supplies
to make them smarter, cleaner and more secure.
We are working to help people with everyday
costs and bills by ensuring retail energy markets
work in the way they should.
We are delivering affordable energy and
clean growth by:
• working to minimise energy costs for UK
businesses and consumers;
• managing the changes to energy networks
required by the transition to a low carbon
economy;
• continuing our efforts to pursue ambitious
global action on climate change to help level
the playing field for UK companies; and
• making sure that the UK capitalises on its
strengths in energy industries and innovation
to win a substantial share of global markets.
We are ensuring that our energy system
is reliable and secure by:
• working across the electricity, oil and gas
sectors to support, upgrade and diversify
our energy supplies;
• creating a smarter and more flexible system;
and
• obtaining further investment in new nuclear
capability.
We have successfully improved our security
of supply through 2016-17. 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.
2016-17 LOLE:
0.5 hours
(2015-16: 1.1 hours)
This is the time that the National
Grid forecast they may need
to use balancing tools in the
electricity supply in 2016-17,9
demonstrating significant
resilience in our electrical security.
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).
If the largest piece of gas
infrastructure failed,
127%
of demand could be met even
in a severely cold winter. 10
This is a 15 point increase from
112% last year, and shows that
we could maintain gas supply
even in the most difficult
circumstances.
9
http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/FES/Winter-Outlook/
10
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/560125/UK_Risk_
Assessment_Gas_BEIS_template_Final__4_.pdf

Performance report
23
11
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/xx-xxxx-xxxx_Q1_Smart_Meters_
Report_final.pdf
12
https://www.gov.uk/government/collections/final-uk-greenhouse-gas-emissions-national-statistics
We have taken further steps to increase security
of supply by:
• agreeing to proceed with the first nuclear
power station in a generation at Hinkley
Point C, and taking steps to secure further
investment in new nuclear capability;
• providing policy and regulatory support and
development to facilitate progress in the shale
industry. Four sites have been granted for
exploration; and
• launching a call for evidence on smart,
flexible energy systems that give consumers
choice and control over how they use or
generate electricity.
We are delivering affordable energy for
households and businesses by encouraging
competition and considering how to extend
protection currently in place for pre-payment
meter customers to a wider group of domestic
consumers. We also support households, the
public sector and businesses to reduce costs
through our energy efficiency policies and
schemes.
Smart meters aim to bring bills down by helping
consumers understand and save on the cost
of the energy they use, enabling new innovative
tariffs; and supporting faster and easier
switching.
There were over
6.78 million
smart and advanced meters
operating in homes and
businesses across Great Britain
as of 31 March 2017 11 (2016:
3.6 million). The Smart Meter
Programme aims to roll-out over
50 million by the end of 2020.
The national communications infrastructure for
smart meters went live across the country in
November. This will enable the roll-out of the
second generation of smart meters across Great
Britain – and for consumers to switch energy
suppliers without losing their smart service.
We have also continued to tackle fuel poverty by
reforming the Energy Company Obligation (ECO),
helping people to keep bills down by living in
more energy–efficient homes.
The Government has set a target of insulating
a million more homes over the next five
years, supporting energy efficiency and our
commitment to tackle fuel poverty. From the
start of May 2015 to the end of January 2017,
around 346,000 homes have had at least one
insulation measure installed under the ECO or
the Green Deal.
We launched a new £320 million capital fund to
support investment in low carbon heat networks,
expected to leverage up to £2 billion of wider
investment by 2020–21.
We are taking action on climate change
and low–cost decarbonisation by passing
the UK’s fifth carbon budget into law, equivalent
to a 57% reduction on 1990 levels by 2032, and
ratifying the Paris Agreement.
We continue to use our strong domestic record
on decarbonisation to press for international
action on climate change – at country, region
and city level – that keeps the goal set out in the
Paris Agreement of limiting global warming to
well below 2°C firmly in reach and helps level the
playing field for UK companies in global markets.
UK emissions in 2015 were
38% lower
than in 1990 and 4% lower
than 2014.12

Annual report and Accounts 2016–17
24
At the same time, GDP has increased. In 2015,
GDP was 64% higher than in 1990 and 2%
higher than in 2014.
We have consulted on proposals to close
unabated coal power stations by 2025, and
are currently considering our response.
We are also helping to fund promising low
carbon technologies where they clearly represent
value for money and we are supporting the
deployment of renewables by running Contracts
for Difference (CfDs) auctions. We launched the
second CfD auction which we expect will result
in enough renewable electricity to power around
one million homes, reducing carbon emissions
by around 2.5 million tonnes per year from 2021-
22 onwards.
We announced new projects worth £28 million
in our Energy Innovation Programme, including:
• a new Offshore Wind Innovation Hub to build
on the UK’s expertise in offshore wind;
• a competition to develop cost reduction
options for large-scale energy storage
(including electricity, thermal and power-to-
gas);
• a competition to develop smarter energy
‘demand side response’ technology for
businesses or public sector organisations to
reduce peak-time energy use and provide
flexibility to the energy system;
• an accelerator to develop innovations to
reduce energy costs for UK industry through
energy efficiency, while leveraging private
sector investment;
• a nuclear innovation programme to support
innovation in the civil nuclear sector; and
• phase five of the Energy Entrepreneurs Fund,
particularly aimed at small and medium-sized
enterprises, which supports the demonstration
of state of the art energy technologies
We are managing our energy legacy safely
and responsibly by working closely with the
Nuclear Decommissioning Authority (NDA) to
discharge our legal liabilities effectively and
manage the security risks from the legacies
of our nuclear and coal industries, and other
energy interests.
The NDA’s business plan covers 120 targets,
encompassing site restoration, spent fuels,
integrated waste management, business
optimisation and critical enablers. Progress
against these objectives is summarised
below.13

Complete

On target

Behind target

Missed target

Deferred

No longer required
The NDA has faced a legal challenge this year
regarding Magnox sites. A high court judgement
in July 2016 found that the NDA had acted
unlawfully in the course of the competition
to appoint a new parent body organisation
for the Magnox sites. With the support of our
Department and Government, the NDA Board
judged that claims were best settled out of court,
to avoid the risk of prolonged and potentially
more damaging litigation. A full and final
settlement of these claims came at the cost
of £97 million to the public purse.
13
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/600844/Quarterly_Performance_
Report_Quarter_2_2016-17__end_of_Sept_2016_.pdf
2016–17
0
20
40
60
80
100
120
Number of NDA Targets

Performance report
25
Separately from the litigation, it became apparent
that the Magnox contract awarded to the
Cavendish Fluor Partnership (CFP) was at risk
of legal challenge. This is because its scope
and value had become materially different from
that anticipated at the time of award. To avert
the risk of further financial exposure to the
taxpayer, the NDA Board also decided to
terminate the contract, with the support of
Government and CFP.
In response to this defective procurement, the
Secretary of State requested Steve Holliday, the
former Chief Executive of National Grid, to lead
an independent inquiry into the procurement,
litigation, settlement and termination of the
Magnox contract. The inquiry is anticipated
to deliver initial findings by Autumn 2017. Our
Department is determined that the reasons for
this failure should be exposed and understood,
that those responsible should properly be held to
account, and that it should never happen again.
Our Department also sponsors the Coal
Authority to manage the £2.8 billion long-term
mining legacy and to regulate the coal industry.
In 2016-17, the Coal
Authority achieved
97% (2015-16: 97%)
of its 2016-17 corporate
objectives.14
14
Coal Authority 2016-17 Annual Report
Building a new,
high-performing
department of state
The announcement to create
BEIS was made on 14 July
2016, and our key priority
is to make sure that our Department has the
corporate capability to deliver its objectives
now, and in the future.
We have delivered a fully functioning
department of state through a successful
Transition Programme which:
• moved all London staff into 1 Victoria Street,
which required moving around 4,000 people
across four locations;
• installed a unified IT system with all staff able
to access the same services in 1 Victoria Street
• agreed the organisational structure for the
new Department; and
• allocated budgets across the department
The programme cost around £3 million. All
key milestones have been achieved, enabling
colleagues to continue delivering their ministerial
objectives. Rigorous programme management
tools and techniques have been applied
throughout, supporting effective delivery
and ensuring a focus on value for money.
A key strength of the programme has been its
engagement with colleagues – drawing on their
skills and expertise to shape plans and help
deliver activity. This has been facilitated at all
levels – with senior leaders playing a particular
role in communicating and engaging with staff.
We will continue to build the Department’s
capability – making sure that we are able
to adapt to the challenges and opportunities
that may arise in the coming years.

Annual report and Accounts 2016–17
26
Relative
severity

High

Medium

Low
Change during
the year

Increasing risk

Decreasing risk

Stable
Principal risks
and uncertainties
The formation of a new department presents
opportunities and challenges associated with
Machinery of Government changes. We have
continued, however, to manage a range of risks
and issues, including uncertainties often outside
our direct influence or control.
Our wide-ranging and multifaceted objectives,
which can have a direct impact on the majority
of UK citizens, present us with an equally wide
array of risks. Many of these situations, such as
Tata Steel, the Nissan manufacturing plant in
Sunderland and Hinkley Point C, receive detailed
media coverage. But the Department also
manages risks that do not get the same level of
media scrutiny with the same rigour and control
as any other risk. In an unpredictable and ever-
changing environment, our risk management
processes are designed to adapt to provide us
with the best chance of successfully delivering
our 4 objectives and improving our corporate
performance.
The principal risks that we have faced over the
fiscal year are described in the following table.
Key: Icons in the table map the risks
to our objectives
Delivering an ambitious
industrial strategy
Maximising investment
opportunities and
bolstering UK interests
Building a new,
high-performing
department of state
Promoting competitive
markets and responsible
business practices
Ensuring the UK has
a reliable, low–cost and
clean energy system

Performance report
27
Risk
Mitigating activities
Direction of risk trend
at year end
External risks faced by the department
EU exit negotiations
The EU exit negotiations end
in suboptimal outcomes for our
policy areas and sectors, leading
to an adverse impact for the
UK economy.
f
f Increasing dedicated resources to
oversee and monitor EU negotiations.
f
f Engaging intensively at all levels with the
Department for exiting the European
Union and the Prime Minister’s Office,
including ministerially. For example, through
membership of central steering groups which
maximises the Department’s influence.
f
f Putting clear, well-organised and well-
communicated programme management
structures in place.
f
f Working to identify our EU exit priorities and
defining the interdependencies between
policy teams.
The uncertainty around
EU exit will continue to
rise until negotiations are
further advanced.
Continuity of energy supply
Interruptions to supply owing
to industrial action, cyber attack,
terrorism, accident or financial
failure.
f
f Putting a tanker fleet on standby with
Army drivers provided by the Ministry
of Defence.
f
f Introducing a contingency plan to help
manage potential strike actions.
f
f Making investment decisions to maintain
the financial viability of Grangemouth and
reduce the threat of industrial action.
f
f Putting the National Emergency Plan
for Fuel into action.
We were involved in
successful efforts to
avoid industrial action at
Grangemouth. However,
this risk has an array of
threats, among them
cyber crime which we
are managing as the
threat increases.

Annual report and Accounts 2016–17
28
Risk
Mitigating activities
Direction of risk trend
at year end
UK steel sector
Tata Steel’s assets in the UK fail
to secure a future and the wider
UK steel sector fails to respond
to the findings of the capability
and capacity study.
f
f Monitoring negotiations between Tata Steel,
trade unions and pension trustees.
f
f Exploring the contribution Government
may be able to provide to secure the
future of Port Talbot.
The Department
successfully worked
with the steel industry
to avoid thousands of job
losses. The uncertainty
has improved, but the
department remains fully
engaged.
Climate change
The Department cannot
demonstrate a credible plan
to meet the 2020 renewables
target without making significant
trade-offs with other objectives
– damaging investor confidence,
bringing undue costs to the UK
consumer, and leading to legal
action against the UK.
f
f Undertaking continued statistical updates
of UK progress against our target.
f
f Maintaining a credible strategy for meeting
the target, including contingencies and
policy options.
f
f Monitoring the outcome of the Renewable
Heat Initiative consultation and the
Department for Transport’s proposals for
increasing deployment of renewable fuels
in transport.
f
f Continuing to assess the target in the
context of exiting the EU.
f
f Staying on track to deliver the UK’s
next carbon budget.
The possibility of
weakened commitment
to the Paris agreement
could threaten success.

Performance report
29
Risk
Mitigating activities
Direction of risk trend
at year end
Risks internal to the department
Industrial strategy
The industrial strategy fails to
deliver its objective to improve
productivity and growth across
the UK.
f
f Engaging closely across Whitehall to ensure
the development of wide-ranging and
ambitious proposals.
f
f Working with Government to define
ambitions and to ensure resources
are available for their implementation.
The industrial strategy
is a Departmental priority.
Hinkley Point C (HPC)
EDF fails to deliver HPC on time
and to budget, resulting in 3.2GW
of electricity generation not
coming online in 2025.
f
f Finalising the investment contract.
f
f Setting up cross-governance arrangements
to provide sufficient oversight of HPC.
f
f Putting Government initiatives with industry
in place to address to potential skills gaps
and supply chain issues.
f
f Providing safeguards against unapproved
stake ownership by foreign investors.
The current status of the
risk is improving but will
be closely monitored.
Nuclear Decommissioning
Authority – Magnox contract
Litigation as a result of failed
procurement process.
f
f NDA has negotiated settlements of £97
million with Energy Solutions and Bechtel
to conclude all the ongoing litigation
proceedings against it.
f
f The NDA also terminated the contract with
Cavendish Fluor Partnership (CFP) because
it became clear that the work required on the
Magnox sites was significantly different from
that which was tendered.
f
f Aiming to reach an initial view on the new
contract delivery model in September.
An independent inquiry
into the conduct of
the 2012 procurement
process has been
launched. Initial findings
are expected Autumn
2017.
Moving the Green Investment
Bank (GIB) into private
ownership
Failure to complete the successful
sale of GIB or being subject to
judicial review.
f
f Conducting an extensive pre-marketing
exercise.
f
f Designing the sale process to attract diverse
and relevant potential investors.
f
f Developing a clear and independently
assured value for money framework.
f
f Following an active engagement and
handling strategy with bidders and with GIB.
The Department
continues to engage
fully with the asset
sale process.

Annual report and Accounts 2016–17
30
Maximising investment
opportunities and
bolstering UK interests
We aim to ensure that we deliver the best results
for the UK and promote UK interests through
the process of EU exit and through our wider
international engagement.
To do this, we will:
• secure the best possible access for
businesses to trade with and operate in
the European market;
• engage with businesses and consumers
to ensure that their views are represented
in EU exit negotiations;
• establish new partnerships with leading non-
EU scientific nations to maximise opportunities
in global innovation;
• promote UK research and innovation
internationally to drive investment and
export opportunities; and
• provide £2 billion of funding through the
International Climate Fund between 2016
and 2021, to help developing countries tackle
climate change and to promote clean growth.
Looking ahead
Delivering an ambitious
industrial strategy
We aim to improve living standards and
economic growth by increasing productivity and
making sure that growth is spread across the
whole country.
To do this, we will:
• continue our development of a modern
industrial strategy, including by responding
to our green paper;
• put investment in our science and research
base at the heart of our industrial strategy,
including the creation of UK Research and
Innovation in 2018 and investment of £4.7
billion in R&D funding, for the period 2017-18
to 2020-21; and
• provide support to businesses across a range
of sectors to ensure the UK economy can
grow and is best placed to benefit from the
challenges of globalisation

Performance report
31
Ensuring the UK has
a reliable, low–cost and
clean energy system
We will continue to ensure that the UK has a
competitive and well-functioning energy system
that can deliver affordable energy and clean growth.
To do this we will:
• ensure that we maintain adequate capacity
to secure fuel, gas and electricity supplies
through management of the capacity market
and operational risks to energy supply;
• advance our long-term plan for investment
in new nuclear;
• set out proposals to ensure that the retail
energy market works for all;
• draw up a roadmap for bringing down
business energy costs;
• support the UK Climate Change Act, including
through the publication of a Clean Growth
Plan; and
• 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.
We will continue to transform the department
to ensure we are high-performing and impactful
and therefore able to deliver these ambitions
and an economy that works for everyone.
Alex Chisholm
Principal Accounting Officer
and Permanent Secretary
13 July 2017
Promoting competitive
markets and responsible
business practices
We aim to secure better outcomes for
consumers and strengthen our corporate
governance framework.
To do this, we will:
• respond to the Matthew Taylor review, which is
considering how best to protect and enhance
worker rights, preserve the flexibility of the UK
labour market, and foster innovative business
models;
• implement the new National Minimum
and National Living Wage rates;
• bring forward proposals to ensure critical
national infrastructure is protected to
safeguard national security
• engage with businesses and academics
across Government to encourage businesses
to raise standards of corporate governance.

Accountability
Report
Morgan Arcade, Cardiff

Accountability report
33
Directors’ Report
Financial Review
The table shown overleaf summarises the
position for the 2016-17 budget against outturn.
The figures here correspond to the Statement of
Parliamentary Supply, on page 98.
Total Departmental Managed Expenditure
In delivering our vision of an economy that works
for everyone, the Total Managed Expenditure
(see Box 1,) for 2016-17 was £31.3 billion, against
which the Department incurred costs of £16.3
billion. The difference of £15.0 billion resulted
mainly from an underspend against Annually
Managed Expenditure (AME) budget versus
outturn.
Comparison of Budget to Outturn Annually
Managed Expenditure
Box 1, adjacent, explains expenditure classified
as Annually Managed Expenditure (AME) as
demand led and therefore volatile. The process
for setting AME budgets takes into consideration
prudent forecasts so as manage the budget
position against a volatile outturn. Overleaf, the
table ‘Comparison between 2016-17 Budget and
Outturn’ shows the budget versus outturn for
AME resource and AME Capital.
Resource AME
Over half the Departments’ expected resource
AME costs relate to Contracts for Difference
(CfD), more information on CfDs see Box 5
page 39. CfDs are signed by the Department
to encourage low carbon electricity generation.
Of the £13.8 billion underspend on resource
AME, £11.3 billion was due to higher than
expected wholesale electricity price projections,
which translates into lower CfD costs for the
Department. The remaining £2.5 billion was
due to lower expenditure by the Nuclear
Decommissioning Authority as a result of
discount rates to decommissioning costs that
span 50 to 100 years.
Capital AME
The underspend on capital AME is due to lower
than expected demand for Post Office Limited
working capital funding as part of government
shareholding.
Box 1: HM Treasury Budgeting
Framework
The total amount that the department
spends is referred to as its Total Managed
Expenditure (TME). HM Treasury classifies
budgets as either Annually Managed
Expenditure (AME) or Departmental
Expenditure Limit (DEL) spend.
AME budgets are volatile or demand-led in
a way that the Department cannot control.
HM Treasury do not set firm budgets but
the Department monitors AME forecasts
closely.
Cost behaviours of DEL budgets are
understood and controllable. At Spending
Reviews, which occur every 3 to 5 years,
HM Treasury sets firm DEL budget limits for
each type of DEL budget.
DEL budgets are split into Capital (CDEL)
and Resource (RDEL).
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
The RDEL budget is 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.
Programme
RDEL
Admin
RDEL
General
Capital
Financial
Transactions
Resource
DEL
Capital
DEL
AME
DEL
TME

Annual report and Accounts 2016–17
34
Comparison between 2016-17 Budget and Outturn
Budget
Outturn
Variance
Control total
£m
£m
£m
%
Resource DEL
2,337
1,972
365
15.6
Capital DEL
11,274
10,835
440
3.9
Resource AME
17,412
3,523
13,889
79.8
Capital AME
311
(15)
325
104.5
Total
31,334
16,315
15,019
47.9
Comparison of spend to last year
Resource DEL
As shown in the table below, the decrease in
Resource DEL expenditure between 2015-16 and
2016-17 was £6.3 billion. This was largely driven
by a £5.9 billion reclassification of science and
research spend from resource to capital.
Capital DEL
The Department’s capital expenditure is
made up of a number of ring-fenced areas.
As highlighted below, the significant movement
within capital DEL was a significant level of
spend shifting between resource and capital.
The capital increase was £6.0 billion, of which
£5.4 billion related to science and research
reclassified research and development spend.
Other spend increases related to £0.6 billion of
financial transactions in the Green Investment
Bank and £87 million in the British Business
Bank; an increase of £143 million for the Nuclear
Decommissioning Authority; and £700 million
additional spending on innovation.
Resource AME
During 2015-16 there was a significant change
in discount rates (from positive to negative,
described in Box 3). This resulted in a significant
movement in the non-cash liability for the Nuclear
Decommissioning Authority. The comparable
movement in 2016-17 was £2.7 billion against
£89.8 billion in 2015-16. The remaining amount
mainly consists of changes in the movement in
the fair value of Low Carbon Contract Company
Contracts for Difference for the supply of
electricity.
Capital AME
In 2015-16 the Capital AME consisted of £1.4
billion in ‘non-voted’ income relating to the
disposal of Royal Mail, which was not repeated
during 2016-17. The £15 million income related
to government shareholdings.
Departmental Expenditure Limit
The total Departmental Expenditure Limit budget
was £13.6 billion against which our outturn was
£12.8 billion, contributing savings of £0.8 billion
to the Total Managed Expenditure. Like AME,
Departmental Expenditure Limit is split across
Resource and Capital estimates and outturn
categories of spend.
Resource DEL
For Resource the estimated ‘voted’ spend was
£3.4 billion, adjusted by a ‘non-voted’ reduction
to £2.3 billion. Outturn against the adjusted
estimate was £2.0 billion. As shown in the table
below, the department spent less than budget
by £365 million. This was due to underspends on
innovation, enterprise and business, and market
frameworks.
Capital DEL
The ‘voted’ Capital estimate was £11.3 billion
and outturn was £10.8 billion. The Capital DEL
outturn was £440 million lower than budget due
to underspend on government shareholdings.
The Department’s final expenditure (Outturn)
compared to its Supplementary Estimate
(Budget) is set out in the table below.

Accountability report
35
Comparison between Outturn in 2016-17 and 2015-16
2016-17
2015-16
Change
Control Total
£m
£m
£m
%
Resource DEL
1,972
8,318
(6,346)
(76)
Capital DEL
10,835
4,882
5,953
122
Resource AME
3,523
101,945
(98,422)
(97)
Capital AME
(15)
(1,613)
1,598
(99)
Total
16,315
113,532
(97,217)
(86)
Key areas of net expenditure for last 3 financial years
2016-17
2015-16
2014-15
Key net costs incurred
£m
£m
£m
NDA
5,082
92,066
7,910
Science and Research
6,374
6,248
6,246
Contracts for Difference
(273)
10,122
2,485
Innovate UK
801
735
604
Coal Authority
34
1,936
5
Government Electricity Rebate
1
309
308
Green Investment Bank
845
308
178
Renewable Heat Incentive
545
372
161
International Climate Finance
333
319
195
Post Office
220
280
330
Other
2,353
837
445
Total
16,315
113,532
18,867
Financial position
Overall, total assets less total liabilities was
£(172.0)bn, compared to £(170.1)bn in 2015-16
and £(66.5)bn in 2014-15.
The significant increase from 2014-15 to 2015-
16 was driven by the changes to the valuation
of the provisions, particularly the nuclear
decommissioning provision. This was due to the
change in the long-term discount rate in 2015-16;
more detail is provided in Box 3. The value of the
provisions has remained relatively stable on an
undiscounted basis.
Box 2: Machinery of Government
transfers
To complete the MoG changes that
created the Department, we agreed the
transfer of assets, liabilities and budgets
with the Department for Education, the
Ministry of Justice and the newly–created
Department for International Trade.
Cabinet Office guidance states that
after a Machinery of Government (MoG)
announcement to transfer policy responsibility
from one department to another, sufficient
resources should be allocated to support
the transfer of functions, based on existing
policies and any collectively–agreed
changes to these policies.
Budgets totalling £21.95 billion were
transferred via Supply and Appropriation Acts
in 2017 to reflect the final MoG agreements.

Annual report and Accounts 2016–17
36
Box 3: Impact of changes on discount rate
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 receivable
cash inflows are calculated at present value
(PV) in accordance with accounting standards.
This PV reflects the time value of money.
The accounts use a number of different rates
depending on the nature of the transaction
and the regulation applicable.
Discount rates used
Category
Rationale
2016-17
2015-16
Nuclear decommissioning provisions
Short term < 5 years
Set by HM Treasury Public
Expenditure System (PES)
Secretariat 2 Dec 2016
-2.70%
-1.55%
Medium 6-10 years
-1.95%
-1.00%
Long term > 10 years
-0.80%
-0.80%
CfD financial instruments
Real rate (as contracts are in real terms)
As above
+0.70%
+0.70%
Coal Pensions
Real rate + 3% RPI (as contractual figures
are in nominal values)
As above: financial instruments
discount rate (non-indexed)
+3.70%
+3.70%
Repayable Launch Investments
Higher of the implicit rate of return or the
financial instrument’s rate
Risk-free rate for Govt investment
appraisal set by the Green Book
adjusted for inflation
+3.50%
+ RPI 2.55%
+3.50%
+ RPI 2.20%
Typically, 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 PV 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
37
Impact on provisions
Both the NDA 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
2016-17
Discounted
liability
2016-17
Undiscounted
liability
2016-17
Impact of
discounting
2015-16
Discounted
liability
2015-16
Undiscounted
liability
2015-16
Impact of
discounting
£m
£m
£m
£m
£m
£m
NDA nuclear
provision
163,505
118,483
45,022
160,672
117,403
43,269
Coal Authority
provision
2,817
1,884
933
2,820
1,899
921
Impact on financial instruments
The fair value of the Contracts for Difference
(CfDs) obligation disclosed in the accounts
is adjusted using the 0.7% real term
discount rate.
Each year, the fair value of the CfDs 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
2016-17
Discounted
liability
2016-17
Undiscounted
liability
2016-17
Impact of
discounting
2015-16
Discounted
liability
2015-16
Undiscounted
liability
2015-16
Impact of
discounting
£m
£m
£m
£m
£m
£m
Contracts for
Difference
liability
31,413
33,388
1,975
27,806
29,800
1,994
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, 2016-17:
RPI was 2.55% (2015-16: RPI was 2.2%) giving
an implicit rate of 6.05% (2015–16: 5.7%).
Category
2016-17
Discounted
assets
2016-17
Undiscounted
assets
2016-17
Impact of
discounting
2015-16
Discounted
assets
2015-16
Undiscounted
assets
2015-16
Impact of
discounting
£m
£m
£m
£m
£m
£m
Repayable
launch
investments
1,205
1,836
(631)
1,389
1,956
(567)
Coal pensions
331
377
(46)
369
428
(59)

Annual report and Accounts 2016–17
38
Box 4: Nuclear Decommissioning Authority provision
The 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.
The NDA’s best estimate of the future costs
of the estate over the next 100+ years on
an undiscounted basis is £119.0 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
39
Box 5: Contracts for Difference (CfDs)
CfDs 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 40 recognised
CfD contracts and the Hinkley Point C CfD,
which has not been recognised, 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. Although difference payments
under CfDs can be positive (an asset) or
negative (a liability), accounting standards
only allow for the liability element to be
recognised. This 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.
Movements in fair value of CfDs
recognised in the Accounts
2016-17
2015-16
£ bn
£ bn
1 April
30.6
21.6
Changes in FV on
existing contracts
-0.8
10.7
Terminations where
CfDs are cancelled
–
-1.7
CfD reinstated
1.7
–
Payments made for generation
-0.1
–
31 March
31.4
30.6
In accordance with accounting standards the
initial fair value of any contract is deferred.
On 1 April 2016 the total deferred fair value
of CfDs disclosed in the accounts was £18
billion. The CFD contract for Hinkley Point was
signed in September 2016, but it has not been
recognised in the accounts. The fair value at
31 March 2017 was £28.8 billion.
The Department recognises all subsequent
movements of fair value on CfD contract
recognised in the accounts through the
Statement of Comprehensive Net Expenditure
(SoCNE) and recognises a liability on the
Statement of Financial Position (SoFP).
Effect on the SoFP
2016-17
2015-16
£ bn
£ bn
1 April
12.6
2.5
Changes in FV on existing
recognised contracts
-0.8
10.7
Terminations where CfDs are
cancelled
–
-0.6
Reinstatement of CfDs
0.6
–
Payments made for generation
-0.1
–
31 March
12.3
12.6
Further details on the CfDs can be found
in note 9 on page 150.

Annual report and Accounts 2016–17
40
Box 6: Hinkley Point C
Hinkley Point C (HPC) will provide low carbon
electricity to 6 million homes, twice as many
as the whole of London, for around 60 years.
It will provide a vital boost for the national and
local economy, creating 25,000 jobs, with at
least 5,000 people from Somerset expected
to work directly on the project, providing a £40
million boost to the local economy every year.
The Funded Decommissioning Programme
will make sure that the taxpayer does not pick
up the cost of decommissioning the plant
in the future.
The Department’s CfD means that no costs
are passed onto the consumer during
the build period of the power station. CfD
contracts are explained in box 5 on page 39.
The CfD for HPC has been signed with NNB
Generation Company, a subsidiary of EDF.
It is much longer than contracts for other
types of power generation, such as offshore
wind, which are typically for 15 years. Some
features of the contract are as follows:
• It 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 (910 TWh).
• The strike price, the amount guaranteed
to the generator through the CfD, has been
negotiated at £92.5/MWh15 but this shall be
reduced by £3/MWh if there is agreement
to commission Sizewell C on or before
the HPC start date. The strike price may
also be adjusted upwards if the operating
expenditure costs are more than assumed
and downwards if they are less. This
provides a way of mitigating long-term cost
risks for both parties.
• There is a construction gain share for HPC,
such that 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 Department.
• Given the expected generating capacity,
and the 35–year contract duration the HPC
CfD is extremely large, the fair value in Sept
2016 was £26.8 billion (in 2016 prices),
which increased by £2 billion to 31 March
2017, as a result of subsequent movements
in forecasts of future wholesale electricity
prices.
• The 35–year duration has presented
significant challenges to value, and there
are a lot of uncertainties, particularly long-
term future forecast wholesale electricity
prices. Given the uncertainties, the CfD has
not been recognised in the accounts, more
detail is provided in the Derivative Financial
Instrument Note.
Future forecast wholesale electricity
prices
Forecast wholesale electricity prices are
derived from the Dynamic Dispatch Model
(DDM) which has been developed by the
Department to facilitate and inform policy
decisions by modelling investor behaviour in
response to fuel and carbon prices and policy
environment. The DDM forecasted wholesale
electricity prices do not go beyond 2050.
The Department has therefore assumed flat
wholesale prices for the 10 years between
2050 and 2060.
Forecasts of future wholesale electricity prices
over such a long time period are inherently
uncertain as they will be affected by a variety
of factors including electricity demand, fossil
fuel prices, generation mix, carbon prices and
technology. The Department considers that
the inherent uncertainties of forecasting future
wholesale electricity prices beyond 2040,
and up to 2060 mean that the HPC CFD does
not meet condition (b) of paragraph 4.38
of the Conceptual Framework, and therefore,
this contract has not been recognised in the
primary statements.
15
In 2012 prices and inflated using the Consumer Price Index (CPI)

Accountability report
41
Sensitivity analysis
The following table shows the impact on
the fair value (in 2016 prices) of the HPC
CfD, classified under level 3 in accordance
with IFRS13, by using reasonably possible
alternative assumptions:
Change in fair value of HPC if:
Favourable changes
£000
Unfavourable changes
£000
Electricity prices decrease by 10%
–
4,477,796
Electricity prices increase by 10%
4,477,796
–
At generation cap
–
259,850
10% less load factor
2,882,384
–
Estimated commissioning date moves backwards
by one year
481,230
–
Sizewell C strike price adjustment for HPC
2,387,085
–
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.

Annual report and Accounts 2016–17
42
Estimates as at January 2017
Levy Control Framework (LCF) budget
Many of our energy policies, including: Contracts
for Difference, the Renewables Obligation (RO)
and the small-scale Feed-in Tariff scheme, are
funded by electricity suppliers who recover their
costs via consumer bills.
The LCF was introduced by HM Treasury and
the then Department of Energy and Climate
Change in 2011 to set caps on consumer-funded
expenditure on energy policies and control the
costs to consumers. It covers several policies
classed as levies.
We have taken action on the Feed-in Tariff
scheme to set lower tariffs. Our measures seek
to maintain a viable solar industry which, in the
medium term, can continue to reduce its costs
and move towards subsidy–free deployment, and
to provide other technology sectors with tapered
support over coming years. Keeping the scheme
open and introducing deployment caps, based
on a £100 million budget, is still expected to
facilitate 1,600MW of new capacity and 240,000
new installations by 2020-21.
The RO is being replaced by the competitive
‘Contracts for Difference’ support scheme. The
CfD controls the rate of deployment and uses
competition to set prices, improving value for
money for bill payers. The Government closed
the RO early to solar photovoltaic (PV) and
onshore wind. For all other technologies, the
scheme closed on 31 March 2017. There are a
number of extensions which allow accreditation
in certain circumstances up to January 2019
in Great Britain and March 2019 in Northern
Ireland. We have also removed guaranteed rates
of support for certain solar PV, biomass co-firing
and biomass conversions stations.
Actual figures (from 2011-12 to 2015-16) show
that LCF spend has not hit the budget cap in
any of the years. However, projections to 2020-
21 forecast that the LCF cap will be exceeded in
each of the remaining years, although the figures
are within the 20% ‘headroom’ agreed by HM
Treasury to allow for cost fluctuations (such as
wholesale price changes) which are outside the
Department’s control.
In the Spring Budget 2017, the Government
announced that the LCF (as a budgetary
framework) will not be renewed post 2020.
£ billion
0
1
2
3
4
5
6
7
8
9
10
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
LCF budget cap
Early Contracts for Difference
Feed-in Tariffs
Renewables Obligation
LCF 20% headroom
Contracts for Difference

Accountability report
43
Official Development Assistance (ODA)
Under agreed statistical reporting methodology,
ODA expenditure is reported on a calendar year
and cash basis. The Department provided £687
million of ODA in 2016.
In 2016 we have delivered £311 million of climate
and energy related ODA. We have also invested
£303 million in international climate finance
including:
• £152 million through large-scale multilateral
funds such as the Green Climate Fund;
• £60 million in the Transformative Carbon Asset
Facility that is using results–based finance to
support developing countries to implement
carbon pricing measures;
• £42 million in the Renewable Energy
Performance Platform, a private–sector
focussed programme targeting renewables
in Africa; and
• £17 million through technical assistance
programmes aimed at building the capacity
of developing countries.
In 2016 we delivered £377 million in research and
innovation related ODA expenditure, including
£92 million from the Newton Fund and £71.8
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 – from: supporting work
to sequence the genetic make-up of the Zika
virus and its rapid diagnostics to supporting the
engineering profession in sub-Saharan Africa.
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.
Further information on the Department’s
ODA expenditure in 2016 may be found in the
publication ‘Provisional UK Official Development
Assistance as a Proportion of Gross National
Income’.16
Charging policy
The 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;
and estate accounting, where fees reflect the
cost of financial transactions on insolvency cases
using the Insolvency Services Account.
Details of charging policies relating to Partner
Organisations may be found in their published
accounts.
16
The figures in this section are provisional; taken from the publication: ‘Provisional UK official development assistance as
a proportion of gross national income: 2016’ available at: https://www.gov.uk/government/statistics/provisional-uk-offi­
cial-development-assistance-as-a-proportion-of-gross-national-income-2016 The split between different funds may not
sum due to roundings.

Annual report and Accounts 2016–17
44
Departmental Board
and Leadership Team
1. Greg Clark
Secretary of State for Business, Energy
and Industrial Strategy and Chair of the
Departmental Board
The Rt Hon 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.
2. Nick Hurd
Minister of State for Climate Change and Industry
Nick Hurd was appointed Minister of State
at the Department for Business, Energy and
Industrial Strategy on 16 July 2016. Prior to this
Nick served as a Minister in the Department
for International Development from November
2015, where his portfolio included climate and
environment, and leadership of the Energy Africa
campaign. He was elected Conservative MP
for Ruislip, Northwood and Pinner in May 2010.
He has spent 18 years in business, including
5 years representing a British bank in Brazil.
3. Margot James
Parliamentary Under Secretary of State, Minister
for Small Business, Consumers and Corporate
Responsibility
Margot James was appointed as Parliamentary
Under Secretary of State at the Department
for Business, Energy and Industrial Strategy
on 17 July 2016. Prior to this Margot served as
Assistant Government Whip from May 2015.
She was elected Conservative MP for
Stourbridge in May 2010. Margot worked in
sales and marketing for her father’s business,
MJI, based in Birmingham. In 1986 she
co-founded Shire Health Group, a public
relations and medical education business.
4. Lord Prior of Brampton
Parliamentary Under Secretary of State
Lord Prior of Brampton was appointed
Parliamentary Under Secretary of State at the
Department for Business, Energy and Industrial
Strategy on 21 December 2016. Previously he
served at the Department of Health as Minister
for NHS Productivity from May 2015. He is a
Conservative member of the House of Lords.
Lord Prior has a wealth of experience including
roles in health, finance, manufacturing and
engineering.
5. Baroness Neville-Rolfe
Minister of State for Energy and Intellectual
Property
Baroness Neville-Rolfe was appointed Minister
of State at the Department for Business, Energy
and Industrial Strategy on 17 July 2016. She
joined the House of Lords as a Conservative peer
in October 2013 and served as Parliamentary
Under Secretary of State at the Department for
Business, Innovation and Skills, and Minister for
Intellectual Property from July 2014 until July
2016. She has been an executive director on
the Board of Tesco PLC from 2006-13 and has
served on several other high-profile boards.
She moved from BEIS to become Commercial
Secretary to the Treasury in December 2016.
6. Archie Norman
Lead Non-Executive Director and Deputy Chair
of the Departmental Board
Archie Norman is one of Britain’s leading
businessmen with a long track record of
business change and value creation. He has led
transformations of major British businesses in the
UK and abroad, served on the boards of several
others, and built strong management teams who
are now in leading positions in several major
British companies. Archie is the first and only
FTSE100 Chairman to be elected a Member
of Parliament.
7. Professor Dame Ann Dowling DBE
Non-Executive Director and Chair of the
Nominations and Governance Committee
Ann Dowling DBE is a Professor of Mechanical
Engineering at the University of Cambridge and
chair of the University Gas Turbine Partnership

Accountability report
45
with Rolls-Royce. Ann is President of the Royal
Academy of Engineering and a Fellow of the
Royal Society. She has held visiting posts at
MIT (Jerome C Hunsaker Visiting Professor,
1999) and at Caltech (Moore Distinguished
Scholar 2001). Her research is in fluid mechanics,
noise, vibration and combustion and is aimed
primarily at aeronautical applications. Ann was
also a Non-Executive Director for BIS from
February 2014.
8. Charles Randell CBE
Non-Executive Director and Chair of the Audit
and Risk Assurance Committee
Charles Randell has been an independent
director of the Bank of England’s Prudential
Regulation Authority since it assumed
responsibility for supervising UK banks,
insurance companies and large investment
firms in April 2013. Prior to that 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 for DECC from October 2014.
9. 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 & 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.
10. Carolyn McCall
Non-Executive Director
Carolyn is CEO of EasyJet and has extensive
experience in business with a wealth of
understanding of the transportation and media
industries. Prior to EasyJet she was Chief
Executive of the Guardian Media Group. She has
been a great champion of diversity, most recently
demonstrated through EasyJet’s commitment
to increase the number of female pilots it trains
and employs.
11. 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.
12. 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.
13. Rachel Campbell
Non-Executive Member – Nominations
and Governance 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.
14. 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. With a

Annual report and Accounts 2016–17
46
strong interest in governance, she is a regular
speaker and contributor of articles to industry
conferences and publications.
15. Nigel Johnson
Non-Executive Member – Audit and Risk
Assurance Committee
Nigel Johnson is a chartered accountant with an
extensive range of audit and advisory experience
gained over 30 years working for a large
professional services firm, supporting diverse
clients across the corporate, not-for-profit and
public sectors. Corporate clients included major
UK- and US-listed groups such as Tate & Lyle,
Trafalgar House Kimberly-Clark, and Hitachi.
He has also worked with charities including
Scope and Great Ormond St. Hospital.
16. 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.
17. Myriam Madden
Non-Executive Member – Audit and Risk
Assurance Committee
Myriam Madden is a leader in the field of
accountancy, having served as President of the
Chartered Institute of Management Accountants
and as Chair of the Joint Venture Board of the
Association of International Certified Professional
Accountants, both global accounting bodies.
She is an experienced Executive Director
specialising in business transformation,
operational re-structuring and finance, in the UK,
US and Europe. Myriam also served as a Non-
Executive Director on the Board of the American
Institute of Certified Public Accountants.
18. 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.
19. Alex Chisholm
Permanent Secretary
Alex Chisholm became Permanent Secretary
for the Department for Business, Energy and
Industrial Strategy in September 2016. He acted
as Joint Permanent Secretary for the Department
initially, alongside Sir Martin Donnelly, having
recently been appointed as the Permanent
Secretary for DECC. Prior to this Alex was the
Chief Executive for the Competition and Markets
Authority.
20. Sam Beckett
Director General, Economics and Markets
Sam has been Director General, Economics and
Markets since December 2016. Prior to this she
was Director General for Economics and Markets
in BIS. 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.
21. 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.

Accountability report
47
22. Clive Maxwell
Director General, Energy Transformation
Clive Maxwell has been Director General, Energy
Transformation since December 2016. Prior to
this he was Director General, Energy Efficiency
and Heat at DECC. Clive was Chief Executive
of the Office of Fair Trading from July 2012, after
being on its board as an Executive Director and
previously working as Senior Director, Services
Sector. Prior to joining the OFT, Clive worked in
a wide range of roles for HM Treasury from 1992
to 2009.
23. 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.
24. Angie Ridgwell
Director General, Corporate Services
Angie Ridgwell has been Director General,
Corporate Services since December 2016. Prior
to this she was Director General for Finance
and Corporate Services at DECC. Before joining
DECC she was Strategic Director for Corporate
Services and Strategic Director of Organisational
Design for Bristol City Council. She has extensive
experience working with a range of local
authorities, government agencies and in the
private sector.
25. Jaee Samant
Director General, Strategy, Growth,
People and Legal
Jaee Samant has been Director General,
Strategy, Growth, People and Legal since
December 2016. 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.
26. Katrina Williams
Director General, International and Growth
Katrina Williams has been Director General,
International and Growth since December
2016. Prior to this she was Director General for
International, Science and Resilience at DECC.
Before joining DECC, Katrina was Director
General for Strategy, Evidence and Customers
in Defra, advising ministers on the department’s
strategic focus, overseeing all of its international
and EU work and how it gets the evidence it
needs to support its work. From 2008 to 2012
she was Director General for Food and Farming
in Defra.
27. Professor Tim Dafforn
Chief Entrepreneurial Adviser
Professor Tim Dafforn is Chief Entrepreneurial
Adviser. Prior to this appointment he was
Chief Scientific Adviser at BIS. Tim has great
expertise across biotechnology and life sciences,
accumulated over a career that includes
authoring more than 100 publications and a
lifetime research grant capture of £10 million.
28. Professor John Loughhead OBE
FREng FTSE
Chief Scientific Adviser
Professor Loughhead is Chief Scientific Adviser.
Prior to this he was Chief Scientific Adviser
at DECC. Before joining DECC, John was
Executive Director at the UK Energy Research
Centre (UKERC). John’s professional career has
been predominantly in industrial research and
development for the electronics and electrical
power industries. He has extensive international
experience in both industry and academia.

Annual report and Accounts 2016–17
48
1
7
13
19
25
2
3
4
5
6
8
14
20
26
9
15
21
27
10
16
22
28
11
17
23
12
18
24
Key to committee membership

Departmental Board

Nominations and Governance Committee

Audit and Risk Assurance Committee

Executive Committee

Performance Finance and Risk Committee

Projects and Investment Committee

People and Operations Committee

Strategic Policy Review Committee

Transition Programme Board

Accountability report
49
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 2016 no 1243
(together known as the ‘Departmental group’,
as consisting of the department and sponsored
bodies listed at note 28 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
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;
• 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; and
• prepare the accounts on a going–concern
basis.
HM Treasury has appointed the Permanent Head
of the Department as Accounting Officer of the
Department.
The Accounting Officer of the Department has also
appointed the Chief Executives or equivalents of
its sponsored non-departmental and other arm’s–
length public bodies as Accounting Officers of those
bodies. The Accounting Officer of the Department
is responsible for ensuring that appropriate systems
and controls are in place to ensure that any grants
that the Department makes to its sponsored
bodies are applied for the purposes intended
and that expenditure and the other income
and expenditure of the sponsored bodies are
properly accounted and in order, 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 are
set out in Managing Public Money published by
HM Treasury. These include responsibility for
the propriety and regularity of the certain 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.
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. I have received appropriate
assurances from the former accounting
officers who served this department and its
predecessors, Sir Martin Donnelly and Stephen
Lovegrove. As far as I am aware, there is
no relevant audit information of which the
Department’s auditors are unaware.
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
Principal Accounting Officer
and Permanent Secretary
13 July 2017
Statement of Accounting
Officer’s responsibilities

Annual report and Accounts 2016–17
50
Introduction
Establishing the right governance for the newly
formed Department has been a crucial part
of creating the best environment to deliver
an economy that works for everyone.
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 2016 to
31 March 2017 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. The
statement seeks to show what has been
achieved in the Department and to set out
the activity that was previously undertaken
in BIS and DECC that has since become the
responsibility of BEIS.
Report of the Lead
Non-Executive Director
When I joined the Department in October we
set out, with the support of the Secretary of
State and Permanent Secretary, to recruit a new
strong Board with highly credible representatives
reflecting the new Department’s mission and
aspirations. As a result, we now have a very
strong team, including top executives from
the UK’s leading companies and professions,
science and the entrepreneurial sector. My
thanks go to those outgoing Non-Executive
Board members from the legacy Departments
who helped to ensure a smooth transition.
Critically, we were able to retain the services
of Ann Dowling and Charles Randell to be part
of our new non-executive team.
The Departmental Board was quick to begin
work, providing challenge and support for two
of our biggest priorities: introducing an industrial
strategy and ensuring the UK gets the best deal
from Brexit. The Non-Executive Board members
have provided a valuable link between the
Department and the business community.
As part of this they have participated in a range
of sector–specific stakeholder engagement
events, themed around the 10 pillars of the
industrial strategy.
The Department has also undergone an intense
period of change over the past year that should
not be underestimated. The Departmental
Board has overseen the delivery of the Transition
Programme to bring the new Department
together. It has also played a key role in shaping
transformation plans – providing steers on
the scope, approach and ambition for the
programme prior to Executive Committee sign
off. The Board will continue to review progress
on transformation, and to deploy the knowledge
and expertise of the non-executive team to
support delivery.
The Board meetings are chaired and led by
the Secretary of State and benefit from full
representation from Ministerial and official
members. I am pleased with the start our non-
executive team has made and I am confident
that we will have a great deal to contribute to
the work of the Department in the year ahead.
Archie Norman
Lead Non-Executive Director
Governance Statement

Accountability report
51
Governance structures
The formation of BEIS in July 2016 provided
an opportunity to create a governance structure
that both drew on the best practice of the legacy
departments and introduced innovations to
enable the Department to deliver its vision of
an economy that works for all.
At a structural level, the top tier of governance
has been established within the Department.
During the course of the transition programme,
there was an approach of dual-running from July
to October, between legacy arrangements with
blended participation to support the move to
our new structure.
This has ensured that key decisions have
received the appropriate scrutiny and approval,
while initial feedback has highlighted that there
is more to do in 2017-18 to communicate these
arrangements and to support different parts
of the Department to engage with this tier of
governance effectively.
The Department is focused on corporate
responsibility and governance, and aims to be
at the forefront for raising standards, diversity
and inclusion in the way that we designed and
implemented our governance structures. We will
evaluate their success over the course of 2017-18
and will report on how we have improved and
refined our approach in the next Annual Report.
Departmental Board
Provides direction on
strategy, performance
and risk management
Audit and Risk
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 the Department
Transition Programme Board : Leading the Transition Programme until the end of 2016-17
People and
Operations
Committee
Effective
management of
human resources,
estates and digital
Performance
Finance and Risk
Committee
Monitoring frameworks
for the Department’s
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 horizon
scanning
Our top-tier governance structure

Annual report and Accounts 2016–17
52
Departmental Board
The Departmental Board is now fully established,
following the appointment of 7 non-executive
Board members by February 2017. The 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 the executive team. It
provides collective strategic leadership and
challenge, with responsibilities for performance,
risk, and delivery, including appropriate oversight
of non-departmental public bodies (NDPBs).
The Board is focused on the Departmental vision
as reflected in the areas it has addressed since
its first meeting in December 2016.
The Board held three meetings in 2016-17, and
there were meetings of the legacy departments’
boards prior to the Machinery of Government
changes. The Board has agreed to hold 6
meetings a year in future. At each meeting,
the Board receives a report from the Permanent
Secretary and divides its time between: reviewing
progress and risks to our strategic objectives;
assuring governance; and supporting the
Department to get the right capability and
systems in place to deliver high performance.
In its first three meetings this has included
consideration of the headline issues facing the
Department such as the industrial strategy,
the UK’s exit from the EU, the Department’s
transition programme and the development
of the Single Departmental Plan.
Board activities
Discussion
Action
Progress
Strategy
Departmental vision
and structure
The Board endorsed the vision for the Department
and emphasised the importance of an effective
industrial strategy to deliver this vision.
The vision has been communicated
to all Department staff and is core to
strategic planning and Departmental
transition.
EU exit opportunities
and challenges
The Board challenged the Department on its
readiness and assumptions. They specifically
sought further views on the impact of currency
depreciation on the UK.
The Board sought a further
discussion on the approach and
priorities for EU exit work.
EU exit approach
and priorities
The Board stressed the need for the Department
to have a lead role in both listening and
communicating clearly to business to assure
and maintain confidence.
The approach to EU exit is now
a standing item for the Board to
challenge and support.
Industrial Strategy
Green Paper
The Board challenged the language of the strategy
and recommended stakeholder engagement to
improve its potential and impact
The Green Paper was launched and
the non-executive Board members
took an active role in the engagement
sessions.
Critical infrastructure
review and mergers
Green Paper
The Board provided views on how to strengthen the
Green Paper and to ensure it had the right scope
and legal scrutiny.
The Green Paper is undergoing
further development.
Entrepreneurship
The Board considered proposals for a review of
entrepreneurship and offered a set of challenges to
strengthen the approach, ensuring this becomes a
core part of the Department’s offer to business.
Further work will be done on this
for 2017-18.
Security of gas
supply
The Board agreed with the assessment of gas
storage capacity in the UK and challenged the
Department on whether enough was being done
to maximise shale gas opportunities.
No additional progress was discussed
at the March Board meeting.

Accountability report
53
Discussion
Action
Progress
Governance and risk
Setting Board terms
of reference
The Board approved the terms of reference and
agreed to work to ensure that the impact of their
decisions was assessed over time.
The Board is working to its terms of
reference and is preparing for a full
evaluation of performance in 2017-18.
Single Departmental
Plan (SDP)
The Board was informed of the approach required
to develop an SDP and agreed that Archie Norman
would have a lead role for the Board.
The SDP was developed with support
from Archie Norman, but publication
has been delayed by purdah rules.
Departmental
risk appetite and
management
The Board agreed to take an iterative approach to
setting risk appetite and challenged the Department
to consider the cumulative impact of risk and how
to mitigate it.
The Departmental risk framework is in
development with the support of the
Audit and Risk Assurance Committee.
Operations
Future shape, size
and operating model
for the Department
The Board made a commitment to ensure the
Department becomes one of the best places
in Government to work, as part of a need to
strengthen performance and talent management.
This was taken forward in the
subsequent Board discussion on
staff performance enhancement.
Performance
enhancement
The Board agreed with the need to strengthen
the offer to staff to attract and retain talent, while
being clear on the need to further improve overall
leadership and management capability.
Discussions are being taken forward
to support this ambition.
Transformation
Programme
The Board recognised that a bold and ambitious
approach is needed to make the Department an
attractive place to work, providing a challenging mix
of work and the opportunity to make a difference.
The programme is now being
established to transform the
Department over the next three years.
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. The Department collects this
information twice a year from executive and
non-executive Board members and on the
appointment of new members. 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.
Due to the relative new state of the Board
and its members, there has not been a formal
evaluation of Board performance in 2016-17. The
Board is committed to assessing and improving
performance and will implement a full internal
review for 2017-18, with a view to having an
independent review in 2020.
The Board is supported by three main
committees:
• the Audit and Risk Assurance Committee;
• the Nominations and Governance Committee;
and
• the Executive Committee.
“An effective Board is a crucial aspect of
good corporate governance. That is why
I made it a priority for my Department
to both recruit a highly talented and
respected set of non-executives and to
ensure that the Board meets frequently
throughout the year to provide the
best possible strategic leadership and
challenge. Having set a clear vision for
the Department and considered some of
the most pressing priorities, including the
industrial strategy and the UK’s exit from
the EU, I am confident we have the right
team and governance in place to deliver.”
Greg Clark
Secretary of State

Annual report and Accounts 2016–17
54
Board and committee
attendance
The table below sets out attendance for the key
governance forums within the Department. Prior
to this, similar arrangements were in place for
BIS and DECC. A summary of the number of
meetings held in each of the legacy departments
are set out in the subsequent table.
Where members were unable to attend meetings
in person, they have been able to share their
views in advance to the chairperson.
Board and Committee attendance for the period 14 July 2016 to 31 March 2017
Board or
committee member
Dates served
Departmental
Board
Audit and Risk
Assurance
Committee
Executive
Committee
Total meetings
during period
3
2
17
Greg Clark
3/3
Nick Hurd
2/3
Margot James
Appointed January
2/2
Baroness Neville-Rolfe
Left December
1/1
Lord Prior
Appointed December
2/2
Archie Norman
3/3
Professor Dame Ann Dowling
2/3
Charles Randell
3/3
2/2
Stephen Carter
Appointed March
1/1
Carolyn McCall
Appointed March
1/1
Kathryn Parsons
Appointed March
1/1
Stuart Quickenden
Appointed March
1/1
Rachel Campbell
Claire Davies
0/2
Nigel Johnson
2/2
Bryan Ingleby
Appointed March
1/1
Myriam Madden
Appointed March
1/1
Lucy Shannon
2/2
Alex Chisholm
3/3
15/17
Sam Beckett
17/17
Gareth Davies
14/17
Clive Maxwell
15/17
Jeremy Pocklington
14/17
Angie Ridgwell
3/3
15/17
Jaee Samant
Appointed January
2/2
15/17
Katrina Williams
15/17
Professor Tim Dafforn
8/17
Professor John Loughhead
14/17
The Nominations and Governance Committee did not meet in 2016-17. The first meeting of the committee was in May 2017.

Accountability report
55
Board and committee activity for
the period 1 April 2016 to 14 July 2016
This table shows the number of meetings held
in the legacy departments prior to the Machinery
of Government change.
Governance Forum
Number held in BIS
Number held in DECC
Departmental Board
1
1
Audit and Risk Assurance Committee
3
3
Nominations and Governance Committee
1
1
Executive Committee
10
9
Non-executives who left during 2016-17
During the first half of 2016-17 several non-
executives ended their work with the Department
as they reached the end of their term or as a
result of the Machinery of Government change.
Name and role
Role ended
Martin Stewart Lead Non-Executive Board Member for DECC
May 2016
Caroline Mawhood Non-Executive Member of ARAC for DECC
June 2016
Wendy Purcell Non-Executive Board Member for BIS
July 2016
Jayne Scott Non-Executive Member of ARAC for DECC
September 2016
Allan Cook Lead Non-Executive Board Member for BIS
November 2016
Grenville Hodge Non-Executive Member of ARAC for BIS
September 2016
Jonathan Vickers Non-Executive Member of Investment Committee for DECC
November 2016
Dale Murray Non-Executive Board Member for BIS
December 2016
Stephen Bligh Non-Executive Board Member for BIS and Chair of the Audit and Risk
Assurance Committee for BIS
December 2016
Tom Kelly Non-Executive Board Member for DECC
December 2016
Juergen Maier Non-Executive Board Member for BIS
December 2016
Rachel Campbell Non-Executive Board Member for DECC
December 2016

Annual report and Accounts 2016–17
56
Audit and Risk Assurance Committee
“Since July 2016, I have been impressed by
the constructive efforts made by colleagues
from BIS and DECC to draw together
their respective Audit and Risk Assurance
Committee (ARAC) arrangements. As Chair,
I am grateful to Stephen Bligh, the former
BIS ARAC Chair, for his support and I am
pleased that we have been able to build a
team of non-executive members that draws
in both former colleagues and new people
who can provide the challenge needed
to ensure BEIS has a clear grip on its
management of risk and finance.”
Charles Randell CBE
Committee Chair
Role of the committee
The purpose of the Audit and Risk Assurance
Committee 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, the Audit and Risk
Assurance Committee 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 reputation for excellent financial
and risk management.
The Audit and Risk Assurance Committee
advises the Board and Accounting Officer on:
• the effective operation of the overall control,
risk and governance arrangements, including
ensuring adequate assurance is available
to the Accounting Officer for the annual
Governance Statement;
• the accounting policies, the accounts, and the
annual report of the organisation, including
the process for review of the accounts prior to
submission for audit, levels of error identified,
and management’s letter of representation to
the external auditors;
• the planned activity and results of both internal
and external audit (including the National Audit
Office’s (NAO) audit of the Resource Accounts)
and their implications for the Department;
• the adequacy of management response to
issues identified by audit activity, including
calling Directors to account as necessary,
and advising on how to make effective
improvements as a result;
• proposals, where appropriate, for tendering
for either internal or external audit services
or for purchase of non-audit services from
contractors who provide audit services; and
• anti-fraud policies, whistleblowing processes,
and arrangements for special investigations.
Charles Randell was confirmed as the BEIS
Audit and Risk Assurance Committee chair
in November 2016 and chaired the new
Department’s first formal Audit and Risk
Assurance Committee on 21 November 2016.
Lucy Shannon, Claire Davies and Nigel Johnson
were confirmed as Non-Executive Members
in March 2017, continuing their role from
the previous BIS Audit and Risk Assurance
Committee. Bryan Ingleby and Myriam Madden
were recruited as Non-Executive Members in
March 2017 to ensure the right balance of skills.
Focus since July 2016
Since the MoG changes in July, the focus for the
Audit and Risk Assurance Committee has been on:
• shaping the approach for the Annual Report
and Accounts to ensure the effects of the
Machinery of Government change are
appropriately reflected;
• continuous review and improvement of
the internal control framework and financial
management;
• assuring the Transition Programme, bringing
together DECC and BIS to form BEIS;
• examining and challenging the new
governance arrangements and control
environment in the Department, and assessing
the levels of control and assurance during
the period prior to embedding these new
governance arrangements and controls;
• ensuring the committee is fit for purpose, with
the right balance of skills and capabilities; and
• the formation of comprehensive risk
management processes, and a single risk
register.

Accountability report
57
Nominations and Governance Committee
“I firmly believe that the success of any
organisation is based on valuing its people
and having an effective strategy for their
personal and career development. As
Chair, I am making it a priority for the
committee to scrutinise the Department’s
plans for senior talent management and
succession planning. I and the committee
will support and challenge the Department
as it seeks to become one of the best
employers in Whitehall.”
Professor Dame Ann Dowling
Committee Chair
Role of the committee
The purpose of the Nominations and Governance
Committee is to support the Departmental Board
by challenging and assuring our strategies and
plans for senior talent management, and to
implement corporate governance policy.
The role of the committee covers the following
five central elements:
• scrutinising systems for identifying and
developing leadership and high potential;
• providing assurance that Board-level
appointments are based on merit, taking
into account the benefits of diversity;
• reviewing plans for the orderly succession
of appointments to the Board and Director
General roles, in order to maintain an
appropriate balance of skills and experience;
• 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; and
• assuring plans and implementation of
corporate governance policy to ensure
the Department is a leader in this field.
In most Government departments this
committee is likely to meet once a year in May
to align with performance management systems.
Meetings did take place in May within the legacy
departments and no meetings have taken place
within this accounting year, since the creation
of BEIS.
The new Department’s Nominations and
Governance Committee has been fully appointed
and met in May 2017 for the first time. Rachel
Campbell has been made a Non-Executive
Member of the Committee following her
involvement as Chair of the DECC Nominations
and Governance Committee.

Annual report and Accounts 2016–17
58
Executive Committee
“The new BEIS Executive Committee
met for the first time on 6 September
2016, rapidly bringing together the senior
leadership team from the two legacy
Departments. It has met on 16 occasions
since. The committee has operated with
real pace and purpose, ensuring that
delegated governance arrangements
were put in place and that there has been
clear senior direction for the delivery of our
strategic objectives, management of risks
and the transformation of our Department.”
Alex Chisholm
Committee Chair
Role of committee
The Executive Committee (ExCo) brings together
the senior leadership team to support the
Permanent Secretary in leading the Department,
and as Accounting Officer. ExCo 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 Performance, Finance
and Risk Committee), regular risk review, and
discussion of ad hoc issues.
The committee is responsible for:
• ensuring Ministers are advised on how
the portfolio of policies and programmes
contribute to the Department’s strategic
objectives, prioritisation of this portfolio given
scarce resources, and resource allocation
including thorough annual business planning;
• ensuring individual policies and programmes
are implemented effectively, through oversight
of delivery, management of risks and issues,
and use of resources; and
• operational management of the Department
including implementation of internal change
and Civil Service reform, people management,
and provision of corporate services.
Focus since July 2016
• Key areas of focus for the BEIS Executive
Committee following the Machinery of
Government changes have been the
Department’s Transition and Transformation
programme, Business Planning, the Efficiency
Review, Single Departmental Plan, Diversity
and Inclusion Strategy, the People Survey,
and Business Continuity Planning. There has
been attendance from senior officials in other
Government departments for discussions on
performance and risk, UK Devolution, and
diversity and inclusion. Areas of focus on
policy have included industrial strategy and
EU Exit.
• The Executive Committee has also delegated
key responsibilities to 4 standing committees
and a fixed-term Transition Programme Board.
These arrangements were established in 2016-
17 and have all made a significant positive
impact to the delivery of the Department’s
vision and objectives.

Accountability report
59
People and Operations Committee
“The People and Operations Committee
was established as a delegated
committee of ExCo in October 2016 and
is crucial to building the right culture,
capability, systems and processes for the
Department to succeed. The Committee
has worked closely with the Transformation
Programme and has been proud to
pioneer our shadow committee approach
to getting wider views into our governance
activity from a range of people across the
Department.”
Angie Ridgwell and Jaee Samant,
Committee Co-Chairs
Role of the committee
The committee builds on the approach of
DECC’s Operations and People Committee
and BIS’s Operations Committee, People
Committee and Digital and Data Committee.
It has responsibilities for people:
• ensuring Departmental staff capability is
aligned with the Department’s business needs
and priorities;
• ensuring diversity and inclusion is central to
the Department’s people agenda, including
recruitment, reward, management, and our
workforce strategy and culture;
• overseeing pay remit and performance
management;
• overseeing shared service needs; and
• overseeing health and safety management.
And it has responsibilities for operations:
• ensuring the smooth running of operations
and that the Department complies with
operations and people strategies set by
the Cabinet Office;
• overseeing the management of the
Department’s buildings and estates and other
physical assets;
• ensuring the provision of effective IT services
for the Department;
• overseeing digital and physical security
management, including ensuring that
provisions are in place to manage major
planned or unexpected events, such
as protest marches, severe flooding or
terrorist attacks;
• overseeing the development and
implementation of knowledge management,
transparency and digital strategies; and
• escalating areas of concern to the Executive
Committee where appropriate.
Focus areas since July 2016
Since the Machinery of Government changes,
the focus for the People and Operations
Committee has been on:
• agreeing on policy and pay harmonisation,
contractual terms and conditions for
employment and other people and pay issues;
• considering a shared service single operating
platform for the Department;
• reviewing the workforce strategy for the
Department;
• reviewing the health and safety policy; and
• overseeing and approving both the leadership
and management, and learning and talent offer
in the Department.

Annual report and Accounts 2016–17
60
Performance, Finance and Risk Committee
Sam Beckett and Angie Ridgwell – Committee
Co-Chairs
“Since forming in October, the Performance,
Finance and Risk Committee has played
a critical role in understanding the
challenges faced by the Department and
ensuring that bringing together two major
portfolios of activity did not lead to a lack
of transparency or decision-making when
they were needed most.”
Sam Beckett and Angie Ridgwell
Committee Co-Chairs
Role of the committee
The Performance, Finance and Risk Committee
has responsibility for providing high-level
oversight of business planning, budgets and
financial management, performance reporting
and risk monitoring.
Specific responsibilities are:
• overseeing and approving the strategic
planning, preparation, presentation and
negotiation of key fiscal events;
• overseeing and approving the development of
the Departmental business plan;
• ensuring that the Department deploys a
consistent process for aligning objectives and
resources, and identifies instances where new
priorities may conflict with resources;
• approving the allocation of funding to ensure
the Department remains within its agreed
budget;
• approving frameworks for the monitoring of
performance, finance and risk and setting
recommendations on the extent to which
variations can be tolerated or need to be
escalated to the Executive Committee;
• monitoring risks to the delivery of the
Department’s objectives, plans and budgets,
and ensuring that appropriate mitigating
strategies are in place to address these;
• monitoring performance against the
Departmental business plan and ensuring
that action is taken to address performance
issues, where variations are outside agreed
tolerances;
• ensuring that effective financial management
processes and controls are in place;
• overseeing development of the Department’s
annual report and accounts and other
published data on finances, performance or
risk, in line with input from the Audit and Risk
Assurance Committee; and
• escalating areas of concern to the Executive
Committee as appropriate.
Focus areas since July 2016
Since the Machinery of Government changes,
the focus for the Performance Finance and Risk
Committee has been on:
• Ensuring the provision of clear and aligned
data from the two legacy departments to drive
management decisions and effective challenge
of data, assumptions and conclusions;
• reviewing and agreeing the Performance
and Risk Report;
• overseeing the financial management of
the Department and allocating resources
as appropriate;
• reviewing and agreeing the Departmental
Risk Framework and Risk Register; and
• reviewing and considering any business cases
that fall outside the Projects and Investment
Committee remit.

Accountability report
61
Projects and Investment Committee
Gareth Davies and Jeremy Pocklington –
Committee Co-Chairs
“Since creating the Projects and Investment
Committee in October 2016 we have
built upon the approach of the DECC
Investment Committee, and the BIS
Investment Gateway, which reviewed
business cases ahead of fiscal events.
The new Committee makes robust
investment decisions on projects and
programmes above £20 million, ensuring
that planned investments align with the
Department’s strategic objectives, are
deliverable and supported by a good
quality business case.”
Gareth Davies and Jeremy Pocklington
Committee Co-Chairs
Role of the committee
The Projects and Investment Committee was
set up following the Machinery of Government
changes, and builds on the work of the former
DECC Investment Committee. The £20 million
threshold was agreed by the Committee in
November 2016, following guidance from HM
Treasury and an extensive review of projects and
their value across the Department.
The Committee has responsibility for:
• deciding whether planned investments with
a whole-life cost of £20 million or above,
or that are risky or contentious:
• align with the Department’s strategic
priorities;
• are supported by a sound, good–quality
business case that clearly articulates
purpose, approach, outputs and outcomes,
costs, benefits and risks;
• are deliverable, with clear goals and
credible delivery plans and assessments,
and a performance monitoring provision;
• are affordable and offer value for money;
• ensuring that lessons learned are being
identified by each project and used effectively
to drive improvements across the Department
and where appropriate, across Government;
• ensuring that the Departmental Board
and Executive Committee are informed of
decisions made to approve, reject or seek
Board views on proposed investments;
• providing advice to the Accounting Officer on
whether all relevant issues in business cases
have been identified, assessed and managed
in accordance with the HM Treasury guidance
on managing public money;
• ensuring that the Accounting Officer informs
the Secretary of State, and, where necessary,
obtains ministerial direction whenever a
business case does not provide sufficient
justification; and
• ensuring that the Departmental assurance
framework, assurance plans and outcomes
of assurance reviews are robust and effective.
Focus areas since July 2016
Since the Machinery of Government changes,
the focus for the Projects and Investment
Committee has been:
• agreeing an appropriate threshold for the
Committee;
• considering the pipeline of projects coming to
the Committee, and the handling of business
cases resulting from fiscal events; and
• reviewing stand-alone digital transformation,
and science and research business cases,
to make investment decisions.

Annual report and Accounts 2016–17
62
Strategic Policy Review Committee
Clive Maxwell and Katrina Williams –
Committee Co-Chairs
“Strategic Policy Review Committee was
set up following the formation of the
Department last summer. The Committee
did not have a predecessor in either of
the former departments. The Strategic
Policy Review Committee considers the
strategic approach that the Department
takes to broad, cross-cutting issues, which
have significance for a range of policy
teams at the Department. This approach
is intended to allow for gaps, tensions
and opportunities to be identified. The
Committee is still relatively new and is
establishing itself and its ways of working
to identify how it can add value for policy
makers at the Department.”
Clive Maxwell
Committee Co-Chair
Role of the committee
The Strategic Policy Review Committee has
responsibility for:
• considering strategic policy issues that could
benefit from wider perspectives across the
Department, with a consistent focus on adding
value to policy making;
• considering cross-cutting policy issues in
which multiple parts of the Department have
an interest, with a particular focus on drawing
together linked or shared policy areas that
were previously split between DECC and BIS,
to ensure strategic coherence;
• considering how the work of the Department
fits into the wider aims of Government and
identifying any gaps and tensions; and
• reviewing the Department’s strategy and
assessing potential gaps and tensions, as well
as strategic risk and prioritisation issues.
The committee sits outside of standard
governance arrangements for Government
departments.
Focus areas since July 2016
The focus of the Strategic Policy Review
Committee has been:
• agreeing its terms of reference as a newly
formed committee;
• agreeing a plan of work for the committee
to deliver; and
• considering the Department’s approach
to a range of cross-cutting areas, such
as devolution, social justice, ownership
of infrastructure and horizon scanning.

Accountability report
63
Transition Programme Board
Angie Ridgwell and Jaee Samant –
Board Co-Chairs
“The Transition Programme Board has
been a really important element of the
programme’s success. It brought together
a range of stakeholders from within and
outside of the Department, including the
programme director and SROs, policy
directors and partner organisation
CEOs, to successfully deliver a complex
programme to tight deadlines. The Board
also provided oversight of communications
and engagement with staff during a difficult
period of change, which led to significant
increases in positive staff feedback on
Transition and the new Department.”
Angie Ridgwell and Jaee Samant
Board Co-Chairs
Role of the committee
The Transition Programme Board is
responsible for:
• making sure the core commitments, objectives
and benefits of the Transition Programme are
met;
• ensuring that the Transition Programme
aligns with the long-term vision for how the
Department operates;
• approving work–stream plans and signing off
any changes to significant delivery milestones
• oversight of transition costs including
approving any work–stream business cases for
additional spend outside delegated budgets;
• resolving risks and issues escalated by the
work–stream leads; and
• ensuring that dependencies are effectively
managed.
Focus areas since July 2016
The Board was set up in October, following a
mobilisation phase of activity that ran from July
focusing on delivering a smooth transition across
a range of areas, including vision and strategy,
people and organisational structure, finance,
technology and estates, communications and
engagement, including:
• Departmental vision and objectives;
• a unified IT system for all colleagues;
• an agreed Departmental budget;
• siting all London-based staff in one building;
• integrated communication to increase staff
understanding and engagement;
• planning and scoping the Transformation
Programme to create a high-performing
department.
The Board’s functions rolled into the
Transformation Programme Board from June
2017, to oversee the next stage in our journey.

Annual report and Accounts 2016–17
64
Compliance with the
Corporate Governance
Code
The Department has complied with the Cabinet
Office’s Corporate Governance in Central
Government Departments: Code of good
practice 2015 with the following exception.
The Nominations and Governance Committee
has not been established and able to meet
during this reporting period. The respective
Nominations and Governance Committees for
BIS and DECC each met once in May 2016.
Board appointments
and diversity
The creation of BEIS led to a complete review
of the legacy non-executive Board members
(NEBMs) from BIS and DECC, to support the
creation of a new and effective Departmental
Board. Archie Norman was appointed to the
position of Lead Non-Executive Board Member
and two of the legacy NEBMs were invited to
continue in their roles at BEIS and take a lead on
the Audit and Risk Assurance Committee and
the Nominations and Governance Committee.
This provided a strong degree of continuity and
leadership to ensure that the Board was able to
begin its work formally from December 2016.
The appointment of four additional NEBMs was
completed by February 2017 following an open
recruitment process, and added significant
strength and expertise to the Department. In the
absence of having an operational Nominations
and Governance Committee at the time of
this recruitment, the process was undertaken
with support from the Cabinet Office Public
Appointments team. The Department sought
a diverse mix of NEBMs, 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; and
• sound judgement with a high level of integrity.
The Board in its current form 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 one member
from a Black, Asian and minority ethnic (BAME)
background, in line with the target set for the
private sector in the Sir John Parker review.
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.
Project management
Prior to the MoG change in July 2016, legacy
departments had undergone audits or reviews
of their programme and project management
practices in 2015 and had taken action to
address the areas raised.
In establishing the new Department’s project
management framework we have sought to
ensure that the best of both legacy departments
is maintained in our transition and proposed end-
state processes. To help validate this intention,
a joint review of our portfolio management
proposals was carried out in February 2017 by
the Infrastructure and Projects Authority (IPA)
and the Government Internal Audit Agency. The
review identified that improvements should be
introduced to enhance the effectiveness of the
framework of governance, risk management
and control while recognising the strengths
of the legacy Department’s processes and
engagement with IPA.

Accountability report
65
We have strengthened our oversight of and
support for our projects by:
• refreshing our portfolio management function;
• combining the best elements of the legacy
departments;
• establishing a new Projects and Investment
Committee with delegated authority from the
Executive Committee; and
• revising criteria on project suitability for the
Departmental portfolio.
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.
Approach to risk
management
The legacy departments that existed before 14
July had established risk management policies
and frameworks supporting their respective
Departmental Risk Registers (DRR), which
comprised their top risks and were aligned to
their Single Departmental Plans (SDP).
BEIS faced immediate challenges to ensure
that significant gaps in controls did not arise
during the transition to create a new Department.
This required adaptive and responsive risk
management and an authoritative approach to
direct the Department strategically through a
period of significant change.
Bringing together the former departmental risk
management processes called for a detailed
analysis of approach, governance, control and
assurance, as opposed to simply seeking to
merge known risks. We needed to understand
the criteria by which the legacy departments had
rated risks and which types of impact had been
given management priority. We also needed to
analyse the processes in place to facilitate the
management and escalation of risks to ensure
the right level of management oversight was
applied, especially important during transition
to ensure there was never a gap in our risk
management. The process that has now
been adopted makes best use of the existing
approaches from the legacy departments and
is illustrated on the next page. This approach is
subject to an annual review to ensure continuing
improvement and will evolve with the Department
to ensure it is effective.
The new DRR includes risks identified and
escalated by the business or included directly
by the Executive Team or one of its committees.
Mitigation measures are identified and all risks
in the DRR have mitigation measures in place to
reduce them to a target level by an agreed date.
The Department has created a new integrated
performance and risk report and has drafted a
new risk management framework, drawing on
the best parts of the process from each legacy
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 risk management
framework will be implemented as a priority
in 2017-18.
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 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
our objectives.

Annual report and Accounts 2016–17
66
Embed and Review
Communicate
Implement
Plan
Assess
Identify
Inputs:
Known Issues
Experience
Lessons Learned
Horizon scanning
Inputs:
Risk Register
Risk Appetite Statement
Plans
Assurance
Inputs:
Experience
Scoring Matrix
Inputs:
Risk Management Policy
Risk Management Strategy
Resource Plan
Risk Appetite Statement
The Departmental Board has overseen the
development of this framework, supported by
the Audit and Risk Assurance Committee. The
Board will agree the levels of Departmental
risk appetite in 2017-18 to strengthen our risk
management further.
The DRR is supported by underlying risk
registers maintained at programme, project and
business levels. Key risks are reported each
month using a standard highlight report template.
The Department requires each major programme
to define its overall risk appetite and all individual
risks are required to have target reduction levels to
reflect the level of exposure that can be tolerated.
The effectiveness of the Department’s risk
management arrangements continues to be
reviewed by the Audit and Risk Assurance
Committee. This year, a number of reviews were
carried out on our predecessor department’s
approaches to risk management. A report
on BIS from September 2016 rated risk
management as moderate, highlighting progress
made since previous reviews while recognising
the need for greater consistency of practice and
strategic alignment; And a report on DECC from
March 2017 rated DECC’s risk management
as moderate, and recommended greater
emphasis on the importance of day-to-day
risk management for BEIS officers, improved
guidance on managing risks associated with
other Government departments, and a more
formalised approach to risk–management
training. These recommendations will be
embedded into our new approach to enhance
the adequacy and effectiveness of the new
Department’s risk management framework.
Our principal risks are described in the
Performance Report.

Accountability report
67
Partner organisation
governance
The Machinery of Government (MoG) changes
in July 2016 that brought DECC and BIS together
substantially changed the partner organisation
(PO) landscape, creating a diverse network of
organisations for the new Department. The way
in which DECC and BIS managed the oversight
of their organisations differed, presenting both
opportunities and challenges for the new
Department.
Given the range and scope of BEIS’ POs, good,
effective relationships with them is a top priority
for the Department. To reflect this, we worked
closely with the Cabinet Office developing their
partnerships between departments and arm’s-
length bodies code of good practice, published
in February 2017.
A 2016 National Audit Office review of
departments’ oversight of arm’s-length bodies
was broadly positive about the former BIS
sponsorship approach. Elements of good
practice identified in this report, and the Code of
Practice, have been retained in the Department.
For example:
• governance sponsors, who are either within
the Department or within UK Government
Investments (UKGI), oversee partner
organisations’ performance and approach
to risk management;
• organisational remits are set out in a
Framework Document or similar agreements;
• the recruitment of Chairs, CEOs and key
ministerial appointments is led through a
central appointments team; and
• risks and assurance relating to the
performance of organisations change to
are reviewed regularly as part of the
Departmental risk management process.
The Department also established networks to
bring together experts across our policy areas,
UKGI and POs to identify ways to develop and
embed best practice into our governance and
sponsorship activities.
Our sponsorship approach was reviewed by
internal audit in the latter half of the year. An
overall rating of ‘moderate’ was achieved and the
report highlighted that improvements would be
gained from:
• developing the relationship model to reinforce
the lines of accountability so that there is clear
authority to take action when required; and
• ensuring framework documents, memoranda
of understanding and similar documents are
up-to-date, accurate and reviewed regularly.
In parallel, networking events with PO chairs and
CEOs identified how we can best support POs
to deliver their objectives. These events informed
targeted work–streams aligned to the Code of
Practice to identify gaps, inconsistencies, and
where improvements can be made. In 2017-
18 a programme of work will implement the
recommendations from these work streams and
the Internal Audit review.
Working closely with the Cabinet Office, a
programme of tailored reviews for those POs
classified as arm’s-length bodies has been
developed for 2017-18 onwards. The reviews will
assess the status, form and function of these
organisations, with an emphasis on exploring
potential efficiencies and the effectiveness of
corporate governance.

Annual report and Accounts 2016–17
68
2016-2017 reform programme
Before the MoG changes, BIS was undergoing
PO landscape reform as part of a wider
transformation programme, BIS2020. Although
this programme paused following the MoG
change, completed actions included:
• closure of the UK Commission for Employment
and Skills (UKCES), with some functions
continuing via alternative routes;
• divestment of Wave Hub Ltd to Cornwall
County Council;
• reclassification of the Industrial Development
Advisory Board and Council for Science and
Technology as Expert Committees; and
• preparations for the sale of UK Green
Investment Bank (GIB) for completion early
in the next financial year.
Partner organisation assurance
The Department’s senior management and
governance structures have an up-to-date view
on POs’ risks and performance through close
working between the Portfolio Office and the
Partnerships Team. All POs provide regular
assurance assessments that are reviewed
internally, with relevant issues escalated through
the Performance and Risk Challenge Panel, the
Performance, Finance and Risk Committee
and the Audit and Risk Assurance Committee.
These include assessment of the capabilities
of the organisation and associated risks and
opportunities. Common risks raised by partners
during the year included:
• the outcome of the EU referendum;
• potential changes to EU funding streams; and
• recruitment and retention of skilled staff.
The Public Appointments process continued
to feature as an area of risk in the earlier
part of the financial year. An internal review
identified improvements to existing systems and
processes, resulting in a lowering of risk across
the department.
Counter fraud and error
The Department and our POs are sharing best
practice on counter fraud. Our counter fraud
strategy relies on ever-closer working across
teams and organisations and the BEIS Group
Counter Fraud Network leverages our collective
capacity, expertise and data to manage the
risks specific to internal and external fraud and
error. The network meets regularly to share
knowledge, discuss current and emerging trends
and develop best practice. We worked closely
with the Cabinet Office to develop counter–
fraud standards being implemented from April
2017 and assessed the extent to which the
Department and our POs comply with these
emerging standards. This assessment identified
our fraud policy and response plans as existing
strengths. In the coming year we will develop
ways to monitor our performance in relation
to these standards.
We successfully prevented a number of fraud
losses during the year, most of which were
cyber-enabled. We are helping the police
with enquiries for a number of on-going fraud
investigations and supporting the wider fight
against economic crime. We also work to protect
genuine users of our services from fraudsters
impersonating our BEIS organisations.

Accountability report
69
Review of the effectiveness
of governance, risk
management and internal
control
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 in place within the
legacy departments of BIS and DECC were
moderate overall and actions were being
taken in line with prior audit reports and
recommendations set out by the NAO and Public
Accounts Committee (PAC).
The Internal Audit process has identified several
gaps in policies and internal controls as well as
instances of non-compliance that will require
leadership action to rectify. This has led to BEIS
having a limited level of control over the reporting
period.
The Machinery of Government (MoG) change
has also had an impact on the overall quality
of governance over the reporting period, leading
to some short-term challenges linked to risks
and governance.
Bringing together two former departments
inevitably resulted in some initial duplication of
administrative policies that underpin the core
internal control environment for BEIS. In practical
terms this has meant that some policies and
associated controls of the legacy departments
have been continued in parallel, but separately,
depending upon the relevant circumstances.
This was necessary to ensure the new
Department could continue to operate through
transition. During the course of the Transition
Programme some of these policies were
reviewed to create new, unified administrative
policies for BEIS. However, as at the end of
2016-17 there remained more work to do.
The leadership of the Department has been alert
to the risks created by the MoG change and
has taken ownership of the situation. This has
mitigated the potential impact of the change,
reduced the Department’s degree of exposure
and set in motion actions that have led to
immediate improvements, such as those brought
about by the Transformation Programme and
also in response to its findings.
The leadership of the Department is clear on
the longer-term challenge of ensuring the right
polices are in place across the Department and
that they are effectively communicated and
acted upon to build a culture of compliance
that strengthens the Department.
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 has implemented
appropriate actions against all recommendations
that it could reasonably be expected to during
2016-17.

Annual report and Accounts 2016–17
70
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 the Chair 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:
• consistently clear and strong levels of staff
communication and engagement to ensure
that leadership messages are getting through;
• positive action in response to people survey
results and clear efforts to improve upon those
for 2017-18;
• varying levels of governance control and
effective stakeholder management;
• the impact of the Machinery of Government
(MoG) and group structure change, resulting
in challenges around governance and controls,
particularly for the management of finance, risk
and HR, where legacy systems and the time
taken to bring services together had an impact.
Looking to the future there is recognition of:
• the 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 need to improve risk management in
line with the new framework and to ensure
a greater focus on risk aggregation and
identification of shared dependencies; and
• the importance of engaging staff on values,
vision and group objectives, while consistently
and effectively applying performance
management systems.
Work has started in 2016-17 to address these
concerns and will continue into 2017-18.
Transitional governance
arrangements
On 14 July 2016, policy responsibilities
immediately transferred to the ministers
appointed by the Prime Minister. Vocational
and higher education (VE and HE) transferred
to the Secretary of State for Education; trade
policies transferred to the Secretary of State
for International Trade; and the remaining
policy responsibilities of BIS and the policy
responsibilities of DECC were transferred to
the Secretary of State for Business, Energy
and Industrial Strategy.
In a MoG change, Accounting Officer
responsibilities formally transfer once Parliament
grants spending authority via a Supply and
Appropriation Act.
From 14 July, our Department was led by the
previous Permanent Secretaries for BIS and
DECC, Sir Martin Donnelly and Alex Chisholm.
Initially, the organisation continued to operate
under two separate systems as plans to create
a single structure were developed.
Sir Martin Donnelly also remained formally
accountable for the parts of BIS which
transferred to other government departments,
with BIS systems and staff providing assurance
for the Secretaries of State for Education and for
International Trade.
Accounting Officer responsibilities were
shared along former departmental lines until
Alex Chisholm was confirmed as Permanent
Secretary on 5 September.
The high-level governance structure for BEIS
was confirmed on 20 October. The organisational
structure was rolled out from November with
all teams in the core Department merged by
year end.
Accounting Officer responsibilities were aligned
with policy responsibilities at the Supplementary
Estimate on 9 February.

Accountability report
71
Accounting Officer responsibilities over the transitional period
DfE
DfE
BEIS
BEIS
DIT
DIT
14 July 2016: Machinery of Government change announced
5 September 2016: Alex Chisholm appointed Permanent Secretary for BEIS;
Sir Martin Donnelly appointed Permanent Secretary for DIT
9 February 2017: Supplementary Estimate
Jonathan Slater
accountable
Alex Chisholm
accountable
Sir Martin Donnelly accountable
(replaced by Antonia Romeo
in March 2017)
Catherine Raines
accountable
DfE
DfE
DfE
DfE
DECC
DECC
DECC
BIS
BIS
BEIS
UKTI
UKTI
UKTI
Trade
Trade
DIT
FE
HE
FE
HE
BIS
Trade
FE
HE
Other governance activity
Local government
The Department has provided grants to local
authorities totalling £49.4 million during the
year under Section 31 of the Local Government
Act 2003.
Shared Service Assurance
We utilised two shared service centres during
2016-17:
• UK Shared Business Services (UK SBS), one
of our partner organisations, provides services
to the legacy-BIS parts of the department.
The core Department receives quarterly
assurance reports from UK SBS on the design
and effectiveness of their internal control
framework. Overall, while noting a need to
invest further in ICT systems, UK SBS has
reported that the HR, Payroll and Finance
are operating effectively. Further narrative is
available in the Governance Statement for UK
SBS, which is published separately as part of
its Annual Report & Accounts.
• Shared Services Connect Ltd (SSCL), a
joint venture between Sopra Steria (a private
sector company) and the Cabinet Office,
provides services to former-DECC parts of
the department. The core Department has
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 that
the vast majority of key controls are operating
as designed, but was qualified because of
exceptions found in the operation of a number

Annual report and Accounts 2016–17
72
of controls. Having reviewed these exceptions,
we are satisfied that none are likely to be
fundamental to our financial statements or
governance statement.
Single Departmental Plan
Internally, the Department will monitor its
progress against its objectives through the newly
established 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.
Ministerial directions
A ministerial direction is where the Accounting
Officer has formally notified a minister of
objections to the minister’s proposed course of
action on regularity, propriety, value for money
or feasibility grounds, and the minister overrules
that advice. 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. No ministerial directions were issued
in 2016-17.
Quality assurance modelling
The two former Departments had quality
assurance guidance and processes for the
development, use and governance of analytical
models. Quality assurance of models in each
department was appropriate and consistent with
the Departments’ quality assurance guidance,
and also with the Aqua Book (a good practice
guide for quality assurance across government).
Following the inception of BEIS, a single
modelling assurance policy was developed,
harmonising the approach for the BEIS. The
policy will be implemented during 2017–18.
Cyber security
During the year, the core Department maintained
the Cyber Essentials accreditation for the ITECC
platform, which is a confirmation that the basic
measures to protect against a cyber-security
incident are in place.
The technical defences against cyber attacks,
whether delivered by email or by web traffic,
have stood up well, and there have been no
serious breaches recorded. The new Common
Technology Platform (Cirrus), which is in
development, aspires to achieve the same basic
standards and adheres to National Security
Council best practice.
Denial of service attacks and attacks via
malicious software are risks to the Department,
mitigated by our security team and our
commercial partners’ continuous review of risks
and mitigations. A business continuity exercise
involving Board members also looked at the
impact of a cyber-security incident to ensure that
we are prepared to respond and recover should
such an incident occur.
No significant cyber security breaches were
reported in 2016-17.
Information security
There was one data protection incident at BIS
between 1 April and 14 July 2016 that needed
to be reported to the Information Commissioner’s
Office (ICO). It involved sensitive personal data,
as defined in the Data Protection Act, in its HR
department. The breach was contained internally.
The ICO decided that regulatory action was
not appropriate in this case but recommended
specific action for BIS. There were no incidents
at DECC during the same period. BEIS has not
had any data protection incidents.
The Department has developed a new portal
for information security to help staff protect
official information. Each business area has a
security champion who works with the security
unit to build awareness among staff and provide
support specifically focused on their particular
information security needs.

Accountability report
73
Internal audit review
In his Annual Report and Opinion, the Group
Chief Internal Auditor (GCIA) has provided
a ‘Limited’ opinion on the framework of
governance, risk management and control
within the Department for 2016-17. This
represents a lower level of assurance than the
‘Moderate’ rating received by both predecessor
departments for 2015-16.
The GCIA identified a number of areas of
weakness across the Department, reflecting
a limited number of areas of poor control
design and operation, and weak operational
frameworks. Specific areas of concern centred
around contract management, health and
safety, management of IT equipment and mobile
phones, contingent labour, data handling and
cyber security.
The GCIA did note, however, that the Department
has not seen a wholesale failure of internal
control, and he was encouraged by the strong
responses of senior management to implement
corrective action, such that we are expected to
make incremental improvements in consistency,
formality and control in 2017-18.
Accounting
Officer’s conclusion
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
while the evidence in respect of the governance
controls in place within the legacy Departments
of BIS and DECC during 2015-16 were moderate
overall, the evidence gathered during 2016-17
shows that BEIS has had a limited level
of control.
The formation of BEIS naturally created some
short-term challenges to risk management,
governance and internal controls. However
evidence from internal audit shows that BEIS
inherited some historical gaps in policies and
internal controls, alongside instances of non-
compliance.
It is clear that the Department has both
recognised the scale of the challenges faced and
already made significant progress in addressing
them and setting plans for future action in terms
of both systems and culture change.
During the course of 2017-18, our Department will:
• develop the risk–management framework that
identifies our key risks, including consideration
of risk tolerance, to ensure it is driving effective
mitigation and escalation;
• improve the control environment to provide
a suite of unified and defined priority internal
policies, with a timetable for aligning all
polices; and
• implement a new methodology to effectively
engage and work with our Partner
Organisations.
Delivering against these in 2017-18 will improve
our level of control and further enhance our
ability to achieve our business objectives.
In late June, we received the NAO value for
money report on our deal for Hinkley Point C.
We believe the deal represents value for money
and will deliver a number of benefits including
25,000 new jobs and apprenticeships, and the
advancement of skills for the UK Nuclear supply
chain. We will reflect carefully on the NAO’s
advice on funding models for future projects.
We are already delivering a number of the NAO’s
recommendations including ensuring stringent
governance arrangements for the life of the
project, and ensuring the Low Carbon Contracts
Company (LCCC) has the information and skills
it needs to manage the contract.
Alex Chisholm
Principal Accounting Officer
and Permanent Secretary
13 July 2017

Annual report and Accounts 2016–17
74
Sustainability Report
The government is committed to mainstreaming
sustainable development, in the way we make
policy, run our buildings and purchase goods
and services, to maximise the positive impacts
on the economy, society and the environment.
Sustainable
Development Goals
The 17 Global Goals for Sustainable
Development17 will shape the world’s approach to
growth and sustainable development until 2030.
The Goals were agreed by 193 member states of
the United Nations (UN) in September 2015 and
apply to every country. The underlying aims of the
Goals are embedded in our vision and objectives:
Our Objective
UN Development Goal
We are:
Delivering an ambitious
industrial strategy
Promote sustained, inclusive and sustainable
economic growth, full and productive
employment and decent work for all
f
f driving growth across the country
f
f investing in science, research
and innovation
f
f cultivating world-leading sectors
f
f supporting businesses to start and grow
Build resilient infrastructure, promote inclusive
and sustainable industrialization and foster
innovation
f
f investing in science, research
and innovation
Make cities and human settlements inclusive,
safe, resilient and sustainable
f
f supporting businesses to start
and grow
Promoting competitive
markets and responsible
business practices
End poverty in all its forms
f
f promoting fairness in the labour
market and improving working
conditions
Promote peaceful and inclusive societies for
sustainable development, provide access to
justice for all and build effective, accountable
and inclusive institutions at all levels
f
f reforming corporate governance
Ensuring the UK has a
reliable, low–cost and
clean energy system
Ensure access to affordable, reliable,
sustainable and modern energy for all
f
f delivering affordable energy for
households and businesses
f
f taking action on climate change and
decarbonisation
Ensure sustainable consumption and
production patterns
f
f ensuring that our energy system
is reliable and secure
Take urgent action to combat climate change
and its impacts
f
f taking action on climate change and
decarbonisation
Progress against our objectives is set out in the performance report on pages 16-25.
17
https://sustainabledevelopment.un.org/

Accountability report
75
Policy development
Climate change adaptation
We have robust business continuity plans
in place to manage occurrences of extreme
weather events. Sustainable operational policies
include considering Climate Change Adaptation
in decision making.
Contributions are made to the cross-government
National Adaption Plan published every five
years. The plan sets out how the risks of future
extreme weather events will be managed in
relation to communities, the built environment,
businesses and local government.
Rural proofing
We ensure that the social, environmental
and financial impacts our policies have on
communities and businesses are fully considered
before they are implemented. Rural proofing is
built into our impact assessments.
Our flagship policy, the industrial strategy, has a
consideration of the importance of place at its
heart. It will deal with the particular challenges
and barriers faced by rural residents, including
a shortage of work premises, slow internet
connections and a lack of knowledge transfer
between business communities spread thinly
over wide areas.
Performance against our
Greening Government
Commitments
Scope
The reporting boundary includes the former
Department for Business, Innovation and Skills
(BIS), the former Department of Energy and
Climate Change (DECC), and those of their arms-
length bodies they report on under the Greening
Government Commitments (GGCs). For 2016-17
we have continued to report separately under
the Greening Government Commitments.
From 2017-18 we will be reporting as one
combined department with a revised carbon
target to reflect our new estates.
The GGC report contains a narrower subset of
arms’–length bodies from the rest of the report
which corresponds more closely to the financial
reporting boundary.
Progress
The former Department of Energy and
Climate Change has improved on its 2015-16
performance in three GGC target areas: GHG
emissions, domestic flights, and waste; and
is on track to meet its 2020 target in all areas
except improving recycling rates and water
consumption.
Target (by 2019/20 compared to 2009/10
baseline)
Former
DECC
Reduce greenhouse gas (GHG)
emissions by 32%
41%
Reduce domestic flights by 30%
46%
Reduce the amount of waste
generated by 25%
28%
Reduce landfill to less than 10%
11%
Recycling >72%
56%
Reduce paper use by 50%
62%
Reduce total estate water consumption
32%
The former Department for Business, Innovation
and Skills is significantly ahead of target in all
areas, both those with specified reduction targets
and those requiring an unspecified reduction.
Target (by 2019/20 compared to 2009/10
baseline)
Former
BIS
Reduce greenhouse gas (GHG)
emissions by 40%
51%
Reduce domestic flights by 30%
33%
Continue to reduce the amount
of waste generated
72%
Reduce landfill to less than 10%
9%
Continue to increase proportion
of waste recycled
79%
Reduce paper use by 50%
78%
Reduce total estate water consumption
55%

Annual report and Accounts 2016–17
76
Greenhouse gas emissions
2014-15
2015-16
2016-17
Non-financial
indicators
(tonnes CO2e)
Gross emissions scope 1 (direct)
53,574
16,809
14,141
Gross emissions scope 2 & 3
(indirect)
138,506
139,723
117,764
Total emissions - scope 1, 2 & 3
192,070
156,532
131,904
Related Energy
Consumption
(MWh)
Electricity: non-renewable
240,220
260,010
253,281
Electricity: renewable
8,773
8,215
4,954
Gas
94,099
86,715
71,430
District heating
220
235
255
Other heat
900
500
949
Total energy consumption
344,212
355,630
330,868
Financial Indicators
(£000s)
Expenditure on energy
25,093
25,830
26,457
CRC licence expenditure
2,516
2,379
3,340
Expenditure on official business travel
12,175
11,974
8,940
Total expenditure on energy
and business travel
39,784
40,183
36,557
The Department continues to demonstrate
a year-on-year reduction in greenhouse gas
emissions. Whilst the conversion factors
applicable to Scope 2 emissions have a
significant contribution to its performance, both
positively and negatively, the underlying energy
consumption – the main contributor to the
emissions – shows a real reduction of 7%.
A project is underway within 1 Victoria Street
to convert office lighting to LED that will deliver
a 50% lighting consumption reduction.
Travel
2014-15
2015-16
2016-17
Number of domestic flights
7,208
5,644
5,445
The Department has reduced the number of
domestic flights by 3.5% since last year and
by 24% over the last two years.
Water
2014-15
2015-16
2016-17
Non-financial
indicators (m3)
Water consumption
364,570
456,234
377,005
Financial indicators
(£’000)
Water supply & sewage costs
1,149
1,001
998
Measures have been taken to cut water use
through: fitting timers to, and improving the
maintenance of, its hot and cold water dispensers;
fixing leaky taps; and installing flow restrictors
where appropriate.

Accountability report
77
Waste
2014-15
2015-16
2016-17
Non-financial
indicators
(tonnes)
Total waste
3,833
3,445
3,148
Non-hazardous
waste
Landfill
669
487
418
Reused/recycled
2,312
2,297
2,035
Composted/
biodigestion
131
144
157
Total ICT waste
Reused
2
0
0
Recycled
2
7
68
Incinerated/energy from waste
424
479
470
Reams of paper procured
189,426
134,844
34,540
Financial indicators
(£’000)
Total disposal cost
1,334
1,214
1,083
The Department is working closely with its
facilities management provider to actively
manage all aspects of the Department’s waste,
including provision of recycling facilities, data
analysis and improving staff awareness, in order
to achieve the GGC waste reduction, recycling
and landfill diversion targets by 2020.
Sustainable procurement
We are mandated to use Crown Commercial
Service frameworks where a suitable framework
exists for the procurement of goods and
services. The procurement service keeps its
policies under regular review and also works
with its partners on a case-by-case basis to
ensure sustainability goals are achieved.
Small and medium enterprise engagement
We have introduced measures and removed
barriers to improve SME engagement. The overall
proportion of spend with SMEs for 2016-17
was 26%, an increase from both predecessor
Departments (16% – 20% in 2015-16.) We are
committed to meeting the cross-Government
target of 33% by 2020.
Prompt payment
Our policy is to comply with the Institute of Credit
Management’s Prompt Payment Code, of which
the Department we are an approved signatory.
Whilst our standard terms and conditions for the
supply of goods or services specify payment
within 30 days of receipt of a valid invoice, we
aim to pay all valid invoices within five working
days of receipt. In 2016-17, 99.4% (2015-16:
99.6%) of undisputed invoices were paid within
the 30 day target and 96.3% (2015-16: 97.8%)
of undisputed invoices were paid within 5
working days.
The proportion of the aggregate amount owed
to trade creditors at the year-end compared
with the aggregate amount invoiced by suppliers
during the financial year in terms of days equalled
less than 1 day.

Annual report and Accounts 2016–17
78
Staff Report
Staff numbers
The average number of full-time equivalent
persons employed during the year is shown
in the table below. Average staff numbers
are subject to audit.
2016-17
2015-16
restated
Permanent
employed staff
Others
Ministers
Special
Advisers
Total
Total
Core
2,998
150
9
5
3,162
3,635
Agency
1,510
79
–
–
1,589
1,816
Non Departmental
Public Bodies
(NDPBs')
13,197
1,279
–
–
14,476
14,713
Total
17,705
1,508
9
5
19,227
20,164
Of which:
Core Department
and Agencies
4,508
229
9
5
4,751
5,451
NDPBs and other
designated bodies
13,197
1,279
–
–
14,476
14,713
Total
17,705
1,508
9
5
19,227
20,164
Staff attitudes
The new Department’s first People Survey
was undertaken in October 2016, just 3 months
after the announcement of the Machinery of
Government (MoG) changes. The response rate
was 86%, well above the Civil Service average
of 65%. It showed our staff’s initial reaction to
the sudden, unexpected changes which created
the department.
The survey returned an engagement index of
54%, a drop on the previous year’s results for
BIS and DECC, which were 56% and 59%
respectively. The drop in engagement was driven
by lower scores on the themes ‘organisational
objectives and purpose’ and ‘leadership and
managing change’. The survey also showed
that dissatisfaction with pay and benefits had
persisted from both predecessor departments.
The indicator for ‘inclusion and fair treatment’
was at 79%, the high–performance benchmark
for the Civil Service, and for ‘learning and
development’, 56%, above the benchmark.
In response, our Executive Committee agreed
to focus on three main areas for improvement:
• organisational objectives and purpose;
• leading and managing change; and
• pay and benefits.
Since the People Survey was taken, the
Transition Programme has delivered changes
which directly address these issues. Staff
engagement was a key focus of the Transition
Programme, in recognition of the importance of
ensuring involving colleagues and making them
feel invested in the creation of the Department.
There were over 40 workshops across London
and regional offices, providing staff with the
opportunity to share their views and shape
the development of plans. In November, our
Departmental vision and top-level objectives
were announced by the Secretary of State.
Monthly ‘pulse surveys’ were used to track
levels of engagement through the Transition
Programme. There was an increase across
all measures between the baseline survey
in October 2016 and the end of March 2017
– for example, staff feeling positive about the

Accountability report
79
future of the Department increased by 75%,
and understanding how their work contributed
to Department objectives increased by 56%.
Surveys of the staff that moved to 1 Victoria
Street indicated that over 90% of felt their
relocation was well organised and effected.
Pulse Survey results
Statement: I have a clear understanding
of the Department’s purpose
Statement: I understand how my
work contributes to the Department’s
objectives
In addition to organisational level activity,
individual team leaders have been working
closely with their teams to identify local actions
to support improvement in staff attitudes.
Building capability
We are committed to building a skilled, talented,
diverse workforce so that we have the right
people, with the right skills, available at the right
time in the right place. Fundamental to this
has been building leadership and management
capability. For leadership and managing change,
our People Survey score was 41%, 2% below the
Civil Service and 11% lower than high performers.
As a new Department with some new
challenges, we are building leadership and
management programmes aligned to our vision
and diversity and inclusion strategy, and the
Civil Service vision and leadership statement.
We are developing managers at all levels with
an ambition to nurture a coaching culture in the
Department. We are giving managers the tools
and knowledge to get the best from their people
through personal development planning, support
for professional development, and career and
talent discussions. In-house workshops covering
capable and resilient leadership, and setting
expectations, run alongside programmes for
new managers and aspiring managers.
Our workforce strategy sets out future skills
and capabilities to match our ambitions and
deliverables such as the industrial strategy and
EU exit work, along with developing overarching
skills for policy, delivery and corporate teams,
and senior leaders.
Throughout our transition, we have been
assessing our capability and talent priorities
to support the development of professional
skills, including career pathways, structured
development programmes, secondments
and qualifications.
Eleven senior policy leads have been undertaking
the Executive Master of Public Policy and we
are regular participants in the flagship Institute
and Projects Authority programmes (MPLA, PLP
and OMP). We have also developed our own
programme (Policy to Delivery) to address the
needs of people whose role brings them into
contact with projects; over 250 people attended
the bespoke commercial skills programme
in 2016-17, and delivery through the in-house
Finance Academy, EU Skills Academy and the
revised BEIS Seminar programme continued
throughout the year.
0
10
20
30
40
50
60
% of respondents who agreed
27
43
54
52
57
Oct
Nov/Dec
Jan
Feb
Mar
0
10
20
30
40
50
60
70
80
Oct
Nov/Dec
Jan
Feb
Mar
46
58
63
64
72
% of respondents who agreed

Annual report and Accounts 2016–17
80
Our assessment of the skills and resourcing
needed to meet the demands of leaving the EU
includes negotiation, analysis, policy expertise in
a European context, and sector expertise.
Work has begun on an internal programme to
build policy capability. Using the framework
of standards agreed across the Civil Service’s
Policy Profession, its priorities include working
internationally, with the EU and around EU exit.
The Department participates in the Civil Service
High Potential Talent Schemes, including the
High Potential Development Scheme (HPDS),
Senior Leaders and Future Leaders Schemes
(SLS and FLS). There was a significant increase
in the number of staff from the Department who
were selected for the 2016 Senior and Future
Leaders Schemes (11 and 49 staff respectively).
The overall diversity outcomes were also positive
for the Department in terms of gender (FLS and
SLS), BME and Disability (FLS). Three of our
Senior Civil Service (SCS) were also selected for
the HPDS.
In the period since the creation of the
Department we have also been working to
develop a comprehensive talent offer for staff
at all grades. This will include expanding the
existing internal talent programmes that were in
place in the legacy departments.
Recruitment practices
Recruitment into the Civil Service, including our
Department at all levels, 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 their 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 the deployment of
our people and our recruitment and resourcing
strategies to ensure priority activities are properly
resourced. To support this and in line with the
Civil Service more widely, on 1 April 2017 we
adopted the new Civil Service Recruitment
Framework to enable effective business delivery
and build capability in key areas.
Diversity and inclusion (D&I)
Inclusion is a priority for the Department and
creating a diverse workforce is an important part
of making this a reality. We have launched our
first D&I strategy, encompassing both internally
and externally focused work. Our aim is to
become 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. Our areas of focus
moving into 2017-18 are:
• representation of:
• women in the SCS at SCS2 and above;
• Black, Asian and minority ethnic staff
at Grade 7 and above; and
• people with disabilities across all grades;
• performance management outcomes for
people declaring a disability and older
workers; and
• ‘inclusive by design’ equality analysis in
all our key decision-making processes.
We have set targets for representation,
unconscious bias training, and diversity data
return rates. This is supported by our action plan
which sets 10 key measureable activities over
the coming three years. The Department has
12 diversity networks, and nearly 60 network
chairs and champions supporting our D&I work.
The D&I strategy is monitored quarterly by the
Executive Committee, and is sponsored by 2
Director Generals and the Permanent Secretary.
The priority of the strategy is to ensure that D&I
is embedded within the core of Departmental
objectives, and delivered in a way which benefits
staff as well as the public.
All directorates in the Department have been
asked to take ownership of the D&I agenda
and have consequently pledged actions to
improve D&I outcomes. We recognise that,
as well as making progress in some areas,
movement remains slow in others, so there
is still more to do.

Accountability report
81
In recent months we have:
• launched our D&I strategy, which was
developed in consultation with our staff;
• achieved a high success rate across
diversity groups for SLS and FLS;
• launched our diversity networks;
• developed a Partnership Agreement with
our diversity networks;
• continued to encourage our people
to complete their diversity data;
• established a Mental Health and Wellbeing
Group for the whole Department; and
• recruited more mental health first–aiders to
our Mental Health First Aid Service, which
provides support to staff seeking help due
to a mental health concern.
The Department is committed to ensuring equality
of opportunity for all disabled employees. As
we make clear in our job application process,
candidates with a disability who apply for a post in
the Department (under the Guaranteed Interview
Scheme) automatically go forward to the interview
stage, provided they satisfy the minimum criteria.
The Department is Disability Confident level 2,
and is aiming to be level 3 by late 2017. All staff
are encouraged to take additional training on
disability awareness. The Department undertakes
the Summer Diversity Internship Programme every
year to encourage a greater diversity of staff. We
also promote external vacancies in a range of
diversity media.
Our staff are expected to undertake unconscious
bias training to increase overall awareness and
support within the Department. We will monitor
and publish our workforce diversity and equality
data annually, which will be available on our
external website.
A detailed breakdown of our people
is as follows:
Ethnicity

9% BAME

51% White
3% Prefer not to say
37% Unknown
Disability

6% Yes

60% No
2% Prefer not to say
32% Unknown
Sexual orientation

4% LGB

56% Straight
14% Prefer not to say
26% Unknown
Gender

49% Female

51% Male
The Department is a proud member of the following schemes:

Annual report and Accounts 2016–17
82
Communicating
with our employees
We have taken great steps to make sure
communication is two–way and staff have the
opportunity to help shape the projects that affect
them and the future of the Department. We
adopt a range of communication channels
to engage staff and to share information, from
face-to-face interaction to town–hall style
meetings, stand–ups, huddles, and floor walks.
Our digital channels include internet, intranet
and webchats. We also have regular formal
and informal meetings with a newly formed
Departmental Trade Union Side, creating
a positive employee relations environment.
A key area of communication and consultation
during 2016-17 was about the Transition
Programme, including:
• the launch of the Secretary of State’s vision
for the new Department;
• the launch of our D&I strategy;
• the relocation of teams from 2 buildings
into one;
• moving all staff onto a common IT platform,
resulting in a single email address and new
phone system;
• development of an interim intranet;
• a new organisational structure, supported
by the Department workforce strategy; and
• new terms and conditions for new entrants.
The focus for 2017-18 will include:
• the launch of a single set of HR policies;
• a new pay and reward strategy;
• developing a set of Departmental values;
• consulting on a new performance
management approach for implementation
on 1 April 2018; and
• a new development programme for our
managers.
Health, safety and wellbeing
We have a strong record in providing a safe
and supportive work environment, and had
no accidents to report in accordance with the
Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations 2013. There were no
enforcement actions against the Department.
Health, safety and wellbeing is monitored
quarterly by the Health and Safety Committee.
An audit report carried out for former BIS by
Government Internal Audit Agency was finalised
in February 2017. The audit received an overall
’unsatisfactory’ assurance, predominantly as
former BIS was assessed as having insufficient
policies and practices. A programme of
building risk assessments, revised policies and
supporting processes was agreed with the
Health and Safety Committee and prioritised for
completion, as well as a change in management
accountabilities. Remedial actions were
completed within two months. This culminated
in a report which held up the BEIS’s response
as an example of excellent practice.
The Department considers the wellbeing of
staff to be paramount and works within the
framework of the Civil Service Health and
Wellbeing Strategy. The focus is mental health,
musculoskeletal health and a healthy lifestyle.
Managing attendance
The Department is committed to supporting
the physical and mental health of its people and
fostering employee wellbeing is a key element of
our focus. Occupational health and an employee
assistance provider are in place to offer additional
support to our people. The Department has
a low sickness absence rate with the average
number of working days lost due to sickness
reported as 2 days per year.
The focus for 2017-18 will include:
• aligning the attendance management policies
of the former departments;
• investing more into our wellbeing strategy
to provide greater longer-term resilience,
innovation and productivity for our people; and
• ensuring our leaders and managers are
equipped to support the focus on wellbeing.

Accountability report
83
Whistleblowing
The Department has a well-publicised
whistleblowing policy and procedure in place
which provides clear guidance for employees on
the importance of raising concerns and how to
do so. Launched by our Permanent Secretary
and fully supported by our Executive Committee,
the whistleblowing policy was the first internal
policy we implemented for our people. The
Department monitors all concerns raised and
the action taken to address and resolve issues.
In 2017-18, as well as continuing to report on
whistleblowing activity every six months to the
Cabinet Office, we will provide an Annual Report
to the Department’s Audit and Risk Assurance
Committee for review.
Health service
The Department uses independent, confidential
occupational health services. Individuals
are asked for their consent to a referral to
the Department’s medical advisers for an
assessment of their fitness for work or to help
the Department consider reasonable
adjustments to support them in the workplace
in accordance with our duty under the Equality
Act 2010. To help ensure that staff have the best
opportunity to continue their employment, the
Department also provides dedicated information
and a counselling support service through
our employee assistance programmes.
Staff costs
18
2016-17
2015-16 restated
Permanently
employed staff
£m
Others
£m
Total
£m
Total
£m
Wages and salaries
713
68
781
795
Social security costs
70
–
70
64
Other pension costs
145
–
145
153
Sub total
928
68
996
1,012
Less recoveries in respect
of outward secondments
(4)
–
(4)
(3)
Total net costs
924
68
992
1,009
Of which:
Core Department and Agencies
255
27
282
315
NDPBs and other designated bodies
669
41
710
694
Total net costs
924
68
992
1,009
During the year, £13,459,098 of staff costs
were capitalised (2015-16: £9,686,662) and 233
employees (2015-16: 209 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 85.
Included within the total net costs of other staff
shown above are Ministers’ total net costs of
£340,369 (2015-16: £406,079) and Special Advisors’
total net cost of £354,978 (2015-16: £465,816).
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
unfunded multi-employer defined benefit schemes
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 resource accounts
of the Cabinet Office. Civil Superannuation
(www.civilservicepensionscheme.org.uk/).
18
Analysis of staff costs is subject to NAO audit opinion

Annual report and Accounts 2016–17
84
For 2016-17, employer contributions of
£48,603,369 were payable to the PCSPS (2015-
16: restated: £55,013,173) at one of four rates
in the range 20.0% to 24.5% (2015-16: 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 2016-17 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 £896,929 (2015-16: restated: £1,059,144)
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
£6,638 (2015-16: £8,853), 0.5% (2015-16: 0.8%
up to 30 September and 0.5% from 1 October
2015) 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 2017 were £11,440
(2015-16: restated: £13,248). Contributions
prepaid at that date were Nil (2015-16: £93,254)
In 2016-17, 16 persons (2015-16: restated: 9
persons) across the Departmental Group retired
early on ill-health grounds; the total additional
accrued pension liabilities in the year amounted
to £229,994 (2015-16: £83,098).
Other Pension Schemes
Employer contributions to other pension
schemes in the year amounted to £94,723,424
(2015-16: restated: £86,833,840). 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 28.
Nuclear site licence
companies
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.
2016-17
2015-16
Permanently
employed staff
Others
Total
Total
Number of staff (full-time equivalent)
14,963
1,559
16,522
16,993
Wages and salaries (£m)
782
101
883
908
Social Security Costs (£m)
90
–
90
78
Other Pension costs (£m)
130
–
130
135
Less recoveries in respect of outward
secondments (£m)
–
–
–
–
Total (£m)
1,002
101
1,103
1,121

Accountability report
85
Reporting of Civil Service and other compensation schemes – exit packages
Number of
compulsory
redundancies
Number of other
departures agreed
Total number of exit
packages by cost band
Exit package cost band
2016-17
2015-16
restated
2016-17
2015-16
restated
2016-17
2015-16
restated
Less than £10,000
23
12
102
58
125
70
£10,000 - £25,000
23
15
105
211
128
226
£25,000 - £50,000
8
10
83
265
91
275
£50,000 - £100,000
3
5
112
301
115
306
£100,000 - £150,000
–
–
6
8
6
8
£150,000 - £200,000
–
–
5
–
5
–
More than £200,000
–
–
10
–
10
–
Total number
of exit packages
57
42
423
843
480
885
Of which:
Core Department and Agencies
–
9
91
541
91
550
NDPBs and other
designated bodies
57
33
332
302
389
335
Total number
of exit packages
57
42
423
843
480
885
Total cost (£)
1,040,737
1,055,788
17,273,787
37,190,539
18,314,524
38,246,327
Of which:
Core Department and Agencies
–
271,458
5,152,252
27,731,701
5,152,252
28,003,159
NDPBs and other
designated bodies
1,040,737
784,330
12,121,535
9,458,838
13,162,272
10,243,168
Total
1,040,737
1,055,788
17,273,787
37,190,539
18,314,524
38,246,327
Exit packages disclosure is subject to audit. 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.

Annual report and Accounts 2016–17
86
Remuneration Report
Remuneration Policy
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 also advises the Prime
Minister on the pay and pensions of Members
of Parliament and their allowances; on Peers’
allowances; and on the pay, pensions and
allowances of Ministers and others whose pay is
determined by the Ministerial and Other Salaries
Act 1975.
In reaching its recommendations, the Review
Body is to have regard for 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; and
• 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 www.ome.uk.com.
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 2015-16 which
was paid in 2016-17. 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.
The following table shows the number of SCS
staff in the Core Department by pay range as at
31 March 2017. 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.

Accountability report
87
Pay Range
No of SCS staff within range as at
31 March 2017
No of SCS staff within range as at
31 March 2016 restated
£55,000 - £59,999
–
1
£60,000 - £64,999
3
18
£65,000 - £69,999
73
60
£70,000 - £74,999
36
39
£75,000 - £79,999
22
21
£80,000 - £84,999
5
3
£85,000 - £89,999
22
26
£90,000 - £94,999
6
8
£95,000 - £99,999
4
7
£100,000 - £104,999
7
6
£105,000 - £109,999
1
1
£110,000 - £114,999
5
2
£115,000 - £119,999
2
3
£120,000 - £124,999
4
3
£125,000 - £129,999
3
2
£130,000 - £134,999
2
4
£135,000 - £139,999
–
2
£140,000 - £144,999
5
5
£145,000 - £149,999
2
–
£160,000 - £164,999
–
1
£175,000 - £179,999
–
1
£180,000 - £184,999
2
–
Total
204
213
The remuneration of the senior civil servants
who are not members of the Departmental or
Executive Boards is based on a combination
of the performance ratings determined by
Permanent Secretary and Directors General
and the award amounts determined by the
Executive Committee. The Members of Executive
Committee for 2016-17 were:
Alex Chisholm
BEIS Permanent Secretary
Sir Martin Donnelly
Former BIS Permanent Secretary (to 5 September 2016)
Steven Lovegrove
Former Acting DECC Permanent Secretary (to 24 April 2016)
Sam Beckett
Director General, Economics and Markets
Gareth Davies
Director General, Business and Science
Clive Maxwell
Director General, Energy Transformation
Jeremy Pocklington
Director General, Energy and Security and Former Acting DECC Permanent Secretary
(25 April 2016 – 03 July 2016)
Angie Ridgwell
Director General, Corporate Services
Prof John Loughhead
Chief Scientific Advisor
Katrina Williams
Director General, International and Growth (to 31 March 2017)
Susannah Storey
Former Director Strategy (to 13 November 2016)
Jo Shanmugalingam
Former Director Strategy (to 13 November 2016)
Stephen Speed
Former Acting Director General, Markets and Infrastructure (to 3 July 2016)
Howard Orme
Former Director General, Finance, Commercial and Digital Transformation (to 9 October 2016)
Philippa Lloyd
Former Director General, People, Strategy and Higher Education (to 28 July 2016)
Rachel Sandby – Thomas
Former BIS Solicitor and Director General, Skills, Deregulation and Local Growth
(to 4 April 2016)

Annual report and Accounts 2016–17
88
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
Salary and Pension entitlements for
Ministers of the Core Department
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. The salary and pension entitlements
of the Ministers of the Department for Business,
Energy and Industrial Strategy for the year ending
31 March 2017 were as follows:
Single total figure of remuneration1
Salary (£)
Pension benefits
(to nearest
£1,000)2
Total
(to nearest
£1,000)
Ministers
2016-17 2015-16
2016-17
2015-16
2016-17
2015-16
Secretary of State
Rt Hon Greg Clark MP (from 14 July 2016)
45,0033
–
13,000
–
58,000
–
Rt Hon Sajid Javid MP (until 13 July 2016)4
22,502
59,884
4,000
26,000
27,000
86,000
Rt Hon Amber Rudd (until 16 July 2016)5
22,502
62,410
4,000
18,000
27,000
80,000
Ministers of State
Jo Johnson MP6
31,680
28,136
8,000
12,000
40,000
40,000
Baroness Neville-Rolfe DBE CMG
(until 08 January 2017)7
65,975
72,470
–
–
66,000
72,000
Nick Hurd (from 15 July 2016)
22,3128
–
6,000
–
28,000
–
Rt Hon Anna Soubry (until 14 July 2016)
17,0329
28,136
2,000
12,000
19,000
40,000
Nick Boles MP (until 14 July 2015)
17,28810
31,680
2,000
7,000
19,000
39,000
Lord Mark Price (until 15 July 2016)11
–
–
–
–
–
–
Andrea Leadsom (until 16 July 2016)12
10,560
26,900
2,000
8,000
13,000
35,000
Ed Vaizey MP (until 15 July 2016)13
–
–
–
–
–
–
Parliamentary Under-Secretaries of State
Margot James (from 16 July 2016)
14,91714
–
4,000
–
19,000
–
Jesse Norman (from 16 July 2016)
14,91715
–
4,000
–
19,000
–
Lord Prior of Brampton (from 09 January 2017)
11,45216
–
4,000
–
15,000
–
George Freeman MP (until 15 July 2016)
12,21017
22,375
1,000
7,000
13,000
29,000
Lord Bourne of Aberystwyth (until 14 July 2016)18
–
–
–
–
–
–
Note:
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’ salary on transfer from the date of appointment
is paid by their new department.
Continued overleaf…

Accountability report
89
1
This is audited information
2
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
3
The full year equivalent is £67,505. 1 April – 31 July salary was paid by Department of Communities and Local Government
4
The full year equivalent is £67,505. 1 August – 31 March salary was paid by Department of Communities and Local
Government
5
The full year equivalent is £67,505. Formerly was Secretary of State at the Department of Energy and Climate Change.
1 August – 31 March salary was paid by the Home Office
6
Joint Minister with the Department for Education from 14 July 2016
7
Salary Includes Lord’s Office-Holders Allowance. From 14 July 2016, was promoted to Minister of State from
Parliamentary Under Secretary of State. 1 Feb – 31 March salary was paid by HM Treasury
8
The full year equivalent £31,680. Formerly was Parliamentary Under Secretary of State for the Department for
International Development
9
The full year equivalent is £31,680. £7,920 was paid as contractual severance pay
10
The full year equivalent is £31,680. £7,920 was paid as contractual severance pay
11
Formerly was a joint minister with the Department for Business, Innovation and Skills (BIS) and the Foregin
and Commonwealth Office (FCO) between 4 April - 15 July 2016. He was renumerated £32,501 by the FCO.
12
The full year equivalent is £31,680. Formerly was Minister of State at Department of Energy and Climate Change
1 August – 31 March 2017 Salary was paid by Department for Environment, Food and Rural Affairs
13
Salary and pension benefits details can be found in the 2016-17 Department of Culture, Media and Sport’s Annual
Report and Accounts
14
The full year equivalent £22,375. Formerly was Assistant Government Whip
15
The full year equivalent £22,375.
16
The full year equivalent £68,710. 1 April – 31 January 2017 Salary was paid by the Department for Health
17
The full year equivalent £22,375. £5,594 was paid as contractual severance pay
18
Ministerial Salary is reported under a Lord in waiting as his former Parliamentary Under Secretary of State role was unpaid

Annual report and Accounts 2016–17
90
Minister11
Accrued
pension
at age
65 at 31
March
2017
Real
Increase
in
pension
at age
65
CETV
at 31
March
2017
CETV
at 31
March
2016
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
93
80
5
Rt Hon Sajid Javid MP (until 13 July 2016)
0-5
0-2.5
55
51
1
Rt Hon Amber Rudd (until 16 July 2016)
0-5
0-2.5
30
26
2
Ministers of State
Jo Johnson MP
0-5
0-2.5
33
26
3
Baroness Neville-Rolfe DBE CMG (until 08 January 2017)2
–
–
–
–
–
Nick Hurd (from 15 July 2016)
0-5
0-2.5
55
49
3
Rt Hon Anna Soubry (until 14 July 2016)
0-5
0-2.5
43
41
1
Nick Boles MP (until 14 July 2015)
0-5
0-2.5
8
6
1
Lord Mark Price (until 15 July 2016)3
–
–
–
–
–
Andrea Leadsom (until 16 July 2016)
0-5
0-2.5
16
14
1
Ed Vaizey MP (until 15 July 2016)4
–
–
–
–
–
Parliamentary Under-Secretaries of State
Margot James (from 16 July 2016)
0-5
0-2.5
5
–
3
Jesse Norman (from 16 July 2016)
0-5
0-2.5
8
4
2
Lord Prior of Brampton (from 09 January 2017)
0-5
0-2.5
40
34
3
George Freeman MP (until 15 July 2016)
0-5
0-2.5
12
11
–
Lord Bourne of Aberystwyth (until 14 July 2016)
–
–
–
–
–
Note:
None of the Ministers of the Department received any benefits-in-kind during the year.
1
This is audited information
2
Not a Member of the Parliamentary Contribution Pension Fund
3
Formerly a joint minister with the Department for Business, Innovation and Skills (BIS) and the Foreign and
Commonwealth Office (FCO) between 4 April- 15 July 2016
4
Salary and pension benefits details can be found in the Department of Culture, Media and Sport’s 2016-17 Annual
Report and Accounts
Salary and Pension entitlements for the
senior managers of the Department
The salary and pension entitlements of the most
senior managers of the Department for Business,
Energy and Industrial Strategy are set out in the
following table. As well as the current members
of the BEIS Departmental or Executive Boards,
this table also includes the former members
who either left the Department during the year
or ceased to be a member. None of the officials
of the Department received any benefits-in-kind
during the year.

Accountability report
91
Single total figure of remuneration1
Salary (£’000)
Bonus
payments
(£’000)
Pension
benefits (to
nearest £1,000)2
Total
(to nearest
£’000)
Officials
2016-17
2015-16
2016-17 2015-16
2016-17
2015-16
restated
2016-17
2015-16
restated
Alex Chisholm
from 04 July 2016)
120-125
(180-185 full
year equivalent)
–
–
–
51,000
–
170-175
–
Sir Martin Donnelly
(until 05 September 2016)3
70-75 (165-
170 full year
equivalent)
160-165
–
–
15,000
51,000
85-90
215-220
Stephen Lovegrove
(until 24 April 2016)4
10-15 (165-170 full
year equivalent)
165-170
–
–
9,000
77,000
xx-xxxx-xxxx
Sam Beckett
125-130
115-120
0-5
–
90,000
81,000 220-225 200-205
Gareth Davies
125-130
125-130
10-15
0-5
80,000
122,000
215-220 245-250
Clive Maxwell
145-150
140-145
–
–
56,000
65,000 200-205 205-210
Jeremy Pocklington
115-120
110-115
–
10-15
79,000
154,000 195-200 275-280
Angie Ridgwell
140-145
140-145
10-15
–
–
56,000
155-160 195-200
Jaee Samant (from 04
April 2016)
95-100 (105-110
full year equivalent)
–
10-15
–
98,000
– 205-210
–
John Loughhead
130-135
125-130
–
–
52,000
50,000
180-185
175-180
Katrina Williams
(until 31 March 2017)
120-125
120-125
–
10-15
28,000
39,0005
150-155
160-165
Susannah Storey
(until 13 November 2016)6
45-50 (115-
120 full year
equivalent)
70-75
5-10
5-10
17,000
27,000
70-75
100-105
Jo Shanmugalingam (until
13 November 2016)7
35-40 (85-90 full
year equivalent)
55-60
5-10
5-10
15,000
27,000
60-65
90-95
Stephen Speed
(until 3 July 2016)8
–
–
–
–
–
–
–
–
Howard Orme
(until 09 October 2016)9
90-95 (160-
165 full year
equivalent)
160-165
10-15
15-20
20,000
48,000
120-125 220-225
Philippa Lloyd
(until 28 July 2016)10
35-40 (125-
130 full year
equivalent)
115-120
(120-125
full year
equivalent)
10-15
15-20
23,000
77,000
xx-xxxx-xxxx
Rachel Sandby-Thomas
(until 04 April 2016)
0-5 (130-135 full
year equivalent)
130-135
–
10-15
–
31,000
0-5
175-180
Catherine Raines
(until 14 Jul 2016)11
40-45 (150-
155 full year
equivalent)
85-90
(150-155
full year
equivalent)
–
–
21,000
40,000
60-65
125-130
1
This is audited information
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 a transfer of pension rights.
3
6 September – 31 March salary and pension benefits details can be found in the Department for International Trade
2016-17 Annual Report and Accounts

Annual report and Accounts 2016–17
92
Footnotes continued
4
25 April – 31 March salary and pension benefits details can be found in the Ministry of Defence 2016-17
Annual Report and Accounts
5
Revised due to retrospective change to salary history
6
14 November - 31 March salary and pension benefits can be found in the Department for Exiting the European Union.
The role was part time
7
14 November - 31 March salary and pension benefits can be found in the Department for Exiting the European Union.
The role was part time
8
Acting Director General for Markets & Infrastructure from 25 April - 3 July 2016 and role was unpaid
9
10 October - 31 March salary and pension benefits details can be found in the Department for Education
2016-17 Annual Report and Accounts
10
29 July - 31 March salary and pension benefits details can be found in the Department for Education
2016-17 Annual Report and Accounts. The role was part time
11
15 July - 31 March Salary and pension benefits details can be found in the Department for International Trade
2016-17 Annual Report and Accounts

Accountability report
93
Pension Benefits1
Officials
Accrued
pension at age
60 as at 31
March 2017 and
related lump
sum
Real increase
in pension and
related lump
sum at pension
age
CETV
at 31
March
2017
CETV
at 31
March
2016
Real
increase
in CETV
Employer
contribution
to partnership
pension
account
£’000
£’000
£’000
£’000
£’000
Nearest
£’000
Alex Chisholm (from 04 July 2016)
15-20
2.5-5
193
155
23
–
Sir Martin Donnelly
until 05 September 2016)2
70-75 plus lump
sum of 220-225
0-2.5 plus lump
sum of 2.5-5
1,682
1,610
14
–
Stephen Lovegrove
(until 24 April 2016)3
25-30
0-2.5
424
418
5
–
Sam Beckett
40-45 plus lump
sum of 110-115
2.5-5 plus lump
sum of 5-7.5
756
669
55
–
Gareth Davies
35-40
2.5-5
472
410
37
–
Clive Maxwell
45-50 plus lump
sum of 120-125
2.5-5 plus lump
sum of 0
721
665
22
–
Jeremy Pocklington
35-40 plus lump
sum of 20-25
2.5-5 plus
lump sum of
0-2.5
486
424
38
–
Angie Ridgwell4
–
–
–
95
–
–
Jaee Samant
(from 04 April 2016)
30-35 plus lump
sum of 85-90
2.5-5.0 plus lump
sum of 7.5-10
564
475
66
–
John Loughhead
5-10
2.5-5
119
71
40
–
Katrina Williams
(until 31 March 2017)
50-55 plus lump
sum of 150-155
0-2.5 plus
lump sum 2.5-5
1,031
9635
23
–
Susannah Storey
(until 13 November 2016)6
15-20
0-2.5
183
174
6
–
Jo Shanmugalingam
(until 13 November 2016)7
15-20 plus lump
sum of 40-45
0-2.5 plus
lump sum 0-2.5
199
186
4
–
Stephen Speed
(until 3 July 2016)
–
–
–
–
–
–
Howard Orme (until 09
September 2016)8
25-30
0-2.5
492
464
18
–
Philippa Lloyd (until 28 July 2016)9
40-45 plus lump
sum of 45-50
0-2.5 plus lump
sum of 0-2.5
782
757
20
–
Rachel Sandby-Thomas
(until 04 April 2016)
45-50 plus lump
sum of 45-50
0-2.5 plus
lump sum of 0
816
816
–
–
Catherine Raines (until 14 Jul 2016)10
15-20
0-2.5
213
199
11
–
Note: Where senior managers left during the course of the year, their CETV closing balance will be as at their leaving date.
1
This is audited information
2
Pension details can be found in the Department for International Trade’s 2016-17 Annual Report and Accounts
3
Pension details can be found in the Ministry of Defence 2016-17 Annual Report and Accounts
4
Chose not to be covered by the Civil Service Pension arrangements for the reporting year
5
Revised due to retrospective change to salary history
6
Pension details can be found in the Department for Exiting the European Union
7
Pension details can be found in the Department for Exiting the European Union
8
Pension details can be found in the Department for Education 2016-17 Annual Report and Accounts
9
Pension details can be found in the Department for Education 2016-17 Annual Report and Accounts
10
Pension details can be found in the Department for International Trade 2016-17 Annual Report and Accounts

Annual report and Accounts 2016–17
94
Notes:1
• 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 2016-
17 relate to performance in 2015-16 and the
comparative bonuses reported for 2015-16
relate to the performance in 2014-15.
• 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
2015.2
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) (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.
1
This is not audited information
2
Available at http://qna.files.parliament.uk/ws-attachments/170890/original/PCPF MINISTERIAL SCHEME FINAL RULES.doc

Accountability report
95
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 4 sections: 3 providing benefits
on a final salary basis (classic, premium or
classic plus) with a normal pension age of 60;
and one providing benefits on a whole career
basis (nuvos) with a normal pension age of 65.
These statutory arrangements are unfunded
with the cost of benefits met by monies voted
by Parliament each year. Pensions payable
under classic, premium, classic plus, nuvos
and alpha are increased annually in line with
Pensions Increase legislation. Existing members
of the PCSPS who were within 10 years of their
normal pension age on 1 April 2012 remained in
the PCSPS after 1 April 2015. Those who were
between 10 years and 13 years and 5 months
from their normal pension age on 1 April 2012
will switch into alpha sometime between 1 June
2015 and 1 February 2022. 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 is 2.32%.
In all cases members may opt to give up
(commute) pension for a lump sum up to the
limits set by the Finance Act 2004.
The partnership pension account is 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
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

Annual report and Accounts 2016–17
96
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 the website
www.civilservicepensionscheme.org.uk
Cash Equivalent Transfer Values
for Civil Service pensions
A Cash Equivalent Transfer Value (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.
Fair Pay Disclosure
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 2016-17 was
£180,000 to £185,000 (2015-16: restated:
£175,000 to £180,000). This was 4.92 times
(2015-16: restated 4.73) the median remuneration
of the workforce, which was £37,092 (2015-16
restated: £37,502).
In 2016-17: 2 (2015-16: restated: 3) received
remuneration in excess of the highest paid
director. Remuneration ranged from £11,670
to £185,111 (2015-16 restated: £13,091 to
£280,000).
Total remuneration includes salary, non-
consolidated performance-related pay and
benefits-in-kind. It does not include severance
payments, employer pension contributions and
the cash equivalent transfer value of pensions.

Accountability report
97
Fees Entitlements for Non-Executive
Board Members1
Below are the fees entitlements to the
Non-Executive Board members for their
role on the BEIS Departmental Board.
The entitlements for the year to each
person were in the following ranges:
Non-executive member
Fees for 2016-17
Fees for 2015-16 restated2
£000
£000
Archie Norman (from 03 October 2016)
10-15 (20 full year equivalent)
–
Professor Dame Ann Dowling
20-25 (20 full year equivalent)
15-20 (15 full year equivalent)
Carolyn McCall (from 01 February 2017)
0-5 (15 full year equivalent)
–
Charles Randell
15-20 (20 full year equivalent)3
20-25 (20 full year equivalent)
Kathryn Parsons (from 01 February 2017)
0-5 (15 full year equivalent)
–
Stephen Carter (from 01 February 2017)
0-5 (15 full year equivalent)
–
Stuart Quickenden (from 01 February 2017)
- (15 full year equivalent)4
–
Martin Stewart (until 31 July 2016)
5-10 (20 full year equivalent)
20-25 (20 full year equivalent)
Allan Cook (until 14 November 2016)
15-20 (20 full year equivalent)
20-25 (20 full year equivalent)
Professor Wendy Purcell (until 23 July 2016)
0-5 (15 full year equivalent)
15-20 (15 full year equivalent)
Stephen Bligh (until 12 December 2016)
15-20 (20 full year equivalent)
15-20 (20 full year equivalent)
Dale Murray CBE (until 12 December 2016)
10-15 (15 full year equivalent)
15-20 (15 full year equivalent)
Juergen Maier (until 12 December 2016)
10-15 (15 full year equivalent)
15-20 (15 full year equivalent)
Tom Kelly (until 12 December 2016)
10-15 (15 full year equivalent)
15-20 (15 full year equivalent)
Rachel Campbell (until 12 December 2016)
10-15 (24 full year equivalent)5
20-25 (24 full year equivalent)
1
This is audited information
2
2015-16 fees restated to recognise remuneration on an accrual basis
3
Waived fee entitlement with effect from 1 March 2017
4
Waived off February and March 2017 fees entitlement
5
Waived off October - December 2016 fees entitlement
Off-payroll Tax Assurance
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 summary of the BEIS tax assurance data
can be found at
https://www.gov.uk/government/publication
s?departments[]=department-for-business-
energy-and-industrial-strategy&publication_
type=transparency-data

Annual report and Accounts 2016–17
98
Parliamentary Accountability
and Audit Report
Statement of Parliamentary
Supply (SoPS)
In addition to the primary statements prepared
under International Financial Reporting Standards
(IFRS), the Government Financial Reporting
Manual (FReM) requires the Department to
prepare a Statement of Parliamentary Supply
(SoPS) and supporting notes to show resource
against outturn against the Supply Estimate
presented to Parliament in respect of each
budgetary control limit. The SoPS and related
notes are subject to audit.
Summary of resource and capital outturn in 2016-17
2016-17
2015-16
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
3,385,099
(1,048,000)
2,337,099
2,999,102 (1,026,768)
1,972,334
385,997
8,317,849
– Capital
1.2
11,274,147
-
11,274,147
10,834,636
- 10,834,636
439,511
4,882,379
Annually Managed Expenditure
– Resource 1.1
17,137,296
275,000
17,412,296
3,291,704
231,511
3,523,215
13,845,592
101,945,294
– Capital
1.2
310,790
-
310,790
(14,507)
-
(14,507)
325,297
(1,612,974)
Total
Budget
32,107,332
(773,000)
31,334,332
17,110,935
(795,257)
16,315,678
14,996,397
113,532,548
Non-Budget
– Resource 1.1
–
–
–
–
–
–
–
–
Total
32,107,332
(773,000)
31,334,332
17,110,935
(795,257) 16,315,678 14,996,397
113,532,548
Total
Resource
1.1
20,522,395
(773,000)
19,749,395
6,290,806
(795,257)
5,495,549
14,231,589
110,263,143
Total
Capital
1.2
11,584,937
-
11,584,937
10,820,129
- 10,820,129
764,808
3,269,405
Total
32,107,332
(773,000)
31,334,332
17,110,935
(795,257) 16,315,678 14,996,397
113,532,548

Accountability report
99
Net Cash Requirement 2016-17
2016-17
2015-16 restated
Note
Estimate
Outturn
Net total outturn
compared
with Estimate:
saving/(excess)
Outturn
£’000
£’000
£’000
£’000
Net cash requirement
3
16,154,642
13,504,477
2,650,165
12,533,264
Administration Costs 2016-17
2016-17
2015-16 restated
Estimate
Outturn
Outturn
£’000
£’000
£’000
Total Administration costs
425,553
392,033
521,450
Figures in the areas highlighted green 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.
Prior year outturn is restated to reflect
the changes as result of the Machinery
of Government changes in 2016-17.
Further information on these restatements
is in note 27 to the financial accounts.
Explanations of the significant variances between
Estimate and outturn are given in the DG’s
Financial Review on pages 33.
The Notes on pages 100-107 form part of
these accounts.

Annual report and Accounts 2016–17
100
Notes to the Statement of Parliamentary Supply
SoPS 1. Net Outturn
SoPS 1.1. Analysis of net resource outturn by section
2016-17
2015-16
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 Science and Research
–
–
–
18,609
(1,239)
17,370
17,370
31,467
14,097
1,239
2,196,528
B Innovation, Enterprise and Business
–
–
–
461,152
(20,703)
440,449
440,449
529,524
89,075
89,075
498,589
C Market Frameworks
5,126
–
5,126
151,224
(87,329)
63,895
69,021
122,542
53,521
53,521
91,389
D Capability
331,276
(42,730)
288,546
24,797
(7,454)
17,343
305,889
455,073
149,184
109,183
351,467
E Government as Shareholder
–
–
–
145,409
–
145,409
145,409
137,710
(7,699)
–
176,092
F Science and Research (ALB) net
935
–
935
256,422
–
256,422
257,357
242,356
(15,001)
–
3,037,774
G Innovation, Enterprise and

Business (ALB) net
51
–
51
5,438
–
5,438
5,489
5,500
11
11
637,000
H Market Frameworks (ALB) net
7,362
–
7,362
38,061
–
38,061
45,423
53,994
8,571
8,571
47,667
I Capability (ALB) Net
39,818
–
39,818
–
–
–
39,818
9,800
(30,018)
–
40,248
J Government as Shareholder (ALB) net
162
–
162
(44,348)
–
(44,348)
(44,186)
260
44,446
36,747
(26,245)
K Security and Resilience: ensure the UK

has a secure and resilient energy system
–
–
–
11,707
(5,884)
5,823
5,823
10,474
4,651
4,651
11,560
L Keeping bills low: keep energy bills
as low as possible for households
and businesses
–
–
–
37,519
(1,154)
36,365
36,365
41,519
5,154
5,154
342,329

Accountability report
101
2016-17
2015-16
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
M Decarbonisation: secure ambitious

international action on climate change
and reduce carbon emissions cost-

effectively at home
–
–
–
57,668
(4,781)
52,887
52,887
72,830
19,943
18,534
114,579
N Energy legacy: manage the UK’s

energy legacy safely and responsibly
–
–
–
282,376
(2,396)
279,980
279,980
287,540
7,560
1,071
306,343
O Oil and Gas Authority
8,048
(11,849)
(3,801)
15,112
(88)
15,024
11,223
11,169
(54)
44
23,388
P Oil and Gas Authority (net)
6,603
–
6,603
4,653
–
4,653
11,256
11,313
57
6,423
–
Q NDA and SLC expenditure
38,195
–
38,195
1,249,250
–
1,249,250
1,287,445
1,336,000
48,555
48,555
1,414,542
R Coal Authority (net)
4,096
–
4,096
22,221
–
22,221
26,317
21,400
(4,917)
–
22,096
S Civil Nuclear Police Authority (net)
1,405
–
1,405
256
-
256
1,661
187
(1,474)
1,474
1,493
T Committee on Climate Change (net)
3,535
–
3,535
–
–
–
3,535
3,561
26
26
3,752
U Low Carbon Contracts Company (net)
–
–
–
(1,136)
–
(1,136)
(1,136)
582
1,718
1,718
1,142
V Electricity Settlements Company (net)
–
–
–
1,707
–
1,707
1,707
298
(1,409)
–
674
Total Voted
446,612
(54,579)
392,033
2,738,097
(131,028)
2,607,069
2,999,102
3,385,099
385,997
385,997
9,292,407
Non-Voted
W Nuclear Decommissioning Authority

Income (CFER)
–
–
–
–
(1,026,768)
(1,026,768)
(1,026,768)
(1,048,000)
(21,232)
(21,232)
(974,558)
Total Non-Voted
–
–
–
– (1,026,768) (1,026,768) (1,026,768) (1,048,000)
(21,232)
(21,232)
(974,558)
Total spending in Departmental
Expenditure Limit
446,612
(54,579)
392,033
2,738,097
(1,157,796)
1,580,301
1,972,334
2,337,099
364,765
364,765
8,317,849
Annually Managed Expenditure by section
Voted
X Science and Research
–
–
–
41,888
–
41,888
41,888
(14,194)
(56,082)
–
49,872

Annual report and Accounts 2016–17
102
Y Innovation, Enterprise and Business
–
–
–
249,667
(42,944)
206,723
206,723
(60,300)
(267,023)
–
(68,032)
Z Market Frameworks
–
–
–
134,029
–
134,029
134,029
198,000
63,971
63,632
101,517
AA Capability
–
–
–
(6,024)
11
(6,013)
(6,013)
25,687
31,700
24,631
(21,807)
AB Government as Shareholder
–
–
–
–
(4,652)
(4,652)
(4,652)
(8,756)
(4,104)
–
(2,338)
AC Science and Research (ALB) net
–
–
–
90,936
–
90,936
90,936
59,680
(31,256)
–
90,315
AD Innovation, Enterprise and Business

(ALB) net
–
–
–
(10,378)
–
(10,378)
(10,378)
18,897
29,275
–
7,722
AE Market Frameworks (ALB) net
–
–
–
(58)
–
(58)
(58)
(397)
(339)
–
(168)
AF Capability (ALB) net
–
–
–
(400)
–
(400)
(400)
1
401
401
2
AG Government as Shareholder (ALB) net
–
–
–
(26,653)
–
(26,653)
(26,653)
(12,696)
13,957
9,853
(47,351)
AH Keeping bills low: keep energy bills

as low as possible for households

and businesses
–
–
–
–
(3,204)
(3,204)
(3,204)
(2,079)
1,125
2,530
(309,667)
AI Decarbonisation: secure ambitious

international action on climate

change and reduce carbon

emissions cost-effectively at home
–
–
–
(1,335,361)
–
(1,335,361)
(1,335,361)
119,467
1,454,828
1,135,406
840,940
AJ Energy legacy: manage the UK’s

energy legacy safely and responsibly
–
–
–
(245,888)
(12,727)
(258,615)
(258,615)
(200,887)
57,728
56,995
(308,924)
AK Renewable Heat Incentive
–
–
–
545,426
–
545,426
545,426
633,000
87,574
87,574
372,420
AL Oil and Gas Authority
–
–
–
–
–
–
–
(313)
(313)
–
166
AM Oil and Gas Authority (net)
–
–
–
106
–
106
106
(314)
(420)
–
–
AN Nuclear Decommissioning Authority
–
–
–
2,850,516
–
2,850,516
2,850,516
5,340,000
2,489,484
2,489,484
89,797,932
AO Coal Authority (net)
–
–
–
2,061
–
2,061
2,061
94,684
92,623
92,623
1,907,290
AP Civil Nuclear Police Authority (net)
–
–
–
(142)
–
(142)
(142)
(122)
20
20
(826)
AQ Committee on Climate Change (net)
–
–
–
(63)
–
(63)
(63)
(62)
1
1
–
AR Low Carbon Contracts Company (net)
–
–
–
1,065,558
–
1,065,558
1,065,558
10,948,000
9,882,442
9,882,442
9,281,975
Total Voted
–
–
–
3,355,220
(63,516)
3,291,704
3,291,704
17,137,296 13,845,592 13,845,592 101,691,038
Non-Voted
AS Market Frameworks
–
–
–
231,511
–
231,511
231,511
275,000
43,489
43,489
254,256
Total Non Voted
–
–
–
231,511
–
231,511
231,511
275,000
43,489
43,489
254,256
Total spending in Annually Managed
Expenditure
–
–
–
3,586,731
(63,516)
3,523,215
3,523,215 17,412,296 13,889,081
13,889,081 101,945,294
Total DEL and AME Resource
446,612
(54,579)
392,033
6,324,828 (1,221,312)
5,103,516
5,495,549 19,749,395 14,253,846 14,253,846 110,263,143
Explanations of the significant variances between the Outturn and Estimate are included in the Directors’ financial review on page 33.

Accountability report
103
SoPS 1.2 Analysis of net capital outturn by section
2016-17
2015-16
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 Science and Research
2,757,049
(10,053)
2,746,996
2,838,927
91,931
9,126
374,354
B Innovation, Enterprise and
Business
451,123
(254,500)
196,623
350,635
154,012
154,012
290,167
C Market Frameworks
986
–
986
5,000
4,014
3,599
(10,906)
D Capability
10,191
(10)
10,181
68,708
58,527
54,602
7,585
E Government as
Shareholder
79,551
(5,136)
74,415
82,874
8,459
8,459
108,914
F Science and Research
(ALB) net
3,453,704
–
3,453,704
3,370,899
(82,805)
–
596,223
G Innovation, Enterprise and
Business (ALB) net
803,985
–
803,985
834,859
30,874
30,874
97,551
H Market Frameworks (ALB)
net
1,246
–
1,246
831
(415)
-
1,049
I Capability (ALB) Net
480
–
480
307
(173)
–
641
J Government as
Shareholder (ALB) net
1,172,445
–
1,172,445
1,331,896
159,451
159,451
1,110,620
K Security and Resilience:
ensure the UK has a
secure and resilient energy
system
(548)
–
(548)
1,437
1,985
1,985
5,071
L Keeping bills low: keep
energy bills as low as
possible for households
and businesses
43,440
(1,239)
42,201
43,609
1,408
1,408
131,102
M Decarbonisation: secure
ambitious international
action on climate change
and reduce carbon
emissions cost-effectively
at home
343,233
(137)
343,096
357,941
14,845
12,540
374,758
N Energy legacy: manage the
UK’s energy legacy safely
and responsibly
6,295
–
6,295
6,300
5
5
5,017
O Oil and Gas Authority
1,052
400
1,452
186
(1,266)
–
2,635
P Oil and Gas Authority (net)
1,163
–
1,163
332
(831)
–
–

Annual report and Accounts 2016–17
104
2016-17
2015-16
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
Q NDA and SLC expenditure
1,970,695
–
1,970,695
1,972,000
1,305
1,305
1,827,695
R Coal Authority (net)
5,960
–
5,960
8,100
2,140
2,140
6,821
S Civil Nuclear Police
Authority (net)
1,655
–
1,655
–
(1,655)
–
2,787
T Committee on Climate
Change (net)
9
–
9
14
5
5
4
U Low Carbon Contracts
Company (net)
592
–
592
(411)
(1,003)
–
955
V Electricity Settlements
Company (net)
1,005
–
1,005
(297)
(1,302)
–
975
Total Voted
11,105,311
(270,675) 10,834,636
11,274,147
439,511
439,511
4,287,153
Non–Voted
W Nuclear Decommissioning
Authority Income (CFER)
–
–
–
–
–
–
(51,639)
Total Non–Voted
–
–
–
–
–
–
(51,639)
Total spending in
Departmental
Expenditure Limit
11,105,311
(270,675) 10,834,636
11,274,147
439,511
439,511
4,882,379
Annually Managed
Expenditure by section
Voted
X Science and Research
834
–
834
–
(834)
–
–
Y Innovation, Enterprise and
Business
–
(4,819)
(4,819)
(10,726)
(5,907)
–
(12,797)
Z Market Frameworks
–
–
–
–
–
–
–
AA Capability
–
–
–
–
–
–
–
AB Government as
Shareholder
7,661,000
(7,527,000)
134,000
537,000
403,000
270,762
223,000
AC Science and Research
(ALB) net
(61,276)
–
(61,276)
–
61,276
54,535
(38,980)
AD Innovation, Enterprise
and Business (ALB) net
84,961
–
84,961
65,107
(19,854)
–
17,297
AE Market Frameworks (ALB)
net
–
–
–
–
–
–
–
AF Capability (ALB) net
–
–
–
–
–
–
–

Accountability report
105
2016-17
2015-16
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
AG Government as
Shareholder (ALB) net
(129,934)
–
(129,934)
(242,318)
(112,384)
–
(430,678)
AH Keeping bills low: keep
energy bills as low as
possible for households
and businesses
–
–
–
–
–
–
–
AI Decarbonisation: secure
ambitious international
action on climate change
and reduce carbon
emissions cost–effectively
at home
–
–
–
–
–
–
2,310
AJ Energy legacy: manage
the UK’s energy legacy
safely and responsibly
12,727
(51,000)
(38,273)
(38,273)
–
–
61,891
AK Renewable Heat Incentive
–
–
–
–
–
–
(22)
AL Oil and Gas Authority
–
–
–
–
–
–
–
AM Oil and Gas Authority (net)
–
–
–
–
–
–
–
AN Nuclear
Decommissioning
Authority
–
–
–
–
–
–
–
AO Coal Authority (net)
–
–
–
–
–
–
–
AP Civil Nuclear Police
Authority (net)
–
–
–
–
–
–
–
AQ Committee on Climate
Change (net)
–
–
–
–
–
–
–
AR Low Carbon Contracts
Company (net)
–
–
–
–
–
–
–
Total Voted
7,568,312 (7,582,819)
(14,507)
310,790
325,297
325,297
(177,979)
Non–Voted
AS Market Frameworks
–
–
–
–
–
–
–
Government as Shareholder
(ALB) net
(1,434,995)
Total Non–Voted
–
–
–
–
–
– (1,434,995)
Total spending in Annually
Managed Expenditure
7,568,312 (7,582,819)
(14,507)
310,790
325,297
325,297 (1,612,974)
Total DEL and
AME Capital
18,673,623 (7,853,494) 10,820,129 11,584,937
764,808
764,808
3,269,405
Explanations of the significant variances between the Outturn and Estimate are included in the
Directors’ financial review on page 33.

Annual report and Accounts 2016–17
106
SoPS 2: Reconciliation of net resource
outturn to net operating expenditure
2016-17
2015-16
restated
Note
Outturn
Outturn
£’000
£’000
Total resource outturn in Statement of Parliamentary Supply
SoPS
1.1
5,495,549
110,263,143
Add:
NDA remedial decommissioning costs which are capital in budgets
but taken through the SoCNE
1,970,695
1,780,384
Capital Grants
1,737,259
1,925,742
Share of profit/loss of joint ventures and associates
242
30,774
Other non-budget
28,090
1,812
Share of minority interest
4,604
3,991
Research and Development costs
6,190,998
0
Less:
Postal Services Holding net profit on disposal of Royal Mail
0
(1,434,995)
Investments realised
0
(29,384)
Non-budgetary income
(28,468)
0
Ordnance Survey dividend in specie
0
(135,752)
Non-budget, non-voted items in respect of BIS (Postal Services Act 2011)
Company Limited and B Company Limited
(88,164)
(103,093)
Expected return on pension scheme assets
(42,266)
(38,060)
Gains/(losses) on defined benefit scheme
(14,260)
7,648
NDA income scored in SOPS only
61,348
69,593
Capital Income in SOCNE
(73,115)
(208,459)
Amortisation of financial guarantees
(7,768)
(14,496)
Research and Development income
(342,822)
0
Other:
Impact of intra–group transactions
(65,773)
(1,077)
Other differences
16,424
(10,539)
Net Expenditure for the period in Consolidated
Statement of Comprehensive Net Expenditure

14,842,573 112,107,232
The prior year comparatives present the Net Operating Expenditure as reported at 31 March 2017.
This is restated following a Machinery of Government change.

Accountability report
107
SoPS 3: Reconciliation of Net Resource
Outturn to Net Cash Requirement
2016-17
Estimate
Outturn
Net total outturn
compared
with Estimate:
saving/(excess)
£’000
£’000
£’000
Resource Outturn
19,749,395
5,495,549
14,253,846
Capital Outturn
11,584,937
10,820,129
764,808
31,334,332
16,315,678
15,018,654
Accruals to cash adjustments:
Adjustments to remove non-cash items:
Depreciation/Amortisation
(30,424)
(27,392)
(3,032)
New provisions and adjustments to previous provisions
(31,332)
(77,542)
46,210
Movement in fair value - Contracts for Difference
(119,000)
1,337,205
(1,456,205)
Other non-cash items
50,174
(279,927)
330,101
Adjustments for NDPBs:
Remove voted resource and capital
(25,474,241)
(12,912,859)
(12,561,382)
Add cash grant-in-aid
8,345,364
7,441,033
904,331
Add share purchase
–
716,483
(716,483)
Adjustments to reflect movements in working balances:
Increase/(decrease) in receivables
1,000,000
(156,468)
1,156,468
(Increase)/decrease in payables
–
40,356
(40,356)
Use of provisions
306,769
301,685
5,084
Financial guarantees called in
–
10,967
(10,967)

15,381,642
12,709,219
2,672,423
Removal of non-voted budget items:

Other adjustment
773,000
795,257
(22,257)
Net cash requirement
16,154,642
13,504,476
2,650,166
SoPS 4: 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.
2016-17
2015-16 restated
Outturn
Outturn
Income
Receipts
Income
Receipts
£’000
£’000
£’000
£’000
Operating income of the NDA within the Ambit
756,394
762,000
935,267
934,000
Operating income outside the Ambit of the Estimate
242,526
242,851
1,979,730
1,979,527
Total income payable to the Consolidated Fund
998,920
1,004,851
2,914,997
2,913,527

Annual report and Accounts 2016–17
108
Regularity of expenditure
1
Losses and special payments
The disclosures in this note are in accordance
with Managing Public Money, the official
guidance on handling public funds.
Losses statement
2016-17
2015-16 restated
Core and
Agencies
Departmental
Group
Core and
Agencies
Departmental
Group
Total number of losses
7,460
7,827
8,138
8,299
RPS receivable impairment
249
249
261
261
Other losses
39
40
283
284
Total value of losses (£m)
288
289
544
545
Details of cases over £300,000
Cash losses
Core Department
£18.9 million was written off in 2016-17 in respect
of Hatfield Colliery Partnership Limited. A loan
was provided by BEIS in order to preserve the
viability of a managed closure plan, but was
unable to be fully repaid as the company went
into liquidation.
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 2016-17 is £249 million
(2015-16: £261 million).
Constructive losses
Core Department
The core Department holds onerous leases for
properties on the Department’s estate, for which
we have provided £113 million. The payments
made during the course of 2016-17 in respect of
these leases amounted to £18.8 million (2015-16:
£16.1 million).
Store Losses
Departmental Group
A loss of £900,000 was incurred by the Nuclear
Decommissioning Authority from the write off of
stores items on nuclear licensed sites.
1
This section is subject to NAO audit opinion

Accountability report
109
Special Payments
Special payments include extra–contractual,
ex–gratia, compensation and special severance
payments.
2016-17
2015-16 restated
Core and
Agencies
Departmental
Group
Core and
Agencies
Departmental
Group
Total number of special payments
29
53
32
38
Total value of special payments (£m)
1
99
–
1
Details of cases over £300,000
Extra–contractual payments
Core Department
The Department funded a settlement for one of
its Partner Organisations with SSCL of £500,000
in 2016-17. This settlement ended the pre-
existing contract with SSCL.
Compensation payments
Departmental Group
The Nuclear Decommissioning Authority made
special payments in 2016-17 of a) £583,540 in
settlement of a tribunal case and b) £85,000,000
to Energy Solutions and £12,345,885 to
Bechtel in settlement of legal action relating to
procurement of a new parent body organisation
for the Magnox nuclear licensed sites.
Remote Contingent Liabilities
1
Quantifiable
The Departmental Group has entered into the
following quantifiable contingent liabilities by
offering guarantees, indemnities or letters of
comfort. None of these is a contingent liability
within the meaning of IAS 37 since the likelihood
of a transfer of economic benefit in settlement
is too remote. They therefore fall to be disclosed
under the requirements of the ‘Government
Financial Reporting Manual’ and ‘Managing Public
Money’. Measurement is carried out following the
requirements of IAS 39, given that the reporting
requirements of ‘Managing Public Money’, and
these liabilities, fall outside the scope of IAS 37.
‘Managing Public Money’ requires that the full
potential costs of such contracts be reported
to Parliament.
1 April
2016
Increase/
(Decrease)
in year
Liabilities
crystallised
in year
Obligations
expired in
year
31 March
2017
Amount
reported to
Parliament by
Departmental
Minute
£m
£m
£m
£m
£m
£m
GIB has provided indemnities relating
to costs of decommissioning and
restoring sites once they are no longer
in use.
103
(70)
–
–
33
–
Other
1
–
–
(1)
–
–
BEIS has indemnified Cornwall
Council for European Regional
Development Fund (ERDF)–related
liability, arising from the transfer of
Wave Hub.
–
18
–
–
18
18
Total
104
(52)
–
(1)
51
18
1
This section is subject to NAO audit opinion

Annual report and Accounts 2016–17
110
Unquantifiable
BEIS has also incurred the following unquantifiable
contingent liabilities. None of these are a
contingent liability within the meaning of IAS 37
since the possibility of a transfer of economic
benefit in settlement is too remote.
Statutory Guarantees
Core Department
• In the event of BAE Systems plc (BAES)
being wound up, other than for the purpose
of reconstruction or amalgamation, the
Government is contingently 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
Core Department
• Indemnities 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 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.
• The Police Information Technology
Organisation (Home Office) provides the
Criminal Enforcement Team (formerly part
of BEIS) with access to data from the Police
National Computer (PNC). The Insolvency
Service (and BEIS) has indemnified the police
against any liabilities which they may incur
as a result of providing that access.
• Indemnity given to National Grid’s liabilities
with regards to the interconnector linking the
UK and France.
Other
Core Department
• 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.
This started a two-year negotiation process.
Any subsequent changes in legislation,
regulation and funding arrangements are
subject to the outcome of the negotiations. As
a result, an unquantifiable remote contingent
liability is disclosed. In accordance with
accounting standards, no contingent assets
can be recognised. During this two–year
period, which includes the full duration of
the next accounting period, the UK remains
a full member of the EU and Euratom with
all the rights and obligations arising from
membership. There are no significant impacts
on the financial statements in the short term
from making the formal notification.
• Incidents/accidents Insurance claims for
exposure to ionising radiation pursued outside
the existing UK Atomic Energy Authority
insurance scheme.
• A contingent liability in respect of risk
associated with the core Department
assuming responsibility for uplifts in pension
contributions for the UK Atomic Energy
Authority’s non-active pension scheme
members.
• European Patent Office (EPO): the UK, as
one of the contracting states, has a potential
liability under Article 40 of the European Patent
Convention of 1973.
• World Intellectual Property Organisation:
the UK, as a contracting state to the Patent
Co-operation Treaty of 1970, has a potential
liability under Article 57 of the Treaty.
• 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 relevant company.

Accountability report
111
• An indemnity has been provided to Pöyry PLC
relating to the use of their yield curve data for
the sale of GIB. 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
Official Receiver relating to their actions as
administrator of SSI Redcar with respect to the
administration of the site.
• The Department has a contingent liability
relating to ongoing legal cases. The cost is
dependent on the outcome of cases which
currently cannot be reliably estimated.
• In the event Financial Reporting Council’s legal
costs fund fall below £1 million in any year,
BEIS will make a grant payment to cover legal
costs subsequently incurred in that year.
• 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 to
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 invoked following
a failed recourse to an indemnity from EDF
Energy.
• 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 exhausted i.e. Company and
Directors insurance (cover limit of £100m); 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 exhausted i.e. Company and
Directors insurance (cover limit of £100m);
and the recovery of costs through the levy.
• Statutory liability in the event of a nuclear
accident in the UK for third-party claims in
excess of the operator’s liability.
• Liability for non-compliance with the
Cogeneration Directive (2004/8/EC): in
the event contractors for the Department
incorrectly certify combined heat and power
plants.
• Liability for 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.
• Under section 9 of The Radioactive
Contaminated Land (Modification of
Enactments) (England) (Amendment)
Regulations 2007 SI 2007/3245 the Secretary
of State is deemed to be the appropriate
person to bear responsibility for remediation of
land contaminated by a nuclear occurrence.
• An indemnity for loss or damage 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.

Annual report and Accounts 2016–17
112
• The Department has indemnified Elexon
Ltd against third-party claims relating to the
design and/or implementation of Contracts for
Difference (CfD) and Capacity Markets (CM)
settlement systems which are not covered by
insurance and/or guarantees by their sub-
contractors.
• Organisation for Economic Co-operation
and Development (OECD) and International
Energy Agency (IEA): an indemnity for any loss
to the IEA arising from use of its data in the
Department’s Global Climate Change 2050
Pathways Calculator, limited to maximum of
£100,000.
• Nuclear Liabilities Fund - 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 (EDFE)) to the extent
that the assets of the Fund fall short. The
undiscounted estimated liabilities of £19.9
billion (2015-16 £19.7 billion) have a present
value of £32.8 billion (2015-16 £33 billion) using
the prescribed discount rate from HM Treasury
of negative 0.8% (2015-16 negative 0.8%). The
value of the Fund is £9.4 billion (2015-16 £9.2
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. In view of changes to actual and
expected interest rates and expected rates of
inflation experienced during the course of the
year, the Trustees are currently reviewing 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
• 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.
Departmental Group
• STFC collaborates with a number of
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.
Other remote contingent liabilities
Indemnities
Core Department
• The Secretary of State Investor Agreement
(SOSIA) provides protections in certain
scenarios where the Hinkley Point C Nuclear
plant is shut shown 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 £22bn
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.

Accountability report
113
Departmental ALBs
• The NDA has non-quantifiable 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.
These are not treated as contingent liabilities
within the meaning of IAS 37 since the
possibility of a transfer of economic benefit
in settlement is considered too remote.
Other potential or expected liabilities
The Department has entered into the following
quantifiable arrangements, none of which are
a contingent liability requiring disclosure under
IAS 37. The following information has been
provided in the interests of transparency.
• 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, an FDP and associated
FDP 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 5 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 2 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.1
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.
1
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/42629/3798-waste-transfer-
pricing-methodology.pdf

Annual report and Accounts 2016–17
114
• 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. To date
three auctions have been held for capacity to
be delivered in 2018-19, 2019-20 and 2020-
21. These awarded 49.26 GW of capacity
agreements at a cost of £1.790 billion, 45.37
GW capacity agreements at a cost of £1.089
billion, and 52.43 GW of capacity agreements
at a cost of £2.024 billion respectively. 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 2017
As at 31 March 2016
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
–
3,321
1,582
4,903
–
2,010
876
2,886
Income from levy – ESC
–
(3,321)
(1,582)
(4,903)
–
(2,010)
(876)
(2,886)
Total Departmental Group
–
–
–
–
–
–
–
–
Alex Chisholm
Principal Accounting Officer
and Permanent Secretary
13 July 2017

Accountability report
115
The Certificate and Report of the Comptroller
and Auditor General to the House of Commons
I certify that I have audited the financial
statements of the Department for Business,
Energy and Industrial Strategy and of its
Departmental Group for the year ended 31
March 2017 under the Government Resources
and Accounts Act 2000. The Department
consists of 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 2016. 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. I have also audited the Statement of
Parliamentary Supply and the related notes.
These financial statements have been prepared
under the accounting policies set out within
them. I have also audited the information in
the Remuneration Report, Staff Report and
Parliamentary Accountability disclosures within
the Accountability Report that is described in
those reports as having been audited.
Respective responsibilities of the
Accounting Officer and auditor
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.
My responsibility is to audit, certify and report
on the financial statements in accordance with
the Government Resources and Accounts Act
2000. I conducted my audit in accordance
with International Standards on Auditing (UK
and Ireland). Those standards require me and
my staff to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the financial
statements
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. This includes an assessment of:
whether the accounting policies are appropriate
to the Department’s and the Departmental
Group’s circumstances and have been
consistently applied and adequately disclosed;
the reasonableness of significant accounting
estimates made by the Accounting Officer;
and the overall presentation of the financial
statements. In addition I read all the financial
and non-financial information in the Annual
Report to identify material inconsistencies with
the audited financial statements and to identify
any information that is apparently materially
incorrect based on, or materially inconsistent
with, the knowledge acquired by me in the
course of performing the audit. If I become
aware of any apparent material misstatements
or inconsistencies I consider the implications
for my certificate.
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.

Annual report and Accounts 2016–17
116
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 2017 and shows that those totals
have not been exceeded; and
• 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.
Opinion on financial statements
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
2017 and of the Department’s net expenditure
and Departmental Group’s net expenditure
for the year then ended; and
• 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 1.29 and
19.1 to the financial statements concerning
the uncertainties inherent in the provisions
relating to the costs of dealing with nuclear
decommissioning liability. As set out in these
notes, given the complexity 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.
I also draw attention to the disclosures made
in Notes 1.29 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 other matters
In my opinion:
• the part of the Remuneration Report, Staff
Report and Parliamentary Accountability
disclosures to be audited has been properly
prepared in accordance with HM Treasury
directions made under the Government
Resources and Accounts Act 2000; and
• the information given in the Performance
Report and Accountability Report for the
financial year for which the financial statements
are prepared is consistent with the financial
statements.

Accountability report
117
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 part of
the Remuneration Report, Staff Report
and Parliamentary Accountability disclosures
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
17th July 2017
National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

Financial
Statements
London Gateway, Thurrock, Essex

Financial Statements
119
Primary Statements
Consolidated Statement of Comprehensive Net Expenditure
for the year ended 31 March 2017
31 March 2017
31 March 2016 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Income from sale of goods and services
6.1
(286)
(1,782)
(624)
(2,118)
Total operating income
(286)
(1,782)
(624)
(2,118)
Staff costs
3
282
992
315
1,009
Purchase of goods and services
4.1
1,629
2,694
1,572
2,483
Depreciation and impairment charges
4.2
445
861
376
621
Provision expense
4.3
72
6,679
210
93,093
Grants
4.4
11,415
7,281
11,307
7,371
Other operating expenditure
(19)
(127)
2
(59)
Profit on disposal of shareholding in Royal Mail plc
10.1
–
–
–
(1,435)
Total operating expenditure
13,824
18,380
13,782
103,083
Net operating expenditure
13,538
16,598
13,158
100,965
Finance income
6.2
(168)
(252)
(364)
(363)
Finance expense
5
(29)
(1,305)
(23)
1,404
Contracts for difference derivatives
9
(1,337)
(181)
839
10,122
Net expenditure for the year from continuing
operations
12,004
14,860
13,610
112,128
Net expenditure for the year from
discontinuing operations
15
–
(18)
–
(21)
Net expenditure for the year
12,004
14,842
13,610
112,107
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
(1)
(145)
2
(146)
– revaluation of intangible assets
–
1
–
(21)
Items that may be reclassified subsequently
to net operating costs:
– revaluation of investments
(241)
(91)
306
1,797
– actuarial (gains)/losses
–
144
–
(111)
– other movements in fair value
(21)
(56)
(86)
(126)
Total other comprehensive net income and
expenditure from continuing operations
(263)
(147)
222
1,393

Annual report and Accounts 2016–17
120
31 March 2017
31 March 2016 restated
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
–
7
–
1
Total other comprehensive net income and
expenditure
(263)
(140)
222
1,394
Comprehensive net expenditure for the year
11,741
14,702
13,832
113,501
All operations are continuing apart from those
included in note 15. Comparative figures for
2015-16 have been re-stated to reflect the merger
of the Department for Business, Innovation and
Skills and the Department of Energy and Climate
Change to form the Department for Business,
Energy and Industrial Strategy (BEIS). There have
also been a number of Machinery of Government
changes relating to former DECC and former
BIS which had an impact on the prior year
comparatives.
Further analysis of staff costs can be found
in the Staff report in the Accountability Report
on page 83.
The Notes on pages 128 to 219 form part
of these Accounts.

Financial Statements
121
Consolidated Statement of Financial Position
as at 31 March 2017
31 March 2017
31 March 2016 restated
1 April 2015 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
264
3,422
264
3,916
308
3,392
Investment
properties
31
151
34
100
–
100
Intangible assets
8
6
101
9
106
10
106
Investment and
loans in public
bodies
10
2,171
1,331
2,908
1,340
2,676
1,374
Other financial
assets
11
1,484
3,965
1,637
4,471
1,939
5,916
Recoverable
contract costs
12
–
2,870
–
2,799
–
1,638
Derivative financial
instruments
64
70
54
65
–
8
Investment in
joint ventures and
associates
13
–
347
–
872
–
680
Trade and other
receivables
14
305
399
356
437
387
480
Total non–
current assets
4,325
12,656
5,262
14,106
5,320
13,694
Current assets:
Inventories
–
33
–
47
–
42
Non–current
assets held for sale
15
1,517
2,609
–
19
–
2
Trade and other
receivables
14
438
1,300
549
1,297
1,059
2,077
Investments and
loans in public
bodies
16
682
682
541
541
293
293
Other financial
assets
11
1
1
2
2
5
5
Derivative financial
instruments
31
42
–
13
–
–
Cash and cash
equivalents
17
1,192
1,817
775
1,495
1,693
2,603
Total current
assets
3,861
6,484
1,867
3,414
3,050
5,022
Total assets
8,186
19,140
7,129
17,520
8,370
18,716
Current
liabilities:
Trade payables
and other liabilities
18
(2,248)
(4,890)
(1,488)
(3,760)
(2,814)
(5,059)

Annual report and Accounts 2016–17
122
31 March 2017
31 March 2016 restated
1 April 2015 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
Provisions
19
(289)
(3,582)
(315)
(3,496)
(648)
(3,829)
Financial
guarantees
(18)
(18)
(23)
(23)
(27)
(27)
Non-current liabilities
held for sale
–
(1,000)
–
–
–
–
Total current
liabilities
(2,555)
(9,490)
(1,826)
(7,279)
(3,489)
(8,915)
Non–current
assets plus/
less net current
assets/ liabilities
5,631
9,650
5,303
10,241
4,881
9,801
Non–current
liabilities:
Trade payables
and other liabilities
18
(1,023)
(2,460)
(1,138)
(3,272)
(322)
(2,020)
Provisions
19
(2,297)
(165,966)
(2,516)
(164,122)
(2,637)
(71,213)
Financial
guarantees
(43)
(43)
(37)
(37)
(60)
(60)
Derivative financial
instruments
9
–
(12,339)
(1,318)
(12,608)
(520)
(2,503)
Retirement benefit
obligations
20
–
(842)
–
(277)
–
(462)
Total non–
current liabilities
(3,363)
(181,650)
(5,009)
(180,316)
(3,539)
(76,258)
Total assets less
liabilities
2,268
(172,000)
294
(170,075)
1,342
(66,457)
Taxpayers’
equity and other
reserves:
General fund
1,364
(175,252)
(353)
(173,156)
449
(71,154)
Revaluation
reserve
904
2,813
647
2,685
893
4,310
Non-current
assets held for sale
revaluation reserve
–
15
–
–
–
–
Charitable funds
–
319
–
311
–
297
Non–controlling
interests
–
105
–
85
–
90
Total equity
2,268
(172,000)
294
(170,075)
1,342
(66,457)
Core Department and Agencies comprise the core Department and the UK Space Agency,
National Measurement and Regulation Office, Insolvency Service and the Oil and Gas Authority
(until 30th September 2016).
The notes on pages 128 to 219 form part of these accounts.
Alex Chisholm
Principal Accounting Officer and Permanent Secretary
13 July 2017

Financial Statements
123
Consolidated Statement of Cash Flows
for the year ended 31 March 2017
2016–17
2015–16 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
(12,004)
(14,860)
(13,610)
(112,128)
Net operating cost from discontinuing operations
–
18
–
21
Adjustment for non–cash expenditure
(941)
6,048
1,293
103,911
(Increase)/decrease in inventories
–
14
–
(5)
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
162
35
541
823
Less movements in receivables relating to items
not passing through the Consolidated Statement
of Comprehensive Net Expenditure
(5)
(66)
(6)
(6)
Increase/(decrease) in trade payables and other
liabilities
18
645
318
(510)
(47)
Less movements in payables relating to items not
passing through the Consolidated Statement of
Comprehensive Net Expenditure
(394)
334
943
1,344
Use of provisions
19
(301)
(3,157)
(663)
(3,533)
Payments to retirement benefit obligations
–
(155)
–
(153)
Financial guarantees called in
(11)
(11)
(11)
(11)
Expenditure funded by the National Insurance
Fund (RPS)
4.1
232
232
254
254
Net cash outflow from operating activities
(12,617)
(11,251)
(11,769)
(9,530)
Cash flows from investing activities
Purchase of property, plant and equipment
(25)
(342)
(16)
(763)
Purchase of investment property
–
–
(15)
(15)
Purchase of intangible assets
(3)
(32)
(3)
(23)
Proceeds of disposal of property, plant and
equipment
3
25
(1)
2
Proceeds of disposal of investment property
–
–
10
41
Proceeds of disposal of intangible assets
1
1
–
1
Proceeds of disposal of assets held for sale
–
23
–
2
Loan redeemed from Post Office Limited
16
7,527
7,530
7,288
7,289
Loans made to Post Office Limited
16
(7,661)
(7,661)
(7,511)
(7,511)
Repayments of other current loans and
investments
3
3
2
2
Repayments of other non current loans and
investments
10
–
–
6
–
Repayments of other loans and investments
47
452
82
2,795
Other investments and loans made
(171)
(1,264)
(237)
(2,736)
Launch investment receipts
144
144
112
112
Venture capital fund redemptions
14
12
–
17
Venture capital fund investments
(13)
(79)
(22)
(66)

Annual report and Accounts 2016–17
124
2016–17
2015–16 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Dividends from Joint ventures and associates
–
5
–
5
Disposal of Joint venture and associates
–
47
–
16
Investment in Joint ventures and associates
13
–
(186)
–
(200)
Investment in shares
(753)
(37)
(462)
(229)
Net cash outflow from investing activities
(887)
(1,359)
(767)
(1,261)
Cash flows from financing activities
From Consolidated Fund (supply) – current year
14,750
14,750
11,427
11,427
From Consolidated Fund (supply) – prior year
153
153
140
140
To Consolidated Fund (supply) – prior year
(909)
(909)
–
–
From the National Insurance Fund
232
232
254
254
Payments to the National Insurance Fund
(232)
(232)
(254)
(254)
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
–
–
–
1
Other adjustments relating to financing activities
–
1
–
–
Net Financing
13,994
14,002
11,567
11,568
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
490
1,323
(969)
777
Receipts due to the Consolidated Fund which are
outside the scope of the Department’s activities
1,005
77
2,915
979
Payments of amounts due to the
Consolidated Fund
(1,078)
(1,078)
(2,864)
(2,864)
Net increase/(decrease) in cash and
cash equivalents in the period after
adjustment for receipts and payments
to the Consolidated Fund
417
322
(918)
(1,108)
Restated cash and cash equivalents
opening balance
775
1,495
1,693
2,603
Cash and cash equivalents at the end
of the period
17
1,192
1,817
775
1,495
The notes on pages 128 to 219 form part of these accounts.

Financial Statements
125
Statement of Changes in Taxpayers’ Equity (Core Department and Agencies)
for the year ended 31 March 2017
Note
General
Fund
Revaluation
Reserve
Taxpayers'
equity
Total
Reserves
£m
£m
£m
£m
Balance at 1 April 2015 restated
449
893
1,342
1,342
Net parliamentary funding – drawn down
11,427
–
11,427
11,427
Net parliamentary funding – deemed
1,594
–
1,594
1,594
National Insurance Fund – RPS
4.1
254
–
254
254
Supply (payable)/receivable adjustment
18
(488)
–
(488)
(488)
Decrease in RPS receivables
14
(6)
–
(6)
(6)
Net expenditure for the year
(13,610)
–
(13,610)
(13,610)
Non–Cash Adjustments:
Auditors’ remuneration
4.1
1
–
1
1
Movements in Reserves:
Other comprehensive net (expenditure)
/income for the year
–
(222)
(222)
(222)
Transfers between reserves
23
(23)
–
–
Other movements
3
(1)
2
2
Balance at 31 March 2016 restated
(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)
/income 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

Annual report and Accounts 2016–17
126
Consolidated Statement of Changes in Taxpayers’ Equity (Departmental Group)
for the year ended 31 March 2017
Note
General
Fund
Revaluation
Reserve
Non-current
Assets Held
for Sale
Revaluation
Reserve
Taxpayers'
equity
Charitable
Funds –
Unrestricted
Non-
controlling
interests
Total
Reserve
£m
£m
£m
£m
£m
£m
£m
Balance at 1 April 2015 restated
(71,154)
4,310
–
(66,844)
297
90
(66,457)
Net parliamentary funding – drawn down
11,427
–
–
11,427
–
–
11,427
Net parliamentary funding – deemed
1,594
–
–
1,594
–
–
1,594
National Insurance Fund – RPS
4.1
254
–
–
254
–
–
254
Supply (payable)/receivable adjustment
18
(488)
–
–
(488)
–
–
(488)
Income payable to the Consolidated Fund
(935)
–
–
(935)
–
–
(935)
Decrease in RPS receivables
14
(6)
–
–
(6)
–
–
(6)
Net expenditure for the year
(112,107)
–
–
(112,107)
–
–
(112,107)
Amounts paid from distributable reserves
(1,969)
–
–
(1,969)
–
–
(1,969)
Non-Cash Adjustments:
Auditors’ remuneration
4.1
1
–
–
1
–
–
1
Movements in Reserves:
Other comprehensive net (expenditure)/income
111
(1,505)
–
(1,394)
–
–
(1,394)
Transfers between reserves
106
(120)
–
(14)
14
–
–
Minority interest
–
–
–
–
–
(5)
(5)
Issue of share capital
1
–
–
1
–
–
1
Other movements
9
–
–
9
–
–
9
Balance at 31 March 2016 restated
(173,156)
2,685
–
(170,471)
311
85
(170,075)
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)

Financial Statements
127
Note
General
Fund
Revaluation
Reserve
Non-current
Assets Held
for Sale
Revaluation
Reserve
Taxpayers'
equity
Charitable
Funds –
Unrestricted
Non-
controlling
interests
Total
Reserve
Net expenditure for the year
(14,842)
–
–
(14,842)
–
–
(14,842)
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
(175,252)
2,813
15
(172,424)
319
105
(172,000)
The notes on pages 128 to 219 form part of these accounts.

Annual report and Accounts 2016–17
128
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 2016-17 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 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 (‘partner organisations’
(POs)) listed in note 28, which fall within
the departmental boundary as defined in
the FReM and make up the ‘Departmental
Group’, excluding transactions and
balances between them. Where the Office
for National Statistics (ONS) designates
a body retrospectively such that the
body should have been designated for
consolidation in a prior period, the
accounts are voluntarily restated to reflect
the position from the effective date of
classification. The consolidated bodies
prepare accounts in accordance with either
the FReM 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 Department and its
POs are all domiciled in the UK.

Financial Statements
129
1.5
Machinery of Government changes
Core Department
The Department for Business, Energy and
Industrial Strategy (the core Department)
was created on 14 July 2016 comprising
all of the former Department of Energy
and Climate Change (DECC) and the
business, industrial strategy, science and
innovation responsibilities of the former
Department for Business, Innovation and
Skills (BIS). Responsibility for higher and
further education and apprenticeships was
moved to the Department for Education;
and responsibility for overseas trade to the
Department for International Trade.
The creation of BEIS is accounted for as
a transfer by merger. This means that the
Group accounts reflect the combined
entity’s results as if DECC and the
remaining elements of BIS had always
been combined. The results and cash
flows in these accounts relate to activities
undertaken by the new Department from
1 April 2016 to 31 March 2017, adjusted to
achieve uniformity of accounting policies.
In accordance with the transfer by merger
principles, prior year balances have been
restated to aid comparability with 2016-17.
The historic carrying values of assets and
liabilities have not been adjusted to fair
value except where required as a result of
aligning the accounting policies of the two
former departments.
There has also been a number of
Machinery of Government changes relating
to DECC and BIS, see note 27 for details of
all the Machinery of Government changes
and the impact of these on the prior year
comparatives.
1.6
Changes in accounting policies
Accounting policies are unchanged
compared to those in the 2015-16
accounts of the former Core departments
and Groups other than a) to set the
capitalisation threshold for the new Core
Department to £3,000 for non-current
tangible and intangible assets (it had
been £2,000 in the former DECC), b)
to change the valuation basis for non-
consolidated subsidiaries of the DECC
and NDA and c) to process receipts from
the Nuclear Decommissioning Authority
and Coal Authority for onward payment
to the Consolidated Fund as agent rather
than recognising as income in the core
Department (this last change impacts the
core Department only and has no effect
on the Group). The changes have been
applied retrospectively. The changed
treatment of the receipts aligns with
treatment of similar receipts in the former
BIS and provides better information
relating to Other income in the Core
Department’s Statement of Comprehensive
Net Expenditure since the receipts are
paid over to the Consolidated Fund rather
than being retained. It has resulted in a
reduction in Other income reported by the
Core Department of £745 million for 2016-
17 and £936 million for 2015-16. Because
the receipts are not retained but are paid
over to the Consolidated Fund, the change
has not affected Taxpayers’ equity in the
Statement of Financial Position. The Group
accounts are unaffected as they are intra-
Group payments and receipts.
1.7
New accounting standards adopted in
the year and FReM changes
No new accounting standards were
incorporated into the FReM in 2016-17.
1.8
Applicable accounting standards
issued but not yet adopted and FReM
changes for 17-18
The standards below will be applied when
adopted by the FReM. IFRS 9 and IFRS 15
are expected to be adopted by the FReM
for 2018-19; the date of adoption for IFRS
16 is still to be determined by HM Treasury.
• IFRS 9 Financial Instruments replaces
IAS 39 Financial Instruments:
Recognition and Measurement,
simplifying the classification and
measurement of financial assets as
well as amending when and how
impairments are calculated and
reported, moving from an incurred loss
to an expected loss model. This will
result in impairments being recognised
earlier than under IAS 39. Changes in
classification and measurement means
that, changes in the fair value of hybrid
debt instruments will be recognised
in Net expenditure for the year rather
than Other comprehensive income and
expenditure.
• IFRS 15 Revenue from Contracts
with Customers replaces both IAS
18 Revenue and IAS 11 Construction
Contracts, unifying the concepts in these

Annual report and Accounts 2016–17
130
two standards into a single model to
recognise revenue once performance
obligations under a contract are
satisfied.
• IFRS 16 Leases replaces IAS 17 Leases,
removing the distinction between
operating leases (off-statement of
financial position financing) and finance
leases (on-statement of financial
position financing). IFRS 16 requires the
recognition of all leases with terms over
12 months to be recognised 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.
The interpretation of these standards into
the FReM is currently being determined by
HM Treasury. Consultation drafts issued
by HM Treasury imply that the adoption of
IFRS 9 will have a material impact on the
Group due to the changes in impairment
calculations and the recognition of gains
and losses on hybrid debt instruments.
IFRS 15 is not anticipated to have a
material impact on the Group. IFRS
16 could have a material effect on the
Statement of Financial Position as the
Group occupies administrative properties
under operating leases but a more limited
effect on recognition of expenditure.
No material changes have been proposed
to the FReM for 2017-18.
1.9
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.
1.10 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.
1.11 European Funding Grants
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.
1.12 Staff costs
Staff costs are recognised as expenses
when the Group becomes obligated to pay
them, including the cost of any untaken
leave entitlement.

Financial Statements
131
1.13 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
they become payable on demand with the
Department exercising no further control
over disbursement.
1.14 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.
1.15 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 2016–17
132
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.
1.16 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.
1.17 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, licenses and
royalties
7 – 15 years
1.18 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.

Financial Statements
133
1.19 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.
1.20 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
1.21 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 SoFP.
Operating leases
Group as lessor
Assets subject to operating leases are
recognised in the SoFP 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.
1.22 Subsidiaries, associates and joint
ventures
Subsidiaries and public sector joint
ventures are consolidated where designated
within the Departmental Group boundary
(note 28); 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.
1.23 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

Annual report and Accounts 2016–17
134
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
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 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).

Financial Statements
135
1.24 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.
1.25 Pensions
The accounting for each of the
Departmental Group’s pension plans is
dependent its nature.
Funded defined-benefit pension
schemes
The Group has 8 funded defined-benefit
pension schemes, the Medical Research
Council Pension Scheme (MRCPS),
2 schemes through the NDA and 5
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
SoCNE in the period to which they relate.
Defined contribution pension schemes
Contributions are charged to the SoCNE
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.
1.26 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:
2016-17
2015-16
Short-term (between 0 and 5 years)
(2.70%)
(1.55%)
Medium-term (between 5 and 10 years)
(1.95%)
(1.00%)
Long-term (over 10 years)
(0.8%)
(0.8%)

Annual report and Accounts 2016–17
136
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
Recoverable contract costs). Provision
charges in the SoCNE are shown net of
changes in these recoverable amounts.
1.27 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
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
in 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.
1.28 Third party assets
The Group holds, as custodian or trustee,
certain cash balances belonging to third
parties. These balances are not recognised
in the financial statements since neither the
Group nor Government more generally has
a direct beneficial interest in them.
1.29 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.
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 1.10) 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
(note 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
137
CfD contracts (note 9)
The significant uncertainties affecting
measurement of 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 measured using modelling
techniques.
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.
1.30 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 27.
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 Board
during the period.

Annual report and Accounts 2016–17
138
3 Staff costs
Staff costs comprise:
2016-17
2015-16
restated
Permanently
employed
staff
Others
Total
Total
£m
£m
£m
£m
Wages and salaries
713
68
781
795
Social security costs
70
–
70
64
Other pension costs
145
–
145
153
Sub total
928
68
996
1,012
Less recoveries in respect of outward secondments
(4)
–
(4)
(3)
Total net costs
924
68
992
1,009
Of which:
Core Department and Agencies
255
27
282
315
NDPBs and other designated bodies
669
41
710
694
Total net costs
924
68
992
1,009
For further information on staff costs and numbers, please see the Staff Report and the Remuneration
Report which includes staff costs for nuclear site license companies which are not included in the
table above.

Financial Statements
139
4 Operating expenditure
4.1
Purchase of goods and services
2016-17
2015-16 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Rentals under operating leases
35
50
39
54
Accommodation and office equipment costs
49
202
55
189
Legal, professional and consultancy costs
115
198
180
245
Finance, HR, IT and support costs
77
81
62
74
Training and other staff costs
8
27
11
29
Travel and subsistence costs
10
49
9
45
Advertising and publicity
1
8
5
11
Programme management and administration of grants
and awards
18
339
68
240
Professional and international subscriptions
332
578
276
453
Enforcement costs of employment related policies
17
17
12
12
Donations
–
19
–
16
Funding Paternity, Adoption and Shared Parental Leave
policy
133
133
103
103
Purchase of geographical and scientific equipment
79
99
81
89
Purchase of weather information and weather related
services
97
97
95
95
Redundancy payments service
232
232
254
254
Sponsorship costs
1
1
1
1
Payment of taxes and levies
–
14
3
1
Subsidy to Post Office Limited
140
140
180
180
Innovation subsidies
5
5
3
3
Energy intensive industries subsidies
265
265
129
129
Other purchase of goods and services cost
15
140
6
260
Total
1,629
2,694
1,572
2,483
Audit fees
Audit fees are included under the heading ‘Legal,
professional and consultancy costs’.
Core Department
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 £705,750 (2015-16: £995,200)
comprises £650,000 (2015-16: £941,000)
for the cost of the audit of the Departmental
Group, £20,000 (2015-16: £20,000) for the trust
statement, and £35,750 (2015-16: £34,200) 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 £159,000 (2015-16:
£189,500) can be found in the accounts of the
individual agencies.
NDPBs and other designated bodies
The cash remuneration of £2,403,219 (2015-16
restated: £2,391,462) relates to the statutory
audit of NDPBs and other designated bodies.
Of this amount, £1,980,352 (2015-16 restated:
£2,012,660) was payable to the NAO and
£422,867 (2015-16 restated: £378,802) was
payable to auditors other than the NAO.

Annual report and Accounts 2016–17
140
In 2016-17, £nil was payable to the NAO (2015-
16 restated: £nil) and £182,093 was payable to
auditors other than the NAO (2015-16 restated:
£210,429) for non-audit services. Further details
can be obtained from the accounts of the NDPBs
and other designated bodies.
Redundancy Payments Service
The core Department 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 RPS is administered
by the Insolvency Service who have a service
level agreement with HM Revenue and Customs.
Claims processed fall into 2 categories: RP1
(which covers redundancy pay, holiday pay and
arrears of pay) and RP2 (pay in lieu of notice).
The average payment for RP1 during 2016-17
was £2,829 (2015-16: £3,343). An average
amount of £1,253 was paid during 2016-17 for
RP2 (2015-16: £1,350).
There is associated income arising from 2
sources:
• Solvent Recovery – where monies are
recovered over a period of up to 3 years from
companies, by setting up a standing order,
that are continuing to trade but would not be
able to do so if they had to meet the full costs
of redundancy payments at that time; and
• Insolvent Recovery – the core Department
becomes a creditor receiving a dividend if
there are sufficient funds on the winding up
of the company.
Expenditure in respect of RPS in 2016-17 totalled
£269 million (2016-17: £285 million) against
income of £37 million (2015-16: £31 million).
The net amount totalled £232 million (2015-16:
£254 million).
4.2
Depreciation and impairment charges
2016-17
2015-16 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Amortisation of recoverable contract costs
–
203
–
243
Depreciation
23
260
23
250
Amortisation
5
33
4
51
Impairment of property, plant and equipment
–
76
1
36
Impairment of intangible assets
–
1
–
2
Impairment of investments1
417
288
348
39
Total
445
861
376
621
1.
The 2016-17 investment impairment figure for core Department and Agencies includes £138 million (2015-16: £285
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
141
4.3
Provision expense
2016-17
2015-16 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Increase/(decrease) in bad debt provision
(6)
(5)
–
–
Increase/(decrease) in provisions
81
6,687
222
93,105
Increase/(decrease) in financial guarantee liabilities
(3)
(3)
(12)
(12)
Total
72
6,679
210
93,093
Included in the increase/(decrease) in provisions
of £6,687 million above (2015-16: £93,105 million)
are the amounts provided in year of £2,304
million (2015-16: £3,247 million), provisions not
required written back credit of £940 million (2015-
16: £318 million), and discount to present value
of £4,964 million (2015-16: £89,474 million) in note
19.1. Also included in the £6,687 million above
are amounts provided in year of £252 million
(2015-16: £244 million), provisions not required
written back credit of £150 million (2015-16:
credit of £117 million) and discount to present
value of £35 million (2015-16: £2,105 million)
in note 19.2.
4.4
Grants
2016-17
2015-16 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Research and development
100
148
103
183
Grant in aid
7,441
–
7,404
–
Post Office Network Reform
80
80
100
100
Market frameworks
58
58
61
61
Science and research
2,346
4,861
2,311
4,930
International Climate Fund – Official Development
Assistance
332
332
306
306
Global Threat Reduction Programme
11
11
12
12
Renewable Heat Incentive
545
545
372
372
Innovation programme
497
1,244
499
1,171
Energy Markets and Consumers
7
7
5
5
Heat Infrastructure Team
13
13
–
–
Other grants
(15)
(18)
134
231
Total
11,415
7,281
11,307
7,371
The 2015-16 Departmental group other grants
figure of £231 million includes £94 million relating
to the gift of shares to Royal Mail plc employees
(2% of issued Royal Mail plc shares) as part of
the disposal of the Government’s shareholding in
Royal Mail plc. See Note 10.1 for further details.

Annual report and Accounts 2016–17
142
5 Finance Expense
2016-17
2015-16 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Change in fair value – Financial Assets
(3)
(4)
(11)
(4)
Net loss/(gain) on foreign exchange
1
(3)
–
(6)
Expected return on funded pension scheme assets
–
(42)
–
(38)
Interest on pension liabilities
–
38
–
37
Unrealised foreign exchange rate gains/losses
1
3
–
–
Interest payable
–
3
–
3
Unwinding of discount on provisions/assets/liabilities
(28)
(1,300)
(12)
1,412
Total
(29)
(1,305)
(23)
1,404
The impact of HM Treasury-prescribed discount
rates for provisions in 2014-15 was to decrease
undiscounted liabilities for the Departmental
Group, the unwinding of which in 2015-16 gave
rise to a positive expense for Unwinding of
discount on provisions. This was reversed when
the long-term rate became negative in 2015-16,
application of which had the effect of increasing
liabilities, hence the negative expense on
unwinding in 2016-17.

Financial Statements
143
6 Income
6.1
Operating income
2016–17
2015–16 restated
Note
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 funding
for The Francis Crick Institute
9
9
141
141
European Union funding
3
17
–
19
Fees, charges and recharges to/from external
customers and central Government organisations
134
222
135
245
Levy income
20
154
16
22
Sales of goods and services
2
1,045
187
1,300
Current grants and capital grants
49
143
66
185
Venture capital and Repayable launch investment
income
26
28
22
26
Miscellaneous income
43
164
57
180
Total operating income
286
1,782
624
2,118
6.2
Finance income
2016–17
2015–16 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Effective interest:
Repayable launch investments
11.1
44
44
57
57
Other
17
16
(29)
(29)
Dividend and interest income
107
192
336
335
Finance income
168
252
364
363
In 2016-17 the core Department recognised
dividend income of £98 million (2015-16: £332
million). This includes a £86 million dividend
from Enrichment Holdings Limited (EHL) (2015-
16: £172 million). The 2016-17 EHL dividend
represents the 2016 year-end dividend from
URENCO. The 2015-16 EHL dividend was higher,
as it represented the 2014 and 2015 year-end
dividends from URENCO. The EHL dividend is
eliminated upon consolidation.
In 2016-17 the Departmental Group received
dividend income of £124 million (2015-16: £283
million) included within the total dividend and
interest income shown above of £192 million
(2015-16: £335 million). The departmental group
recognised the 2015-16 year-end dividend from
URENCO of £86 million (2015-16: £90 million).
Recognised in both the core Department and the
Departmental Group in 2015-16 was a one-off
‘notional’ super dividend of £135 million from
Ordnance Survey Trading Fund (OSTF) as a
result of OSTF transferring its trade and assets
into a Government owned limited company,
Ordnance Survey Limited (OSL), for which further
details are disclosed in note 10.1.

Annual report and Accounts 2016–17
144
7 Property, plant and equipment
Departmental Group 2016-17
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
(restated)
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
(restated)
(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)
Carrying amount
at 31 March 2017
374
1,294
39
35
61
1,006
7
144
462
3,422
Carrying amount
at 31 March 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

Financial Statements
145
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
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
Departmental Group 2015-
16 (restated)
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 2015
394
4,061
36
50
223
6,237
24
311
444
11,780
Additions
–
13
–
1
6
545
2
3
194
764
Disposals
(1)
(82)
–
–
(10)
(291)
(4)
–
–
(388)
Impairments
–
(62)
(1)
(1)
–
(6)
–
–
(7)
(77)
Transfers in/(out) of boundary
–
–
–
–
–
1
–
–
(1)
–
Reclassifications
(39)
89
(5)
25
9
103
–
7
(231)
(42)
Revaluations
63
32
6
–
1
9
–
2
17
130
At 31 March 2016
417
4,051
36
75
229
6,598
22
323
416
12,167
Depreciation
Balance at 1 April 2015
(6)
(2,843)
–
(24)
(116)
(5,234)
(18)
(147)
–
(8,388)
Charged in year
–
(53)
–
(8)
(40)
(138)
(1)
(16)
–
(256)

Annual report and Accounts 2016–17
146
Departmental Group 2015-
16 (restated)
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
Disposals
–
82
–
–
10
263
3
–
–
358
Impairments
–
45
–
–
–
(4)
–
–
–
41
Transfers (in)/out of the
boundary
–
–
–
–
–
(8)
–
–
–
(8)
Reclassifications
–
(15)
–
–
–
1
–
–
–
(14)
Revaluations
–
23
–
–
(1)
(5)
–
(1)
–
16
At 31 March 2016
(6)
(2,761)
–
(32)
(147)
(5,125)
(16)
(164)
–
(8,251)
Carrying amount at 31
March 2016
411
1,290
36
43
82
1,473
6
159
416
3,916
Carrying amount at 1 April
2015
388
1,218
36
26
107
1,003
6
164
444
3,392
Asset financing:
Owned
398
1,290
36
43
79
1,473
6
147
416
3,888
Finance leased
13
–
–
–
–
–
–
12
–
25
On balance sheet (SoFP) PFI
and other service concession
arrangements
–
–
–
–
3
–
–
–
–
3
Carrying amount at 31
March 2016
411
1,290
36
43
82
1,473
6
159
416
3,916
Of the total:
Core Department and
Agencies
18
103
–
38
12
72
2
–
19
264
NDPBs and other designated
bodies
393
1,187
36
5
70
1,401
4
159
397
3,652
Carrying amount at 31
March 2016
411
1,290
36
43
82
1,473
6
159
416
3,916

Financial Statements
147
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 5 years and where
appropriate in the intervening period, relevant
indices are used. The most significant land
and buildings at 31 March 2017 were held by
MRC, BBSRC, STFC and NERC. Revaluations
for these entities were conducted by Powis
Hughes Limited for MRC, GVA Grimley Limited
for BBSRC and STFC, and NERC 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. 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.
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 2016-17 was
£145 million (2015-16: £146 million).
Further information can be found in the financial
statements of the individual bodies’ accounts.

Annual report and Accounts 2016–17
148
8 Intangible Assets
Departmental Group
2016-17
Assets under
Construction
Information
Technology
Software
Licences
Websites
Patents
Total
£m
£m
£m
£m
£m
£m
Cost or Valuation
Balance at 1 April
2016 (restated)
17
128
24
1
268
438
Additions
4
14
16
–
–
34
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
136
52
1
267
463
Amortisation
Balance at 1 April
2016 (restated)
–
(92)
(19)
(1)
(220)
(332)
Charged in year
–
(18)
(10)
–
(7)
(35)
Disposals
–
–
1
–
–
1
Impairments
–
1
–
–
–
1
Reclassifications
–
3
–
–
–
3
At 31 March 2017
–
(106)
(28)
(1)
(227)
(362)
Carrying amount
at 31 March 2017
7
30
24
–
40
101
Carrying amount
at 31 March 2016
17
36
5
–
48
106
Asset financing:
Owned
7
30
24
–
40
101
Carrying amount
at 31 March 2017
7
30
24
–
40
101
Of the total:
Core Department and
Agencies
4
1
1
–
–
6
NDPBs and other
designated bodies
3
29
23
–
40
95
Carrying amount
at 31 March 2017
7
30
24
–
40
101

Financial Statements
149
Departmental Group
2015-16 (restated)
Assets under
Construction
Information
Technology
Software
Licences
Websites
Patents
Total
£m
£m
£m
£m
£m
£m
Cost or Valuation
At 1 April 2015
8
109
25
1
247
390
Additions
16
6
1
–
–
23
Disposals
(1)
(3)
(3)
–
–
(7)
Impairments
(1)
(1)
–
–
–
(2)
Reclassifications
(3)
8
1
–
–
6
Transfers in/(out)
(2)
9
–
–
–
7
Revaluations
–
–
–
–
21
21
At 31 March 2016
17
128
24
1
268
438
Amortisation
At 1 April 2015
–
(77)
(18)
(1)
(188)
(284)
Charged in year
–
(17)
(3)
–
(32)
(52)
Disposals
–
2
2
–
–
4
At 31 March 2016
–
(92)
(19)
(1)
(220)
(332)
Carrying amount
at 31 March 2016
17
36
5
–
48
106
Carrying amount
at 1 April 2015
8
32
7
–
59
106
Asset financing:
Owned
17
36
5
–
48
106
Carrying amount
at 31 March 2016
17
36
5
–
48
106
Carrying amount
at 1 April 2015
8
32
7
–
59
106
Of the total:
Core Department and
Agencies
3
5
1
–
–
9
NDPBs and other
designated bodies
14
31
4
–
48
97
Carrying amount
at 31 March 2016
17
36
5
–
48
106
All software licenses are acquired separately.
All Information Technology (IT) assets are
internally generated. IT assets are initially
classified as assets under construction and are
not amortised until they are commissioned, at
which time they are 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 their 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, these assumptions
would be classed as level 3 assumptions. The
carrying amount of the patents at year end is
£40 million (2015-16: £48 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 2016–17
150
9 Derivative Financial
Instruments
The most significant items included within
Derivatives on the Consolidated Statement
of Financial Position are Contracts for
Difference (CfDs).
Contracts for Difference (CfDs)
Contracts for Difference 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 (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 International Accounting Standard 39 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 recognised
in these accounts is assessed by reference
to IFRS13 (Fair Value) which provides three
options for assessment. The different options
are hierarchical and classed as Level 1, 2, or 3,
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 and can include use of an
entity’s own data, models and assumptions.
The fair value of the Department’s CfDs
recognised in these accounts 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
2 Dec 2016.
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. The Department has
signed CfDs that span 15 and 35 years. With
the assumption of even cash flows in each year,
those in later years are more sensitive to the
differing discount rates, being 0.7% for financial
reporting and 3.5% for economic appraisal
purposes.
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; and
• the contract for HPC) 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.
Typically, if generators start generating within
their TCW (which is specified in the contract)
then the generation period starts from the date
of generation and subject to all conditions being
met, the generator can extract benefit for the
full term of the contract. If generators miss the
end of their TCW (and it is not extended under
the terms of the contract) then the payment life
period commences at the end of their TCW even
if the generator is not in a position to generate.
If the generator does not achieve the required
minimum generation capacity by the contractual
‘Longstop Date’, the LCCC has a right to
terminate the CfD.

Financial Statements
151
There is an obligation placed on licensed
electricity suppliers to fund the CfD liabilities as
they crystallise. 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 2016 the LCCC was counterparty
to 38 contracts. Of those, 14 contracts were
related to 8 CfD projects under the government’s
“Final Investment Decisions enabling
Renewables” programme (FIDeR). Subsequently,
2 additional CfDs were entered into or transferred
to the LCCC during the financial year.
• The Drax FIDeR contract was transferred
to the LCCC from the Core Department in
December 2016. The Drax biomass project
has a capacity of 637MW of low carbon
generation.In addition, in March 2017, a
previously terminated CfD contract was
reinstated following the results of a tribunal
decision.
• The Hinkley Point C contract was signed
on 29 September 2016. Details of the contract,
which has not been recognised in these
accounts, are further explained in the section
entitled “Hinkley Point C” in this note.
At 31 March 2017 the LCCC was counterparty
to 40 contracts recognised in the accounts.
The transaction price for CfDs differs from the
fair value at initial recognition (measured using a
valuation model) because the transaction price
on day one was zero as the generators were
awarded the CfD contracts at nil consideration
through a competitive process. However the
future anticipated cash flows do have a fair
value determined using projections of wholesale
electricity prices from the Dynamic Dispatch
Model with significant unobservable inputs and
based on IFRS 13 Level 3 valuation technique.
The Departments financial instruments are
therefore 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 and disclosed in the
accounts.
The following table shows the movement of
the CfD liability on the SoFP:
Core Department
and Agencies
LCCC CfDs exc.
HPC
Departmental
Group Total
£m
£m
£m
CfD liability as at 1 April 2015 recognised on the
Consolidated Statement of Financial Position
498
1,987
2,485
CfD liability transferred during the year
(896)
896
–
Re-measurement of the CfD liability
1,735
8,965
10,700
CfD liability released during the year
–
(578)
(578)
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

Annual report and Accounts 2016–17
152
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 1 April 2015
2,315
16,808
19,123
Measurement differences deferred on
contracts transferred from BEIS
(816)
816
–
Measurement differences recognised
in respect of terminated CfDs
(1,088)
(1,088)
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 from BEIS
(1,499)
1,499
–
Measurement differences deferred
during the year
–
–
–
Deferred measurement differences
recognised during the year
–
(41)
(41)
Deferred measurement
differences as at 31 March 2017
–
19,079
19,079
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 BEIS.
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)
The following table shows the impact on the fair
value of the CfDs which have been recognised in
these accounts, classified under Level 3 by using
the assumptions described below:
Level 1
Level 2
Level 3
Total
£m
£m
£m
£m
Core Department and Agencies
–
–
2,836
2,836
LCCC
–
–
27,806
27,806
As at 31 March 2016
–
–
30,642
30,642
LCCC
–
–
771
771
As at 31 March 2017
–
–
31,413
31,413

Financial Statements
153
Reconciliation of CfDs
The following table shows the impact of changes
to the fair value of CfDs which have been
recognised in these accounts, classified under
Level 3:
–
Core Department
and Agencies
LCCC CfDs exc.
HPC
Departmental
Group Total
£m
£m
£m
As at 1 April 2015
2,813
18,795
21,608
Transferred during the year
(1,712)
1,712
–
Change in fair value during the year
1,735
8,965
10,700
CfD terminated during the year
–
(1,666)
(1,666)
As at 31 March 2016
2,836
27,806
30,642
Additions during the year
–
–
–
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)
Deferred measurement differences
as at 31 March 2017
–
31,413
31,413
The fair value of the CfDs has been estimated
using a discounted cash flow model. This
method involved the projection ofa series of
cash flows and application of a discount rate
to establish the present valueof 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)
Management’s estimate of each CfD fair value
takes into account many factors and inputs within
ranges that consider the most likely outcome
across the life of the CfD. 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% (2015-16:
0.7%). The following six assumptions are key to
the CfD valuation:
1. 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.
2. 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.
3. 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.

Annual report and Accounts 2016–17
154
4. Future forecast wholesale electricity prices
Forecast wholesale electricity prices are derived
from the Dynamic Dispatch Model (DDM) which
has been developed by BEIS 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, adjusted to take into account start-
up and shut-down costs;
• half hourly demand for electricity taking
into account wind and solar profiles and
generation, interconnector flows, pumped
storage, auto-generation; and
• projecting the future generation mix, taking into
account announced government policy and
illustrative assumptions on future policy.
Economic, climate, policy, generation and
demand assumptions are external inputs to the
model including demand load curves for both a
range of sample days for each season, including
business and non-business days, and high and
low demand days. Inherent limitations exist within
forecasting wholesale electricity prices across
the long term (>20 years).
5. 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.
6. 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
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 excluding HPC (in 2016 prices),
classified under Level 3 in accordance with IFRS
13, by using reasonably 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%
–
1,858
Electricity prices increase by 10%
1,858
–
10% more load factor
–
3,141
10% less load factor
3,141
–
Estimated Commissioning Date moves back one year
553
–
Generation starts at earliest possible date
–
359
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
155
Fair value
of CfDs
Valuation
technique
Significant
unobservable inputs
Range
Min-Max
Units
£m
(min – max)
2016
30,642
DCF
Future electricity prices
37.6 - 54.02
£/MWh
2017
31,413
DCF
Future electricity prices
35.2 - 53.42
£/MWh
Hinkley Point C
The Department entered into the HPC Contract
on 29 September 2016. This project has a
maximum cumulative 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 the HPC CfD requires that an
assumption be made of wholesale electricity
prices in each year out to 2060. The Department
uses a dynamic despatch model to develop
scenarios-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; and
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 have materially
different characteristics from the other CfDs
which currently exist. The European Pressurised
Reactor is a much more complex asset than
the wind turbines or bio-mass generators
associated with our 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 UK
Government under the CfD. This unavoidably
long lead time before generation commences
is relevant to condition (a) of paragraph 4.38 of
the Conceptual Framework.
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 HM Treasury 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 of 3.5% would lead to
a valuation of £15.6bn compared to £28.8bn
using HM Treasury Financial Reporting Manual
discount rate of 0.7%.

Annual report and Accounts 2016–17
156
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 criterion (b) as outlined
above. Therefore, the HPC CfD has not been
recognised as a transaction in these primary
statements. It is expected that when the HPC
CfD meets the recognition criteria (a) and (b) of
paragraph 4.38 of the Conceptual Framework
the HPC CfD will be recognised at the prevailing
fair value at that point in time. The fair value at
the date of recognition will be determined in
accordance with IFRS 13 and the difference
between the fair value and the transaction price
of zero will be deferred and amortised in the
same way as the other CfDs described above.
Changes in fair value after the date of recognition
will be recognised in subsequent reporting
periods and accounted for in the Statement
of Comprehensive Net Expenditure and the
Statement of Financial Position as they arise.
The Department has nonetheless set out
below its best estimation of the fair value of
the contract, and its sensitivity to assumptions
underlying the valuation, in the interests
of transparency. This follows a ‘Level 3’
methodology under IFRS 13, 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), 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 2016
–
–
–
–
As at 31 March 2017
–
–
28,824
28,824
Information on other factors which impact
on the fair value of HPC CfD is set out below:
Start date
The Target Commissioning Date (TCD: current
expected start date) for reactor one and reactor
two of the Hinkley Point C project are 1 May
2025 and 1 November 2025 respectively.
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. 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.
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
Hinkley Point C project outperforms relative to
the original base case assumptions; and (ii) a
mechanism to capture gains above specified
levels arising from the sale of equity and
economic interests (direct or indirect) in the
Hinkley Point C project.
In each case, as and when the Internal Rate
of Return (IRR) thresholds are reached:

Financial Statements
157
• 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.
The equity gain share mechanism forms part
of the Secretary of State Investor Agreement
and does not therefore impact the fair value of
Hinkley Point C.
Installed Capacity
Hinkley Point C 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,
Hinkley Point C’s strike price change is also
subject to the following three additional factors:
1. Construction gain share for
Hinkley Point C
If the construction costs of Hinkley Point C come
in under budget, the strike price will be adjusted
downwards so that the gain (or saving) is shared
with 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 Hinkley Point C is over budget.
2. OPEX reopener for Hinkley Point C
The strike price may be adjusted upwards if the
operational expenditure costs are more than
assumed and downwards if they are less. There
are two operational expenditure reopener dates,
at 15 years and 25 years after the first reactor
start date. The rationale behind the reopener
is that the strike price is based on long-term
assumptions on operational expenditure costs.
The reopener provides a way of mitigating long-
term cost risks for both parties.
3. Sizewell C strike price adjustment
for Hinkley Point C
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 Hinkley Point C 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, IFRS13
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.
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 Dynamic Dispatch Model
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). 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:

Annual report and Accounts 2016–17
158
Change in fair value of HPC if:
Favourable changes
Unfavourable changes
£m
£m
Electricity prices decrease by 10%
–
4,478
Electricity prices increase by 10%
4,478
–
At generation cap
–
260
10% less load factor
2,882
–
Estimated Commissioning Date moves back one year
481
–
Sizewell C Strike price adjustment for HPC
2,387
–
Low carbon price assumption
–
6,480
High carbon price assumption
6,340
–

Financial Statements
159
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
Departmenta
Group Total
£m
£m
£m
£m
£m
£m
£m
Balance at
1 April 2015
restated
2,469
115
92
2,676
(2,094)
792
1,374
Additions
462
–
148
610
(332)
–
278
Redemptions
–
(34)
(6)
(40)
6
–
(34)
Impairments
(326)
–
1
(325)
315
–
(10)
Revaluations
12
–
–
12
–
(255)
(243)
Unwinding
of discount
–
–
2
2
–
–
2
Loans repayable
within 12 months
transferred to
current assets
–
–
(27)
(27)
–
–
(27)
Balance at
31 March 2016
restated
2,617
81
210
2,908
(2,105)
537
1,340
Additions
753
–
168
921
(822)
–
99
Redemptions
–
–
–
–
–
–
–
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
1,723
81
367
2,171
(1,262)
422
1,331

Annual report and Accounts 2016–17
160
10.1 Ordinary Shares in other public sector bodies
31 March 2017
31 March 2016
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
2,617
1,146
2,469
1,171
Additions
753
37
462
229
Impairments
(148)
–
(326)
(11)
Revaluations
18
(97)
12
(243)
Reclassification
(1,517)
–
–
–
Balance at reporting date
1,723
1,086
2,617
1,146
Comprising
Ordinary Shares held within the Departmental boundary
– held at cost
1,059
–
2,007
–
Ordinary Shares held outside the Departmental
boundary – held at fair value
664
1,086
610
1,146
Balance at reporting date
1,723
1,086
2,617
1,146
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 (GIB)
The core Department holds 1,517,450,000 shares
of £1 each (31 March 2016: 1,034,850,000) in
GIB. BEIS made £483 million (31 March 2016:
£60 million) capital injections into GIB during
the year in exchange for share capital. The Core
Department’s holding had a cost of £1,517
million at 31 March 2017 (31 March 2016: £1,035
million).
The principal objective of the company is to
accelerate private sector investment in the clean
energy sector.
On the 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. See Note 15 for further details.
British Business Bank Plc (BBB)
The core Department holds 1,071,407,935
ordinary shares (31 March 2016: 837,525,846),
each with a nominal value of £1. BEIS made
£234 million (31 March 2016: £173 million) capital
injections in BBB during the year in exchange for
share capital, to allow BBB to make investments
that could not be financed with free capital.
The core Department’s holding had a cost less
provision for impairment of £1,046 million at 31
March 2017 (31 March 2016: £815 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,
held at cost less provision for impairment of £6
million at 31 March 2017 (31 March 2016: £12
million).
The company is a specialist business services
organisation that provides finance, procurement,
grants, information systems and HR and payroll
services to the public sector. Its main objective
is to improve the economy, efficiency and
effectiveness of corporate services to BEIS
bodies.

Financial Statements
161
Postal Services Holding Company Limited (PSH)
The Secretary of State for BEIS 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 2017 (31 March 2016: £430
million). The Secretary of State for BEIS 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 £7 million at 31 March
2017 (31 March 2016: £145 million), reflecting
the reduction in the value of investments held
by PSH. The impairment is reversed in the
Departmental Group and recognised as a fair
value movement in Post Office Limited (POL).
The principal objective of the company is to hold
and manage its shares in POL.
Low Carbon Contracts Company Ltd (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 (CFD’s) throughout their lifetime.
Electricity Settlements Company Ltd (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).
Wave Hub Limited
The core Department held one ordinary share in
Wave Hub Limited with a nominal value of £1.
The principal objective of the company is to
provide test platforms for companies performing
research and development in wave energy
technologies on the Cornwall Coast. On 31
March 2017 Wave Hub was transferred to
Cornwall Council.
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) and Royal Mail plc
The core Department holds 100% of the shares
in the Postal Services Holding Company Limited
(PSH), the company which wholly owns Post
Office Limited (POL) and up to the end of 2015-
16 held the department’s investment in Royal
Mail plc.
PSH holds 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 for BEIS. This
shareholding is held at fair value, but as there is
no active market for these shares the net asset
value of POL is considered to be a reasonable
approximation for fair value. The fair value as at
31 March 2017 was £nil (31 March 2016: £137
million).
The principal objective of POL is to provide retail
post office services through its national network
of branches.
During 2015-16 PSH’s shareholding of
299,913,077 ordinary shares in Royal Mail plc
was reduced to nil through a combination of
sales (28% of issued Royal Mail plc shares) and
gifts to employees (2% of issued Royal Mail plc
shares). A total realised profit on disposal of
£1,435 million was recognised in 2015-16, as
shown in the Statement of Comprehensive Net
Expenditure. £94 million was incurred in 2015-16
for the gift of shares to employees and
is shown in Note 4.4 under other grants.

Annual report and Accounts 2016–17
162
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 for BEIS owns 49,999
ordinary shares and the Treasury Solicitor owns
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
considered to be a reasonable approximation of
fair value. The fair value as at 31 March 2017 was
£324 million (31 March 2016: £322 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. BEIS
acquired the ordinary shares in OSL for £170
million on 1 April 2015 as part of the Ordnance
Survey Trading Fund transferring its trade and
assets into OSL.
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 2017 was £189 million
(31 March 2016: £174 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 2017 was £75 million
(31 March 2016: £49 million).
NNL Holdings Limited (NNLHL)
The core Department holds two shares of £1
each in NNL Holdings Limited (NNHL) with a
nominal value of £1 each.
NNLHL 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 NNLHL is
considered to be a reasonable approximation
of fair value. The fair value as at 31 March 2017
was £76 million (31 March 2016: £65 million).
Nuclear Liabilities Fund
The primary objective of the Nuclear Liabilities
Fund Limited is to produce sufficient returns to
cover the cost of decommissioning 8 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 2017 was £nil
(31 March 2016: £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 of £422 million as at
31 March 2017 (31 March 2016: £399 million).

Financial Statements
163
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.
10.2 Public Dividend Capital (PDC)
Companies
House
UKIPO
Ordnance
Survey
Met Office
Total
£m
£m
£m
£m
£m
Balance at 1 April 2015
16
6
34
59
115
Additions
–
–
–
–
–
Redemptions
–
–
(34)
–
(34)
Impairments
–
–
–
–
–
At 31 March 2016
16
6
–
59
81
Additions
–
–
–
–
–
Redemptions
–
–
–
–
–
Impairments
–
–
–
–
–
At 31 March 2017
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.
On 1 April 2015 the trade and assets of
Ordnance Survey were transferred to the newly
incorporated Limited Company, Ordnance
Survey Limited (OSL). BEIS is the sole
shareholder of OSL. Ordnance Survey was a
trading fund owned by BEIS, but outside of the
departmental boundary. BEIS’s investment in the
trading fund was recorded as PDC. The transfer
of the trade and assets from Ordnance Survey to
OSL resulted in the £34 million PDC investment
BEIS had in the Trading Fund being repaid and
£170 million of ordinary share capital for OSL
being recognised, 100% of the issued ordinary
share capital in OSL. The £170 million ordinary
share capital issued was equal to the net assets
of Ordnance Survey trading fund at the date of
the transfer.

Annual report and Accounts 2016–17
164
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 2016
75
86
250
Turnover
66
83
227
Surplus/profit (deficit/loss) for the year before financing
(2)
4
9
Net Assets/(Liabilities) at 31 March 2017
79
85
246
Turnover
66
88
227
Surplus/profit (deficit/loss) for the year before financing
4
7
5
For all bodies, information for 2016-17 was
derived from their draft unaudited accounts. The
information for 2015-16 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 2017
31 March 2016
Restated
Core Department
and Agencies
Departmental
Group
Core Department
and Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
210
113
92
88
Additions
168
62
148
49
Repayments
-
-
(6)
-
Impairments
-
-
1
1
Unwind of discount
3
3
2
2
Reclassification
(5)
(5)
-
-
Loans repayable within 12 months
transferred to current assets
(9)
(9)
(27)
(27)
Balance at reporting date
367
164
210
113
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 and Recyclable
Energy Efficiency Loans (EELs and REELs)
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 of EELs and REELs
with public sector bodies is £137 million at 31
March 2017 (31 March 2016: £92 million). The
non-current element of the loans is £107 million
at 31 March 2017 (31 March 2016: £68 million),
and the current element of these loans is £30
million at 31 March 2017 (31 March 2016: £24
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

Financial Statements
165
by the British Business Bank and launched in November 2014, aimed at improving the provision of
asset and lease finance to smaller UK businesses. Fleetbank Funding Limited was designated as a
consolidated body in 2016-17, resulting in the loan being reclassified as a loan to a public sector entity
from a loan to a private sector entity. This was adjusted in the opening balances as part of changes in
the departmental boundary.
The carrying amount of the Fleetbank Funding Limited loan is £130 million at 31 March 2017 (31
March 2016: £93 million), the increase is due to additions in year of £37 million (31 March 2016: £93
million).
This loan is to a consolidated body and 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 £58 million at 31 March 2017 (31
March 2016: £nil). The loan investments were made during 2016-17. The loans are accounted for at
cost under IAS 27 in the core Department.
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 does not claim to be 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.
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

– Issuing or allotment of shares in the Post Office network company (Post Office
Limited)

– Voluntary winding-up of the company

– Varying certain of the company’s Articles of Association, including the rights of the
special shareholder

– Exercising of voting rights in Royal Mail plc

Annual report and Accounts 2016–17
166
Body in which Share is
held and type and value
of Share
Significant terms of Shareholding
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; and

– Voluntary winding-up of the company or member of the group.
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.
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; 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 cases.

Financial Statements
167
Body in which Share is
held and type and value
of Share
Significant terms of Shareholding
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; and
prior to the permanent closure of such a station, the disposal of any asset which is
necessary for the station to generate electricity.
British Energy 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; 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 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; or

– 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 Carbon Trust. The members’ fund at 31
March 2017 was nil (31 March 2016: nil).

Annual report and Accounts 2016–17
168
11 Other financial assets
31 March 2017
31 March 2016 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April (restated)
1,639
4,473
1,944
5,921
Transfer
–
7
(35)
–
Reclassifications
5
(1,267)
(1)
(1)
Additions
17
1,281
116
688
Repayments
(206)
(508)
(126)
(2,142)
Effective interest
45
45
58
58
Unwinding of discount
–
2
–
–
Revaluations
(7)
(7)
(297)
(21)
Impairments
(8)
(60)
(20)
(43)
Impairment reversals
–
–
–
13
Balance at reporting date
1,485
3,966
1,639
4,473
Comprising:
Repayable Launch Investments
11.1
1,205
1,205
1,389
1,389
Other Financial assets
11.2
280
2,761
250
3,084
Balance at reporting date
1,485
3,966
1,639
4,473
Other financial assets analysed between current and non-current assets:
31 March 2017
31 March 2016 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Due within twelve months
1
1
2
2
Due after twelve months
1,484
3,965
1,637
4,471
Total
1,485
3,966
1,639
4,473
11.1 Repayable launch investments
31 March 2017
31 March 2016 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
1,389
1,389
1,740
1,740
Repayments
(144)
(144)
(112)
(112)
Effective interest
44
44
57
57
Revaluations
(84)
(84)
(296)
(296)
Balance at period end date
1,205
1,205
1,389
1,389
Repayable launch investments are held by the core Department.

Financial Statements
169
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 vies 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 2.55% and 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 launch investments is
influenced by the interaction of key drivers such
as 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 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 launch investments was a £268 million
credit at 31 March 2017 (31 March 2016: £116
million credit restated). The revaluation reserve
was restated as a result of an over-release of
income in prior years. This was not material in
any one financial year, but resulted in a material
diminution in the value of the revaluation reserve
over time. Therefore, this adjustment has been
treated as a prior year adjustment, with the 2014-
15 and 2015-16 reserve position restated. This is
further explained in note 27.
The carrying value of the investments derived
from the discounted cash flow model at
31 March 2017 was £1,205 million (31 March
2016: £1,389 million). The historic cost excluding
accrued income of the portfolio at 31 March
2017 was £600 million (31 March 2016:
£706 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.

Annual report and Accounts 2016–17
170
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.
The model is iterated 10,000 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
£1,179 million and £1,229 million respectively,
at 31 March 2017 (2015-16: £1,353 million and
£1,410 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
171
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 2015 restated
139
17
322
213
1,559
578
785
568
4,181
Reclassifications
–
–
–
–
–
–
(1)
–
(1)
Additions
45
–
246
–
1
23
313
60
688
Redemptions
(135)
(2)
(41)
(133)
(1,466)
(163)
(78)
(12)
(2,030)
Revaluations
7
–
–
3
112
47
36
70
275
Effective interest
–
–
1
–
–
–
–
–
1
Impairments
(1)
–
(19)
–
–
–
(19)
(4)
(43)
Impairment reversals
–
–
–
–
–
–
13
–
13
Balance at 1 April 2016 restated
55
15
509
83
206
485
1,049
682
3,084
Transfers in/(out)
–
–
6
–
–
–
–
1
7
Reclassifications
–
–
(255)
–
–
–
(51)
(961)
(1,267)
Additions
–
–
141
–
70
14
275
781
1,281
Redemptions
(12)
(1)
(95)
(23)
(41)
(118)
(81)
7
(364)
Revaluations
3
–
(2)
5
31
62
108
(130)
77
Effective interest
–
–
1
–
–
–
–
–
1
Unwinding of discount
–
–
2
–
–
–
–
–
2
Impairments
–
–
(1)
–
–
–
(55)
(4)
(60)
Balance at 31 March 2017
46
14
306
65
266
443
1,245
376
2,761
Of the total:
Core Department and Agencies
–
–
2
–
–
–
278
–
280
NDPBs and other designated bodies
46
14
304
65
266
443
967
376
2,481
Balance at 31 March 2017
46
14
306
65
266
443
1,245
376
2,761

Annual report and Accounts 2016–17
172
Core Department
Private Sector Loans:
Private Sector Loans are classified as ‘loans and
receivables’ and measured at amortised cost in
accordance with IAS 39.
The prior year included loans to the Green Deal
Finance Company (GDFC). The carrying value
is £nil at 31 March 2017 (31 March 2016: £23
million) as the loans were sold in the year.
Green Deal Finance Company Loans comprised
a Stakeholder Loan and Senior Facility Loan. The
stakeholder loan was fully impaired in 2014-15.
In November 2014, the Department provided a
facility of up to £34 million of additional funding
to GDFC, in the form of a senior facility loan. This
facility expired at the end of December 2015 after
which no further drawdowns were possible.
On 13 January 2017 the core Department sold
GDFC and the full amount of £23 million was
recovered on sale.
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) is 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 2 private sector fund managers
– Hermes GPE and the European Investment
Fund. The UKIIF was valued at £130 million at
31 March 2017 (31 March 2016: £84 million).
NDPBs and other designated bodies
Gilts and Bonds
Nesta Trust held investments in gilts. The
investments in gilts were classified as ‘available-
for-sale financial assets’ and were measured at
fair value in accordance with IAS 39 based on
market quotes. The value of Gilts held by the
NDPBs and other designated bodies as at 31
March 2017 was £nil (31 March 2016: £11 million).
The movement in the value of gilts is primary a
result of repayments of £12 million (31 March
2016: £135 million).
BIS (Postal Services Act 2011) Company Limited
and Nesta Trust 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 NDPBs and other designated bodies
as at 31 March 2017 was £46 million (31 March
2016 restated: £43 million).
Private sector loans
GIB, BBB, STFC, Nesta Trust and Fleetbank
Funding Limited 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 2017, £304 million of loans
were held by NDPBs and other designated bodies
(31 March 2016 restated: £480 million).
During the reporting period BBB made loans of
£70 million (31 March 2016: £65 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 2017 was
£170 million (31 March 2016: £104 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 2016-17 Fleetbank Funding Limited made
loans of £34 million (31 March 2016: £89 million)
to private companies through the Enable Loan
Programme scheme. The fair value of loans held
by Fleetbank Funding Limited as at 31 March 2017
was £122 million (31 March 2016: £89 million).

Financial Statements
173
Fleetbank Funding Limited (an SPV set up to hold
the Enable Loan Programme investments) was
designated a central government entity in 2016-17.
It is now consolidated as part of the Departmental
Group, with the opening balances restated.
Included in the £255 million reclassification balance
is £260 million relating to GIB’s private sector
loans which on 20 March 2017, were reclassified
as non-current assets held for sale. Prior to
reclassification the fair value of loans held by GIB
was £260 million (31 March 2016: £277 million).
Property-related holdings
BIS (Postal Services Act 2011) Company Limited
and Nesta Trust have property-related holdings.
At 31 March 2017 the value of the holdings was
£65 million (31 March 2016: £83 million).
During the period, BIS (Postal Services Act 2011)
Company Limited disposed of £21 million of
property related investments (31 March 2016:
£130 million). The fair value of the investments
held by BIS (Postal Services Act 2011) Company
Limited as at 31 March 2017 was £65 million
(31 March 2016: £81 million). These investments
relate to holdings in a number of marketable
real estate investment funds and are held as
‘available for sale financial assets’ in accordance
with IAS 39.
Equities (listed securities)
At 31 March 2017 the Departmental Group held
£266 million of listed equities (31 March 2016:
£206 million). The investments are held by BIS
(Postal Services Act 2011) Company Limited,
and Nesta Trust.
During 2015-16, PSH’s investment in Royal Mail
Plc was reduced to nil through a combination of
sales (28% of issued Royal Mail Plc shares) and
gifts to employees (2% of issued Royal Mail Plc
shares). Further details are disclosed in Note 10.1.
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 2017 was £443 million (31 March 2016:
£485 million).
The fair value of the remaining investments
in BIS (Postal Services Act 2011) Company
Limited as at 31 March 2017 was £428 million
(31 March 2016: £469 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, GIB, Nesta Trust and BIS (Postal Services
Act 2011) Company Limited hold investment
funds. The value invested at 31 March 2017
was £967 million (31 March 2016 restated:
£827 million). In accordance with IAS 39, the
investments of BBB, GIB 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 £956
million at 31 March 2017 (31 March 2016: £764
million). The most significant investment is in the
Business Finance Partnership (BFP) for medium-
sized businesses at 31 March 2017, this was
valued at £584 million (31 March 2016: £500
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 £155 million at 31
March 2017 (31 March 2016: £136 million). BBB
provides invoice discount finance and peer-to-
peer lending through the Investment Programme
funds which were valued at £122 million at 31
March 2017 (31 March 2016: £50 million).
On 20 March 2017, GIB’s investment fund
balance of £53 million was reclassified as
a non-current asset held for sale. Prior to
reclassification the fair value of loans held by
GIB was £53 million (31 March 2016: £52 million).

Annual report and Accounts 2016–17
174
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 2017 was £350 million
(31 March 2016: £508 million).
The remaining other investments are held by GIB,
Nesta Trust, Northern Powerhouse Investment
Fund and the Medical Research Council, and are
classified as ‘available for sale’ in accordance
with IAS 39. The fair value of these other
investments at 31 March 2017 was £26 million
(31 March 2016: £19 million).
The reason for the reduction in remaining other
investments is due to GIB’s other investments
balance of £961 million being reclassified as
a non-current asset held for sale on 20 March
2017. Prior to reclassification the fair value of
other investments held by GIB was £961 million
(31 March 2016: £155 million). The movement in
GIB’s other investments value was primarily due
to additions of £777 million (31 March 2016:
£61 million) of which £681 million is the purchase
by GIB’s Off-shore Wind Fund of Lincs Offshore
Wind Farm in 2016-17. As the Lincs Offshore
Wind Farm is not a designated body, it is not
consolidated in the BEIS departmental group
and in accordance with the FReM is recognised
as an investment under IAS 39.

Financial Statements
175
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 2017 were £2.87 billion
(31 March 2016: £2.799 billion).
Recoverable contract costs relating to nuclear provisions
31 March 2017
Departmental
Group
31 March 2016
Departmental
Group
£m
£m
Gross recoverable contract costs
6,885
7,221
Less applicable payments received on account
(3,445)
(3,576)
Less associated contract loss provisions
(570)
(846)
Balance at reporting date
2,870
2,799
The above balances relate to the Nuclear
Decommissioning Authority. The movements
in gross recoverable contract costs during the
year were:
Gross recoverable contract costs
31 March 2017
Departmental
Group
31 March 2016
Departmental
Group
£m
£m
Gross recoverable contract costs at 1 April
7,221
5,661
Increase/(decrease) in year
175
2,071
Unwinding of discount
(42)
35
Release in year – continuing operations
(266)
(303)
Amortisation of recoverable contract costs
(203)
(243)
Gross recoverable contract costs at 31 March
6,885
7,221
The gross balance of recoverable contract costs
of £6,885 million comprises £2,011 million
(31 March 2016: £2,213 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 £4,874 million (31 March 2016:
£5,008 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.

Annual report and Accounts 2016–17
176
13 Investments in Joint Ventures and Associates
31 March 2017
31 March 2016 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance at 1 April
–
872
–
680
Reclassifications
–
(682)
–
–
Additions
–
186
–
200
Dividends
–
(5)
–
(5)
Disposals
–
(47)
–
(16)
Profit/(Loss)
–
18
–
(24)
Revaluations
–
5
–
37
Balance at reporting date
–
347
–
872
NDPBs and other designated bodies
Green Investment Bank, MRC, STFC, UKAEA
and BBB plc have joint ventures and/or
associates. The most significant holdings are:
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 2016: 42%) of the ordinary shares in
the Francis Crick Institute Limited. 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
2017 is £266 million (31 March 2016: £268
million), after revaluing to reflect BEIS’s share of
net assets.
Green Investment Bank
Green Investment Bank holds a number of joint
ventures and associates, the most significant
holdings are below. At 20 March 2017 the
carrying value of joint ventures and associates
held by GIB were reclassified as a non-current
asset held for sale.
These include the following:
Scira Offshore Energy Limited (Sheringham
Shoal Wind Farm)
In November 2014, the Green Investment Bank
(GIB) purchased a 20% share in Sheringham
Shoal, a wind-farm operator based off the coast
of Norfolk, through its wholly owned subsidiary
UK Green Investment Sheringham Shoal Limited.
This investment was part of GIB’s wider strategy
to strengthen the UK offshore wind sector.
Subsequently in March 2015 GIB sold their
holding in UK Green Investment Sheringham
Shoal Limited to the Offshore Wind Fund in
which GIB have a holding. The investment
in Sheringham Shoal is accounted for as an
associate and its value at 31 March 2017 is
£209 million (31 March 2016: £220 million).
Rampion Offshore Wind Limited
The Green Investment Bank (GIB) holds a
25% (31 March 2016: 25%) share in Rampion
Offshore Wind Limited through its wholly owned
subsidiary UK Green Investment Rampion
Limited. BEIS accounts for this investment as an
associate under IFRS 11 (equity method), with a
carrying value of £195 million at 31 March 2017
(31 March 2016: £75 million). This investment is
part of GIB’s wider strategy to strengthen the UK
offshore wind sector. Construction of this project
commenced in May 2015 and is progressing in
line with expectations. The wind farm is expected
to become fully operational during 2018.
For further financial information on the
investments shown above, please see the
individual accounts of the entities.

Financial Statements
177
14 Trade and other receivables
31 March 2017
31 March 2016 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
93
535
215
544
Deposits and advances
–
–
–
5
Other receivables:
VAT and other taxation
18
131
35
129
Staff receivables
1
2
1
3
RPS receivables
135
135
140
140
Other
89
109
71
132
Prepayments and accrued income
102
388
87
344
438
1,300
549
1,297
Amounts falling due after more than one year:
Trade receivables
4
60
16
60
Deposits and advances
–
1
–
–
Other receivables
301
300
340
341
Prepayments and accrued income
–
38
–
36
305
399
356
437
Total Receivables
743
1,699
905
1,734
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 £135 million as at 31 March 2017 (31
March 2016: £140 million). There is a risk that
the estimation of 14% is over-optimistic and
therefore would result in a downward revision
in future years. Additionally the model has been
created using only 11 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.
Coal Pensions receivables included in Other
receivables are held by the core Department, and
represent the amounts due to the Government
relating to its relationship with the British Coal
Staff Superannuation Scheme (BCSSS) and
the Mineworkers’ Pension Scheme (MPS). After
privatisation of the British Coal Corporation in
1994 the Government gave financial guarantees
in relation to certain benefits payable to members
and beneficiaries of the 2 schemes. The balance
of Coal Pensions receivables at 31 March 2017
is £331 million (31 March 2016: £369 million).
As part of those agreements the Government
is entitled to a portion of any periodic valuation
surpluses. Recommended cash flows to
Government are generally determined by the
Government Actuary following their triennial
valuations. The most recent valuations were at 31
March 2015 for BCSSS and 30 September 2014
for MPS. More details can be found at
https://www.bcsss-pension.org.uk/ and
http://www.mps-pension.org.uk/.
The Coal Pensions receivables have been
classified as loans and receivables in accordance
with IAS 39: Financial Instruments: Recognition
and Measurement. They are valued at fair
value which equates to the cash flows being
discounted at a rate of 3.7%, which is the
Treasury’s real Financial Instrument discount rate
of 0.7% plus appropriate indexation.

Annual report and Accounts 2016–17
178
15 Non-current assets and liabilities held for sale
31 March 2017
31 March 2016
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance of assets at 1 April
-
19
-
2
Additions and reclassifications
1,517
2,605
-
19
Disposals
-
(23)
-
(2)
Revaluations
-
8
-
-
Carrying amount of assets at reporting date
1,517
2,609
-
19
Balance of liabilities at 1 April
-
-
-
-
Additions and reclassifications
-
(1,000)
-
-
Carrying amount of liabilities at reporting date
-
(1,000)
-
-
Carrying amount at reporting date
1,517
1,609
-
19
Core department
The most significant items held as ‘Non-current
assets classified as held for sale’ in accordance
with IFRS 5 comprise the core Department’s
shareholding in Green Investment Bank plc
(“GIB”). Prior to reclassification as a non-current
asset held for sale the shareholding was held at
cost less impairment. In accordance with IFRS
5, the shareholding is held at the lower of the
carrying value (cost less impairment) and fair
value less cost to sell. The shareholding is held
at the carrying value as at 31 March 2017 of
£1.517 billion. This core Department shareholding
is eliminated on consolidation.
Green Investment Bank
On 3 March 2016, the Secretary of State formally
launched a process for the sale of the shares
in the Green Investment Bank (“GIB”). On 19
April 2017, the Secretary of State signed a deal
to sell the shares to Macquarie Group Limited.
The negotiations with Macquarie Group Limited
were sufficiently advanced by 31 March 2017 for
GIB to be classified as a non-current asset held
for sale. The sale is expected to be completed
during 2017.
Of the total additions to assets held for sale
of £2,605 million shown above, £2,565 million
relates to the assets of GIB. Of the total additions
to liabilities held for sale of £1,000 million shown
above, £1,000 million relates to the liabilities of
GIB.
The results of GIB for the year are presented
below:
31 March 2017
31 March 2016
£m
£m
Income from sale of goods and services
(145)
(24)
Total operating income
(145)
(24)
Staff costs
19
17
Purchase of goods and services
59
23
Depreciation and impairment charges
35
11
Other operating expenditure
(12)
(33)
Total operating expenditure
101
18
Finance income
(6)
(30)
Finance expense
32
15
Net expenditure
(18)
(21)

Financial Statements
179
The major classes of assets and liabilities of GIB as held for sale as at 31 March 2017 are, as follows:
Note
31 March 2017
£m
Non-current assets:
Property, plant and equipment
7
474
Intangible assets
5
Other financial assets
11
1,264
Investment in joint ventures and associates
13
682
Total non-current assets
2,425
Current assets:
Inventories
1
Trade and other receivables
61
Other financial assets
9
Cash and cash equivalents
69
Total current assets
140
Total assets
2,565
Current liabilities:
Trade payables and other liabilities
18
(748)
Total current liabilities
(748)
Non-current assets plus/less net current assets/ liabilities
1,817
Non-current liabilities:
Trade payables and other liabilities
18
(202)
Provisions
(50)
Total non-current liabilities
(252)
Total assets less liabilities
1,565
Amounts included in accumulated OCI:
Revaluation reserve
15
Reserve of disposal group classified as available for sale
15
The net cash flows incurred by GIB are as follows:
31 March 2017
31 March 2016
£m
£m
Cash flows: Net cash inflow from operating activities
354
704
Cash flows: Net cash outflow from investing activities
(889)
(828)
Cash flows: Net Financing
482
–
Cash flows: Net increase/(decrease) in cash equivalents in the period
(53)
(124)

Annual report and Accounts 2016–17
180
16 Investments and loans in public sector bodies: current
31 March 2017
31 March 2016
restated
£m
£m
Balance at 1 April
541
293
Additions
7,662
7,511
Repayments
(7,530)
(7,290)
Loans repayable within 12 months transferred from non-current assets
9
27
Balance at reporting date
682
541
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 currently matures in March 2018. The
outstanding balance at 31 March 2017 was £649
million (31 March 2016: £515 million) which is
included in the £682 million above.
17 Cash and cash equivalents
31 March 2017
31 March 2016
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Balance as at 1 April
775
1,495
1,693
2,603
Net change in cash and cash equivalent balances
417
322
(918)
(1,108)
Balance as at period end date
1,192
1,817
775
1,495
The following balances at 31 March were held at:
The Government Banking Service (GBS)
1,191
1,606
774
1,294
Commercial banks and cash in hand
1
211
1
201
Balance at period end date
1,192
1,817
775
1,495

Financial Statements
181
18 Trade payables and other liabilities
31 March 2017
31 March 2016 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
8
91
9
109
Trade payables
–
310
–
212
Other payables
28
355
41
212
Accruals and deferred income
1,020
2,930
662
2,434
Amounts issued from the Consolidated Fund for supply
but not spent at year end
977
977
488
488
Consolidated Fund Extra Receipts due to be paid to the
Consolidated Fund:
Received
215
227
288
305
2,248
4,890
1,488
3,760
Amounts falling due after more than one year:
Trade Payables
–
2
–
3
Other payables, accruals and deferred income
1,023
2,456
1,138
3,266
Finance leases
–
2
–
3
1,023
2,460
1,138
3,272
Total payables
3,271
7,350
2,626
7,032
Included under accruals and deferred income
are: a) promissory note liabilities with maturities
of less than one year of £446 million (31 March
2016: £136 million) and with maturities greater
than one year of £1,022 million (31 March
2016: £1,137 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 £719 million
(31 March 2016: £695 million) and after one year
of £1,416 million (31 March 2016: £1,424 million);
more details are available in the accounts of the
Nuclear Decommissioning Authority.

Annual report and Accounts 2016–17
182
19 Provisions for liabilities and charges
31 March 2017
31 March 2016 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Current liabilities:
Not later than one year
289
3,582
315
3,496
Total current liabilities
289
3,582
315
3,496
Non-current liabilities:
Later than one year and not later than five years
1,008
13,244
1,072
13,206
Later than five years
1,289
152,722
1,444
150,916
Total non-current liabilities
2,297
165,966
2,516
164,122
Total
2,586
169,548
2,831
167,618
Total provisions
Nuclear
19.1
1,592
165,283
1,698
163,239
Other
19.2
994
4,265
1,133
4,379
Total
2,586
169,548
2,831
167,618
19.1 Nuclear
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
Restated balance at 31
March 2015
1,581
257
1,838
69,326
1,244
72,408
Unwinding of discount
(14)
7
(7)
1,446
2
1,441
Discount to present value
61
34
95
89,379
–
89,474
Provided in the year
4
–
4
2,982
262
3,248
Provisions not required
written back
–
(15)
(15)
(303)
–
(318)
Provisions utilised
in the year
(217)
–
(217)
(2,637)
(160)
(3,014)
Restated balance at 31
March 2016
1,415
283
1,698
160,193
1,348
163,239
Unwinding of discount
(17)
(1)
(18)
(1,273)
(18)
(1,309)
Discount to present value
54
15
69
4,895
–
4,964
Provided in the year
38
9
47
2,256
–
2,303
Provisions not required
written back
–
–
–
(264)
(676)
(940)
Provisions utilised
in the year
(204)
–
(204)
(2,636)
(134)
(2,974)
Balance at
31 March 2017
1,286
306
1,592
163,171
520
165,283

Financial Statements
183
Estimated forward discounted cash flows as at 31 March 2017
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
191
–
191
3,024
162
3,377
Later than one year and
not later than five years
612
52
664
11,761
168
12,593
Later than five years
483
254
737
148,386
190
149,313
Total forward
cash flows as
at 31 March 2017
1,286
306
1,592
163,171
520
165,283
Core Department
British Energy
As a result of the restructuring of British Energy
(BE) in January 2005, the Government assists
BE 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 costs are
estimated to be £188 million (31 March 2016:
£205 million) (undiscounted at current prices)
for next year and are then expected to fall each
year thereafter. Each year the profile of future
payments is reassessed in line with the Retail
Prices Index (RPI) 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 best estimate of the cost of the liabilities is
discounted using HM Treasury’s discount rates
which range from -2.70% to -0.80% depending
on the timing of cash flows. The undiscounted
cost of the provisions as at 31 March 2017 was
£266 million (31 March 2016: £258 million).
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 £53 billion out of the
total £163.2 billion provision (31 March 2016:
£51.2 billion out of £160.2 billion restated). The
estimates are necessarily based on assumptions
about the processes and methods likely to
be used to discharge the obligations and
reflect 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

Annual report and Accounts 2016–17
184
estimates to present value also has a significant
impact on the liability reported in the Statement
of financial position of £163.2 billion at
31 March 2017 (31 March 2016: £160.2 billion
restated). The undiscounted equivalent of this
reported liability is £119 billion at 31 March
2017 (31 March 2016: £117.4 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).
Further details are reported in Box 4 on page
38 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.
Further detail, including movement on the gross
provision, can be found in the accounts of
the NDA.

Financial Statements
185
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
Restated balance at 1 April 2015
486
184
185
133
458
1,446
918
121
147
2,632
Transferred in/(out)
–
–
–
–
–
–
–
–
25
25
Discount to present value
64
46
23
–
12
145
1,927
–
35
2,107
Provided in the year
–
–
–
5
65
70
15
87
72
244
Provisions not required written back
(28)
(20)
(1)
(5)
(23)
(77)
(33)
(1)
(6)
(117)
Provisions utilised in the year
(49)
(10)
(11)
(16)
(359)
(445)
(16)
(55)
(2)
(518)
Unwinding of discount
(2)
3
(2)
(2)
(3)
(6)
11
–
1
6
Restated balance at 31 March
2016
471
203
194
115
150
1,133
2,822
152
272
4,379
Transferred in/(out)
–
–
–
–
–
–
–
–
(34)
(34)
Discount to present value
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)
(99)
(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

Estimated forward discounted cash flows as at 31 March 2017
Not later than one year
43
8
11
17
19
98
26
38
43
205
Later than one year and not later than
five years
146
36
50
72
40
344
110
41
156
651
Later than five years
244
154
70
24
60
552
2,682
42
133
3,409
Total forward cash flows as at 31
March 2017
433
198
131
113
119
994
2,818
121
332
4,265
The time scale over which it is estimated the discounted costs will need to be incurred is shown against Estimated forward discounted cash flows.

Annual report and Accounts 2016–17
186
Core Department
Concessionary fuel
The provision has previously covered the cost of
the Department’s responsibility to provide either
solid fuel or a cash alternative to ex-miners and
their dependants formerly employed by British
Coal, including the administration of the scheme.
On the 15 November 2013, the Chancellor of
the Exchequer announced that the government
would additionally guarantee the concessionary
fuel allowance of those who lost their entitlement
as a consequence of the restructuring of UK Coal
in July 2013. This resulted in a further cohort of
approximately 1,500 beneficiaries added to the
Department’s Scheme.
On 4 March 2015, the Minister of State for Energy
further announced that the government would
ensure that the current UK Coal miners, approximately
700 beneficiaries, would continue to receive their
concessionary fuel benefits upon closure of the
companies’ remaining deep mines. The estimated
future cost is also included in the provision.
Of the total 52,287 current beneficiaries (including
ex UK Coal beneficiaries) at 31 March 2017,
44,015 have opted for the cash alternative at
an average of around £741 per annum; for the
remainder, the average annual solid fuel cost to
the Department is around £1,416 per beneficiary
(this includes the cost of fuel, distribution and
VAT). The provision is based on standard female
mortality rates and includes an assumption
of beneficiaries continuing to switch their
entitlement from solid fuel to cash, in line with
rates observed in the recent past and allowing
for the fact that the ex-UK Coal beneficiaries
have greater restrictions in this regard.
British Shipbuilders
British Shipbuilders had liabilities arising from
personal injury to former employees resulting
primarily from exposure to asbestos during the
course of their work. The Core Department has
taken on full responsibility for the liabilities of the
former Corporation, which was abolished in
March 2013. The best estimate of the cost of the
liabilities is discounted using HM Treasury’s
discount rates which range from -2.70% to
-0.80% depending on the timing of the cash
flows. The undiscounted liability as at 31 March
2017 was £176 million (31 March 2016: £183
million). The discounted value is higher than the
undiscounted liability due to the negative discount
rates used.
The Department’s approach to accounting for
the personal injury compensation claims against
British Shipbuilders and its subsidiaries has been
to provide for those costs of resolution which are
both probable and reliably estimable. An actuarial
review of asbestos and other disease liabilities
as at 31 March 2016 was reported in April 2016.
This report identified a range of undiscounted
liabilities from £118 million to £389 million. The
current estimate is that the liabilities will extend
for up to 33 years.
In the light of significant uncertainty associated
with asbestos claims, there can be no guarantee
that the assumptions used to estimate the
provisions for the cost of resolving asbestos
claims will be an accurate prediction of the actual
cost that may be incurred and, as a result, the
provisions are the subject of an actuarial review
when a condition changes materially.
The core Department is also responsible for
compensation claims made against former
British Shipbuilders’ companies. The Financial
Services Compensation Scheme does not
compensate former employees in respect
of periods of employment with nationalised
industries and the Department assumed liability
for this compensation by way of a Minute to
Parliament in 2003. The undiscounted liability at
31 March 2017 was £9 million (31 March 2016:
£9 million) and is included within other provisions.
Legacy ailments
Responsibility for the compensation claims relating
to personal injuries and ailments suffered by
former British Coal mineworkers transferred to the
Department on 1 January 1998 by a restructuring
scheme under the Coal Industry Act 1994.
The liabilities concern compensation claims
relating to personal injuries. Over £6.3 billion has
been paid out since privatisation and there are
future liabilities such as induced hearing loss
(£28 million), miscellaneous disease claims
(including phurnacite, mesothelioma,
pneumoconiosis, pleural thickening, asbestos-
related conditions, vibration white finger, chronic
obstructive pulmonary disease, cancer, pleural
plaques, other minor benefits schemes)
(£69 million) and recently commenced litigation
by former British Coal Coke Oven Workers
(£20 million). The provisions are based on the
forecasts of the settlements of future claims,
taking into account discussion with our legal
advisors, claim handlers and recent actuarial
estimates. Forecasts beyond 2022, when the

Financial Statements
187
current contract with our legal advisors is due to
end, are subject to considerable uncertainty in
estimates of the number of cases and the levels
of damages and costs.
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 discounted by HM
Treasury’s discount rate in the range -2.70% to
-0.80% in real terms, depending on the timing of
the cash flows. 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 by BEIS.
Work is also ongoing 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 undiscounted liability as at 31 March
2017 was £106 million (31 March 2016: £111
million). The discounted value is higher than
the undiscounted liability due to the negative
discount rates used for the short and medium
term.
Group
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 undiscounted liability as at 31 March 2017
was £165 million (31 March 2016: £109 million).
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. 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
£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 2017 and will continue at least
until the date at which the individual would have
reached normal retirement age.

Annual report and Accounts 2016–17
188
20 Retirement benefit obligations
2016-17
Funded
pension
schemes
2015-16
Funded
pension
schemes
£m
£m
Present value of defined benefit obligation at 1 April
5,821
5,923
Interest cost
197
188
Current service cost
186
222
Past service cost
36
25
Benefits paid
(200)
(189)
Actuarial (gains)/losses
1,385
(412)
Employee contributions
25
26
Transfer in
–
38
Present value of defined benefit obligation at 31 March
7,450
5,821
Fair value of assets at 1 April
5,544
5,461
Expected return on plan assets
190
174
Employer contributions
162
160
Benefits paid
(200)
(189)
Actuarial gains/(losses)
887
(112)
Employee contributions
25
26
Transfer in
–
24
Fair value of assets at 31 March
6,608
5,544
Net liability at 31 March
842
277
The increase in the net liability at 31 March
2017 compared to 31 March 2016 is primarily
due to a decrease in the discount rate applied
to the defined benefit obligation for the Medical
Research Council from 3.4% at 31 March 2016
to 2.5% at 31 March 2017 and for the nuclear site
licence companies from 3.5% at 31 March 2016
to 2.5% at 31 March 2017.
Net (asset)/liability by scheme
31 March 2017 31 March 2016
£m
£m
Medical Research Council
(3)
(124)
SLC – LLWR section of CNPP
13
5
SLC – SLC section of Magnox Electric Group of ESPS
144
151
SLC – Magnox section of CNPP
32
23
SLC – Group Pension Scheme SLC section of CNPP
100
30
SLC – Sellafield section of CNPP
541
191
Nuclear Decommissioning Authority
15
1
Total net liability
842
277

Financial Statements
189
Medical Research Council (MRC)
The MRC operates a defined benefit, final salary
pension scheme. A full actuarial evaluation was
undertaken as at 31 December 2013 which
was rolled forward by the actuary to determine
the approximate position as at 31 March 2017.
Further details can be found in the accounts of
the MRC.
Nuclear site licence companies (SLCs)
There are 5 defined benefit, final salary pension
schemes relating to 3 of the 4 SLCs comprising:
a) the LLWR section of the Combined Nuclear
Pension Plan (CNPP) (for LLW Repository
Limited), b) the SLC Section of the Magnox
Electric Group of the Electricity Supply Pension
Scheme and the Magnox Section of the CNPP
(for Magnox Limited) and c) the Group Pension
Scheme SLC section of the CNPP and the
Sellafield section of the CNPP (for Sellafield
Limited). They are subject to the UK regulatory
framework for pensions. The plans are operated
under trust and the Trustees are responsible for
operating them. All are closed to new entrants.
Full actuarial evaluations were undertaken as at
31 March 2016 for the Magnox schemes and
as at 31 March 2013 for the other three. The
actuaries rolled forward the results to determine
approximate positions as at 31 March 2017.
Further information relating to actuarial
assumptions, asset allocation and sensitivity
analysis is provided below for these SLC
schemes only as they comprise the major part
of the overall pension liability.
Major actuarial assumptions for SLC schemes
LLW Repository Limited
Magnox Limited
Sellafield Limited
2016-17
2015-16
2016-17
2015-16
2016-17
2015-16
Discount rate
2.5%
3.5%
2.5%
3.4%
2.5%
3.5%
Inflation (Retail Prices Index)
3.2%
3.0%
3.4%
3.2%
3.2%
3.0%
Life expectancy in years at
65, currently aged 65 (male)
21.8
22.6
Life expectancy in years at
65, currently aged 45 (male)
23.1
23.9
Life expectancy in years at
65, currently aged 65 (female)
24.2
25.3
Life expectancy in years at
65, currently aged 45 (female)
25.8
26.6
Life expectancy in years at
60, currently aged 60 (male)
28.4
27.8
Life expectancy in years at
60, currently aged 40 (male)
29.5
29.7
Life expectancy in years
at 60, currently aged 60
(female)
30.3
30.2
Life expectancy in years at
60, currently aged 40 (female)
31.4
32.2
Life expectancy in years at
65, currently aged 65 (male)
22.8
22.6
Life expectancy in years at
65, currently aged 45 (male)
24.2
23.9

Annual report and Accounts 2016–17
190
Asset allocation for SLC schemes
31 March 2017 31 March 2016
£m
£m
Equities
1,538
1,163
Property
292
299
Government bonds
1,488
1,133
Corporate bonds
391
369
Other growth assets
1,235
957
Other
64
261
Balance at reporting date
5,008
4,182
Sensitivity analysis for SLC schemes
LLW
Repository
Limited
Magnox
Limited
Sellafield
Limited
£m
£m
£m
0.1 percentage point decrease in annual discount rate
58
0.1 percentage point increase in inflation assumption
56
0.5 percentage point decrease in annual discount rate
5
323
0.5 percentage point increase in inflation assumption
5
323
1 year increase in life expectancy
1
119
44
The table shows the increase in liability that
would result from changes in these actuarial
assumptions.
Nuclear Decommissioning Authority (NDA)
2 defined benefit pension schemes relate to the
NDA – the Closed and Nirex sections of the
CNPP. Both are closed to new entrants. Full
actuarial evaluations were undertaken as at
31 March 2013. The actuaries rolled forward
the results to determine approximate positions
as at 31 March 2017.

Financial Statements
191
21 Capital and other commitments
Total minimum payments in respect of capital, lease and other commitments
31 March 2017
31 March 2016 restated
Note
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Contracted capital commitments
21.1
123
2,095
119
2,087
Minimum future payments under:
Operating leases
21.2
282
353
374
474
Finance leases
–
3
–
5
PFI contracts and service concession
arrangements
5
5
7
7
Other financial commitments
21.3
3,178
3,612
1,960
2,367
Total
3,588
6,068
2,460
4,940
21.1 Capital commitments
31 March 2017
31 March 2016 restated
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
2
415
1
318
Intangible assets
1
40
–
53
Loans and investments
120
1,640
118
1,716
Total
123
2,095
119
2,087
Core Department
The core Department has not entered into any
significant capital commitments.
NDPBs and other designated bodies
Capital commitments as at 31 March 2017
include the following significant items:
• Property, plant and equipment commitments
for Biotechnology and Biological Sciences
Research Council (BBSRC) of £225 million
(31 March 2016: £165 million) at the BBSRC
Institute sites for the next four years and for
Natural Environment Research Council (NERC)
of £93 million (31 March 2016: £133 million),
to build a new polar research vessel.
• Investment commitments of £960 million
(31 March 2016: £946 million) for the British
Business Bank plc (BBB) relating to undrawn
investment commitments, £456 million
(31 March 2016: £539 million) for the Green
Investment Bank (GIB), which on 20 March
2017 was reclassified as an asset held for
sale – relating to investment contracts where
the borrower or investee entity may draw
down committed capital over the contracted
period – and £99 million (31 March 2016:
£101 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.

Annual report and Accounts 2016–17
192
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 2017
31 March 2016
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
–
–
Later than one year and not later than five years
–
2
–
2
Later than five years
–
19
–
11
–
22
–
13
Buildings:
Not later than one year
60
68
69
78
Later than one year and not later than five years
172
187
252
268
Later than five years
33
57
51
100
265
312
372
446
Other:
Not later than one year
7
8
1
6
Later than one year and not later than five years
10
11
1
6
Later than five years
–
–
–
3
17
19
2
15
Total
282
353
374
474
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 2017
Departmental
Group
31 March 2016
Departmental
Group
£m
£m
Receivables under operating leases for the following periods
comprise:
Not later than one year
7
5
Later than one year and not later than five years
24
10
Later than five years
39
17
Total
70
32
All of the above balances relate to the Departmental Group’s ALBs.

Financial Statements
193
21.3 Other financial commitments
BEIS 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
BEIS is committed are as follows:
31 March 2017
31 March 2016 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Not later than one year
487
674
523
705
Later than one year and not later than five years
1,601
1,806
1,294
1,472
Later than five years
1,090
1,132
143
190
Total
3,178
3,612
1,960
2,367
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
2016-17
Total
2015-16
restated
£m
£m
£m
£m
£m
European Space Agency
a
216
926
–
1,142
737
Other subscriptions
1
5
29
35
35
Core Department and
Agencies total
217
931
29
1,177
772
European Organisation for
Nuclear Research (CERN)
b
132
82
–
214
203
Institut Laue Langevin (ILL)
c
18
76
35
129
129
Other subscriptions
35
48
7
90
65
Departmental Group total
402
1,137
71
1,610
1,169
Notes:
The Departmental Group is required to subscribe
to a number of bodies on an ongoing 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 UK Space Agency subscribes to the
European Space Agency (ESA) programme.
The UK shares research objectives with other
European nations and collaborates with them
to mitigate the high capital and running costs
of facilities. There are agreements in place at
national level to regulate annual contributions
and the management of the facilities. These
include a period of notice of withdrawal from
the arrangement. ESA requires a 12-month
notice period after the end of the current
calendar year.
b) 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.
c) 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.

Annual report and Accounts 2016–17
194
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
Total
2016-17
Total
2015-16
restated
£m
£m
£m
£m
£m
Met Office
a
97
407
1,035
1,539
596
Met Office Supercomputer
–
–
–
–
47
Ordnance Survey
b
53
150
–
203
352
Other commitments
120
113
26
259
193
Core Department and
Agencies total
270
670
1,061
2,001
1,188
Other commitments
2
–
–
2
9
Departmental Group total
272
670
1,061
2,003
1,197
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.

Financial Statements
195
22 Financial instruments
The carrying amounts of financial instruments in each of the IAS 39 categories are as follows:
31 March 2017
31 March 2016 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
1,192
1,817
775
1,495
Receivables (i)
14
641
1,273
818
1,354
Loans to public sector bodies (ii) & (iii)
10.3 & 16
991
846
751
654
Other financial assets
11.2
2
313
27
516
Total loans and receivables
2,826
4,249
2,371
4,019
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
1,205
1,205
1,389
1,389
Ordinary shares in public sector companies (iv)
10.1
664
1,086
610
1,146
Other financial assets
11.2
278
2,439
223
2,499
Total available for sale
2,147
4,730
2,222
5,034
Derivatives:
Forward contracts
95
107
73
77
Contracts for difference
–
(12,334)
(1,337)
(12,607)
Total derivatives
95
(12,227)
(1,264)
(12,530)
Fair value through profit or loss:
Other financial assets
11.2
–
2
–
61
Total fair value through profit or loss
–
2
–
61
Held to maturity:
Other financial assets
11.2
–
7
–
8
Total held to maturity
–
7
–
8
Financial liabilities
Financial guarantees
(61)
(61)
(60)
(60)
Payables (ii)
18
(1,228)
(1,964)
(826)
(1,332)
Total other financial liabilities
(1,289)
(2,025)
(886)
(1,392)
(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 2016-17, excludes £58 million, relating to the Core
Department’s 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.

Annual report and Accounts 2016–17
196
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
Group’s financial performance and position and
the nature and extent of the Group’s 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 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 2017 is
£6,720 million (31 March 2016 restated: £7,816
million). The risk of non-payment is reflected in
the carrying amounts of the assets and liabilities,
where the Department 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 Department minimises the risk
by monitoring the overall performance of the
Funds and to secure value for the 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 2017 BEIS has £684 million of
guarantees outstanding (31 March 2016: £755
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 £201
million (31 March 2016: £189 million). However,
not all loans are expected to payout and BEIS
has estimated its liability to be £61 million
(31 March 2016: £60 million). In addition, BEIS
has estimated that it will have future fees
receivable of £27 million after allowing for bad
debts (31 March 2016: £31 million). Both the
liability for expected payouts and asset for
future fees are recognised on the Statement
of Financial Position.

Financial Statements
197
NDPBs and other designated bodies
• BIS (Postal Services Act 2011) Company
Limited is exposed to credit risk, from its
investments in debt securities. At 31 March
2017, the Company held debt securities
of mixed quality. The group is exposed to
counter party credit risk on its high-yield debt
securities. Based on historic rates of market
defaults a 2% to 4% default rate within the
portfolio would not be unexpected. To manage
the risk of loss, the investments are broadly
diversified. There are specific parameters
for the holding of the debt securities within
particular sectors together with a limit on
individual holdings as a percentage of the total
portfolio. The investment managers also have
significant expertise in managing default risk.
• 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
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.
• The Green Investment Bank (GIB) is exposed
to credit risk with respect to their debt
investments. GIB minimises the risk of default
by entering into loan arrangements with
borrowers with strong credit ratings and who
hold appropriate collateral.
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:
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 (ESA) 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
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 Company, MRC, STFC,
NERC and Nesta Trust are subject to minor
foreign currency risk through the maintenance
of bank accounts in foreign currencies
(predominantly USD and EUR) to deal with day-
to-day overseas transactions.
Investments
At 31 March 2017 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 £21 million (31 March
2016: £30 million).
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’

Annual report and Accounts 2016–17
198
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
favourable interest rate movements. Interest rate
risk is not expected to have a significant impact.
GIB and BBB each hold 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. GIB has entered into swaps to
hedge against interest rate risk. The counterparty
to these swaps is the core Department and
so the Group is unaffected. BBB does not use
derivatives to hedge interest rate risk.
The impact of interest rates affects the discount
rate used to arrive at the fair value of the CfD
liability held by LCCC. Changes in interest rates
which affect the discount rate would therefore
affect the Statement of Financial Position
valuation. However the Group is not financially
exposed to this risk because the liability is
funded through a levy on suppliers.
Other market risk
Core Department
The core Department is exposed to wider risks
relating to the performance of the economy
as a whole. The main risks resulting from a
downward movement in the economy include
failures of investee companies of investment
funds, 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.
NDPBs and other designated bodies
GIB is exposed to market risk through the
concentration of investments in the clean energy
sector. GIB 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 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

Financial Statements
199
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
Department are not financially exposed to this
risk because the liability is funded through a levy
on suppliers.
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 than quoted prices, that are observable
either directly or indirectly;
– Level 3 – uses inputs for the assets or liabilities
that are not based on observable market data,
such as internal models or other valuation
method.
The following table presents the Departmental
group’s financial assets and liabilities that are
measured at fair value at 31 March 2017 and
31 March 2016:
31 March 2017
31 March 2016
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
–
1,086
–
1,086
–
1,146
–
1,146
Ordinary shares in listed equities
11.2
266
–
–
266
199
–
–
199
Ordinary shares in unlisted private
equities
11.2
–
14
429
443
–
15
470
485
Debt and venture capital
investments
Repayable launch investments
11.1
–
–
1,205
1,205
–
–
1,389
1,389
Gilts and bonds
11.2
46
–
–
46
55
–
–
55
Property related holdings
11.2
–
–
65
65
–
2
81
83
Investment funds
11.2
–
–
1,243
1,243
–
–
1,004
1,004
Other investments
11.2
7
350
19
376
3
508
162
673
Total available for sale assets
319
1,450
2,961
4,730
257
1,671
3,106
5,034
Derivatives
Forward contracts
–
112
–
112
–
78
–
78
Total derivatives used for hedging
–
112
–
112
–
78
–
78
Fair value through profit or loss
Ordinary shares in listed equities,
Investment funds and other investments
11.2
2
–
–
2
9
–
52
61
Total fair value through profit or loss
2
–
–
2
9
–
52
61
Total assets
321
1,562
2,961
4,844
266
1,749
3,158
5,173
Derivatives
Forward contracts
–
(5)
–
(5)
–
(1)
–
(1)
Contracts for difference
9
–
– (12,334) (12,334)
–
– (12,607) (12,607)
Financial liabilities through profit
or loss
–
(5) (12,334) (12,339)
–
(1) (12,607) (12,608)
Total liabilities
–
(5) (12,334) (12,339)
–
(1) (12,607) (12,608)

Annual report and Accounts 2016–17
200
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, 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;
– 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 instrument for the year ended 31 March 2017,
excluding the Contracts for Difference which is 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)
74
94
Closing balance
429
1,205
1,327
2,961
The following table presents the changes in level 3 instrument for the year ended 31 March 2016,
excluding the Contracts for Difference which is 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
564
1,740
1,113
3,417
Additions
20
–
375
395
Repayments/disposals
(162)
(112)
(218)
(492)
Gains and losses recognised in CSoCNE
48
(239)
29
(162)
Closing balance
470
1,389
1,299
3,158
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.
The sensitivity analysis for the significant
valuations using level 3 inputs for property related
holdings and investment funds are detailed in the
financial statements of British Business Bank Plc,
Green Investment Bank and BIS (Postal Services
Act 2011) Company Limited.

Financial Statements
201
23 Contingent liabilities disclosed under IAS37
The Departmental Group has the following
significant contingent liabilities. Other liabilities
are disclosed in our partner organisation
accounts.
Basis of Recognition
Description
Unquantifiable
Nuclear
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.
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
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.
Site restoration liabilities
inherited from British Coal
The Department has inherited liabilities from British Coal to reimburse certain third parties
with the costs necessary to meet 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.
Deed relating to the British
Coal Staff Superannuation
Scheme (BCSSS) under
Paragraph 2(9) of Schedule
5 to the Coal Industry Act
1994
Deed relating to the
Mineworkers’ Pension
Scheme (MPS) under
Paragraph 2(9) of Schedule
5 to the Coal Industry Act
1994
Government Guarantees were put in place on 31 October 1994, the day the Schemes
were changed to reflect the impact of 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.
Restructuring Scheme
Where liabilities transferred under the various Coal Authority Restructuring Schemes
(CARS) have crystallised due to planning conditions, agreements, claims etc. a provision
has been made in these financial statements. It has not however been possible to
quantify those contingent liabilities that may arise in the future.
UK Space Agency
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.
Outer Space Act 1986
The UKSA has an obligation, governed by international (UN) 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.
Financial Reporting Council
The core Department has provided assurance to 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.

Annual report and Accounts 2016–17
202
Basis of Recognition
Description
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.
Inventories
In March 2017 the Nuclear Decommissioning Authority 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 relating to potential treatment
or disposal costs.
BBSRC
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.
Subsidence damage and
public safety liabilities
Licensees of mining operations are required to provide security to the Coal Authority to
cover anticipated future costs of settling subsidence damage liabilities within their Areas
of Responsibility. Outside the Areas of Responsibility of the holders of licences under
Part II of the 1994 Act, the Authority is responsible for making good subsidence damage.
Where an Area of Responsibility is extinguished, this would transfer to the Authority
who would become responsible for the discharge of outstanding subsidence liabilities.
The Authority also has an ongoing liability to secure and keep secured the majority of
abandoned coal mines. (In all cases the liability for operating collieries is the responsibility
of the licensees/lessees and security is held to address those liabilities.)
The above liabilities have been provided for within the Coal Authority provision (note 19.2)
based on analysis of trends and claims experience. However it is possible that significant,
unexpected events outside of this provision may materialise.
In addition to the above general contingent liability, damage notices have been submitted
to the Coal Authority in respect of subsidence damage to Wentworth Woodhouse, a
Grade I listed country house. The Coal Authority has rejected these notices. The Upper
Tribunal (Lands Chamber) has ruled on 4 locations of damage and concluded that the
Coal Authority has no liability in respect to these; one further area of damage has yet to
be considered and the Coal Authority will continue to strongly defend its case.
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 Authority does not expect that the outcome of the above issues
will materially affect its financial position.
The 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.
Other
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
Feed-in-Tariffs
(£293 million)
The Department faces 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. Following determination of the legal principles by the Court of
Appeal, the Department is preparing for a full trial on the facts of the case, which is set
for the first available date after 21 January 2018. Based on updated claims, claimants
are seeking damages of up to £293 million. The Department has been ordered to pay
80% and 50% of the claimants’ legal costs relating to preliminary hearings in the High
Court and Court of Appeal respectively; the Department bears its own legal costs.
The claimants and the Department are likely to incur substantial further legal costs (the
Department’s costs being estimated at £3.1 million) and the losing party is likely to be
ordered to pay the costs of the winning party.

Financial Statements
203
Basis of Recognition
Description
British Business Bank
(£201 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 2017 is £201 million.
Under the BBB’s Help to Grow financial guarantee programme, which was new in the
year, 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 2017 the amount lent under these financial guarantee agreements was £0.6 million
(2016: £nil).
Reprocessing and staff
commitments
(£16 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 £16
million (31 March 2016: £12 million).
Wave Hub
(£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.
Ofgem administration costs
from the buy-out fund
(£3.6-£3.8 million)
BEIS, 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 2017. 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 2017) but will not know the size of the buy-out fund until
October 2017.
Innovate UK
(£2.5 million)
Innovate UK is responsible for decommissioning of Narec Monitoring Platform at an
estimated cost of £2.5 million. This could take place anytime between 3 and 25 years.
Medical Research Council
(£1.8 million)
MRC has identified a contingent liability of £1.8 million (31 March 2016: £1.8 million)
for dilapidation work. This may be required at the end of property leases which are
due to expire within the next five years.

Annual report and Accounts 2016–17
204
24 Contingent assets
Departmental ALBs
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
Deed Relating to the British
Coal Staff Superannuation
Scheme (BCSSS) under
Paragraph 2(9) of Schedule
5 to the Coal Industry Act
1994
(£1.707 billion)
On 13 February 2015 an agreement was signed between the Trustee and ‘the Guarantor’
(the core Department) to amend the Scheme structure of the BCSSS which was
designed to provide certainty to members over increases to their pensions in the future.
Under the provisions of the agreement, within 12 months of 31 March 2033, the trustee
shall pay to the Guarantor any surplus remaining on the Scheme net of any amount
retained for the obligation.
At the last valuation, the Government Actuary’s Department had valued the surplus at
£1.707 billion. The value of this surplus is subject to change depending on performance
of future investments and changes to underlying valuation assumptions. Therefore the
amount receivable by the Department is not certain and is dependent on a surplus being
available on the Scheme in 2033. Based on the sizeable current surplus, the Department
considers a receipt from the scheme in 2033 to be probable.

Financial Statements
205
25 Related-party transactions
The core Department is the parent of the bodies
listed in Note 28 – 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, UKIPO, 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, Higher
Education Funding Council for England, UK
Green Investment Bank, UK Space Agency,
Engineering and Physical Sciences Research
Council, HM Revenue and Customs, the
Department for Environment, Food and Rural
Affairs, the Department for Communities and
Local Government, Office of Gas and Electricity
Markets, the Met Office and the 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 £21
million in grants from the core Department during
the year.
In the course of allocating funding during the
year, the 7 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.

Annual report and Accounts 2016–17
206
26 Third-party assets
The following are balances on accounts held in
BEIS’s name at banks but which are not BEIS’s
monies. They are held or controlled for the
benefit of third parties and are not included in
BEIS’s Accounts.
31 March 2017
31 March 2016 restated
Core
Department
and
Agencies
Departmental
Group
Core
Department
and
Agencies
Departmental
Group
£m
£m
£m
£m
Monetary assets such as bank balances and
monies on deposit
34
42
50
63
Total
34
42
50
63
The table above includes the following significant third-party assets:
On 31 March 2017 the core Department held
£21m (31 March 2016: £16.6m) transferred
from BNFL plc to meet the potential future
capitalisation requirements of the National
Nuclear Laboratory Ltd. These monies are held
in GBS (Government Banking Service) accounts.
On 22 October 2013 the Department took
over temporary management of the Iranian Oil
Company’s (IOC) interest in the Rhum gas field;
enabling co-management of the Rhum field with
the operator, and 50% owner, British Petroleum
(BP). This action was under the Hydrocarbons
(Temporary Management Scheme) Regulations
2013, which allows the Secretary of State (SoS)
of the Department to apply a temporary scheme
to the hydrocarbons interests of a listed person
which holds a relevant licence, where SoS
is satisfied that this is necessary to avoid or
remediate environmental damage and/or
prevent permanent destruction of the value
of the relevant licence.
On 16 January 2016 the IOC ceased to be a
listed, sanctioned entity by the EU and UK. The
Department completed an orderly handover of
the Rhum gas field management to the IOC by
the agreed deadline of 16 March 2016. The IOC
is now in full control of the management of their
interest in the Rhum gas field.
The IOC’s share of revenues from resumed
production was being held by the Department
in a separate dedicated account, on behalf of
the IOC. The IOC’s share of costs were funded
from this account and the balance of the funds
amounting to £25.9 million was paid over to IOC
in June 2016.

Financial Statements
207
27 Restatement of Statement of Financial Position and
Statement of Comprehensive Net Expenditure as a
result of Machinery of Government (MoG) changes,
changes to the Designation Order and other
restatements
Machinery of Government (MoG) changes
(accounted for as transfer by merger)
BEIS has had several MoG changes affecting
its Estimate and Accounts for the year ended
31 March 2017, where functions or responsibilities
have been merged or transferred within
Government. A function is an identifiable
business operation with an integrated set of
activities, staff and recognised assets and
liabilities, and changes are accounted for using
merger accounting in accordance with the FReM.
This requires the restatement of the Primary
Statements and the associated Notes
to the Accounts.
The creation of BEIS from the merger of
BIS and DECC, and transfer out of functions
from BIS to Department for Education
(DfE), Department for International Trade
(DIT) as a result of Departmental changes
announced in July 2016.
As a result of the Departmental changes
announced in July 2016, there were several MoG
changes effective from 1 April 2016:
• The transfer in to BEIS of BIS and DECC.
• The transfer out of Higher Education (HE),
Further Education (FE) and Apprenticeships
to Department for Education (DfE) from BIS.
In addition as a result of this MoG change,
the Construction Industry Training Board,
the Engineering Construction Industry
Training Board, the Higher Education
Funding Council for England, the Office
for Fair Access, the Skills Funding Agency,
the Student Loan Company and the UK
Commission for Education and Skills are no
longer consolidated within the Department’s
Accounts. To reflect the change in 2014-15
and 2015-16 comparative figures have been
restated. The Departmental Group’s net assets
decreased by £57,499 million and £42,437
million respectively and in 2015-16
net expenditure decreased by £2,016 million
as a result of this MoG change.
• The transfer out of the International Trade
and Export Control (ITEC) to Department for
International Trade (DIT) from BIS. To reflect
the change in opening balance sheet 2014-
15 and 2015-16 comparative figures, the
Departmental group’s net assets decreased
by £3 million in both years and in 2015-16
net expenditure decreased by £15 million
as a result of this MoG change.
As part of alignment of accounting policies
of BIS and DECC, receipts from the Nuclear
Decommissioning Authority and Coal Authority
for onward payment to the Consolidated Fund
will be processed by the core Department as
agent rather than recognised as income (this
change impacts the core Department only
and has no effect on the Group).
Also part of the alignment of accounting
policies, the Department’s investments in other
public sector bodies that are outside of the
departmental boundary and not consolidated
are held at fair value. In DECC these had been
reported at historical cost whereas in BIS net
assets of the entities was used. Across the BEIS
Departmental Group, net assets is now used as
the most appropriate measure of fair value. The
core Department’s net assets increased by £65
million and £57 million in 2015-16 and 2014-
15 and the Departmental Group’s net assets
increased by £235 million and £225 million in
2015-16 and 2014-15 respectively as a result
of this MoG change.
In addition to the creation of BEIS, the following
MoG changes were previously announced and
implemented during 2016-17.
Transfer of Offender Learning and Skills
Service to Ministry of Justice
As a result of the Spending Review 2015, the
Offender Learning and Skills Service programme
transferred from 1 April 2016 from BIS to Ministry
of Justice. To reflect the change in 2015-16
comparative figures, the Departmental Group’s
net expenditure was decreased by £1million as
a result of this MoG change.

Annual report and Accounts 2016–17
208
Transfer of Shareholder Executive Group
to UK Government Investments
On 1 April 2016, the function of the Shareholder
Executive transferred from BIS to the Chancellor
of the Exchequer under a new body called
UK Government Investments. UK Government
Investments brings together the activities
of both the Shareholder Executive and UK
Financial Investments and is wholly owned by
the Chancellor of the Exchequer. To reflect the
change in 2015-16 comparative figures, the
Departmental Group’s net expenditure was
decreased by £11 million as a result of this MoG
change.
Transfer of Environmental Regulation to
the Department for Environment, Food and
Rural Affairs (DEFRA)
On 1 April 2016, Environmental Regulation
transferred from BIS to DEFRA. This has not
resulted in any impact on net expenditure or net
assets.
Transfers of functions (accounted for as
transfer by absorption)
In addition there were 3 transfers of functions
accounted for as transfers by absorption, where
the Departmental Group’s Primary Statements
and Notes have not been restated and the
transfers are accounted for prospectively.
• The transfer in of the National Measurement
Regulation Office (NMRO) activities to core
Department from 1 April 2016. This resulted
in £2.4 million of NMRO’s net assets being
transferred into the core Department. NMRO
was previously one of BIS’ agencies. This
transfer was between the core Department and
an Executive Agency and has had no net effect
on the presentation of financial statements as
the transfer is reflected within the Core and
Agencies column (see note 27.1 below).
• The transfer out of BEIS Criminal Enforcement
to Insolvency Service from 1 January
2017. This transfer was between the core
Department and an Executive Agency and
has had no net effect on the presentation of
financial statements as the transfer is reflected
within the Core and Agencies column.
• The transfer out of the Oil and Gas Authority
to the Oil and Gas Authority limited company
from 1 October 2016. This transfer was
between an Executive Agency and a Non-
departmental Public Body.
These transfers have no impact on the financial
statements as they are within the Departmental
Group.
Changes to the Departmental boundary
Four GIB entities were added to the Designation
and Amendment Order in 2016-17, with a
retrospective classification, that affect the prior
year figures. The prior year figures have therefore
been restated to reflect the change in the
Departmental boundary.
These are:
• UK Green Investment Offshore Wind C L.P.
• UK Green Investment LID Limited
• UK Green Investment FCG Limited
• GLID Wind Farms Topco Limited
In addition, Fleetbank Funding Limited was
designated as a central government body. These
changes to the departmental boundary have
resulted in an increase in net assets of £437
million.
Changes in accounting policy
No changes in accounting policies were adopted
by the FReM in 2016-17.
Prior period restatements
In 2016-17 a prior period accounting error
was identified in relation to the over-release of
income from the revaluation reserve in relation to
Repayable Launch Investments.
In accordance with Department’s accounting
policy, repayments received in excess of historic
costs of an investment in the portfolio were
released to the Consolidated Statement of
Comprehensive Net Expenditure. It was identified
that this released was incorrectly calculated. As
a result CSoCNE was not materially overstated in
any individual financial year but, the over-release
had resulted in a material reduction in the value
of the revaluation reserve.
The Department has restated the 1 April 2015
reserves position, increasing the revaluation
reserve by £266 million and reduction in the
General Fund by £266 million. In 2015-16, the
income released has been decreased by
£7 million and revaluation reserve increased
by £7 million, resulting in a restated revaluation
reserve of £273 million.
The second restatement arises from elimination
in 2016-17 of intra-Group receivables relating
to funding of nuclear site licence company
retirement-benefit obligations against the Nuclear
Decommissioning Provision. In prior years they
had been eliminated against current accrued
expenses.

Financial Statements
209
Impact of restatements on opening balances for the Departmental Group at 31 March 2016
Nature of restatement
Balance at 31
March 2016
per 2015-16
published
accounts
(BIS)
Re-presented
balance at 31
March 2016
of the 2015-
16 published
accounts
(DECC)
Machinery of
Government
changes and
accounting
policy
alignments
Changes in
the boundary
Other prior
period
adjustments
Restated
balance at 31
March 2016
£m
£m
£m
£m
£m
£m
Consolidated Statement of Comprehensive Net Expenditure
Net expenditure
for the period
8,890
105,262
(2,046)
(6)
7
112,107
Other
comprehensive
net income and
expenditure
1,434
(19)
(14)
–
(7)
1,394
Total
comprehensive
expenditure
10,324
105,243
(2,060)
(6)
–
113,501
Consolidated Statement of Financial Position
Non-current
assets
64,167
4,159
(54,726)
506
–
14,106
Current assets
6,436
819
(3,892)
51
–
3,414
Current liabilities
(2,797)
(4,428)
354
(9)
(399)
(7,279)
Non-current
liabilities
(1,381)
(179,792)
996
(538)
399
(180,316)
General fund
(63,835)
179,334
57,390
(6)
273
173,156
Revaluation
reserve
(2,119)
(59)
(234)
–
(273)
(2,685)
Charitable funds
(423)
–
112
–
–
(311)
Minority interest
(48)
(33)
–
(4)
–
(85)
Statement of Parliamentary Supply
Resource DEL
16,819
1,405
(9,906)
–
–
8,318
Capital DEL
2,471
2,309
102
–
–
4,882
Resource AME
(7,826)
101,581
8,190
–
–
101,945
Capital AME
9,965
64
(11,642)
–
–
(1,613)
Net outturn for
the year
21,429
105,359
(13,256)
–
–
113,532

Annual report and Accounts 2016–17
210
Impact of restatements on opening balances for Core Department and Agencies
at 31 March 2016
Nature of restatement
Balance at 31
March 2016
per 2015-16
published
accounts
(BIS)
Re-presented
balance at 31
March 2016
of the 2015-
16 published
accounts
(DECC)
Machinery of
Government
changes and
accounting
policy
alignments
Changes in
the boundary
Other prior
period
adjustments
Restated
balance at 31
March 2016
£m
£m
£m
£m
£m
£m
Consolidated Statement of Comprehensive Net Expenditure
Net expenditure
for the period
10,377
4,385
(1,159)
–
7
13,610
Other
comprehensive
net income and
expenditure
241
(5)
(7)
–
(7)
222
Total
comprehensive
expenditure
10,618
4,380
(1,166)
–
–
13,832
Non-current
assets
59,465
488
(54,691)
–
–
5,262
Current assets
5,373
248
(3,754)
–
–
1,867
Current liabilities
(1,826)
(860)
860
–
–
(1,826)
Non-current
liabilities
(871)
(4,351)
213
–
–
(5,009)
General fund
(61,838)
4,482
57,436
–
273
353
Revaluation
reserve
(303)
(7)
(64)
–
(273)
(647)

Financial Statements
211
Impact of restatements on opening balances for the Departmental Group at 1 April 2015
Nature of restatement
Balance at 31
March 2015
per 2015-16
published
accounts
(BIS)
Re-presented
balance at 31
March 2015
of the 2015-
16 published
accounts
(DECC)
Machinery of
Government
changes and
accounting
policy
alignments
Changes in
the boundary
Other prior
period
adjustments
Restated
balance at 31
March 2015
£m
£m
£m
£m
£m
£m
Consolidated Statement of Financial Position
Non-current
assets
50,870
2,827
(40,003)
–
–
13,694
Current assets
6,969
1,444
(3,391)
–
–
5,022
Current liabilities
(3,422)
(5,786)
774
–
(481)
(8,915)
Non-current
liabilities
(1,448)
(75,736)
445
–
481
(76,258)
General fund
(48,709)
77,334
42,263
–
266
71,154
Revaluation
reserve
(3,783)
(37)
(224)
–
(266)
(4,310)
Charitable funds
(433)
–
136
–
–
(297)
Minority interest
(44)
(46)
–
–
–
(90)
Impact of restatements on opening balances for Core Department and Agencies
at 1 April 2015
Nature of restatement
Balance at 31
March 2015
per 2015-16
published
accounts
(BIS)
Re-presented
balance at 31
March 2015
of the 2015-
16 published
accounts
(DECC)
Machinery of
Government
changes and
accounting
policy
alignments
Changes in
the boundary
Other prior
period
adjustments
Restated
balance at 31
March 2015
£m
£m
£m
£m
£m
£m
Consolidated Statement of Financial Position
Non-current
assets
45,074
332
(40,086)
–
–
5,320
Current assets
5,412
776
(3,138)
–
–
3,050
Current liabilities
(2,593)
(1,661)
765
–
–
(3,489)
Non-current
liabilities
(872)
(2,793)
126
–
–
(3,539)
General fund
(46,454)
3,348
42,391
–
266
(449)
Revaluation
reserve
(567)
(2)
(58)
–
(266)
(893)

Annual report and Accounts 2016–17
212
27.1
The National Measurement
and Regulation Office (NMRO)
transfer into BEIS core Department
As detailed in Note 27 above, 1 April 2016,
NMRO became part of the Regulatory Delivery
directorate within the core Department. This
resulted in £2.4 million of net assets transferring
from NMRO to the core Department. The full
effect of this transfer is shown below.
Transfer to BEIS
Statement of Comprehensive Net Expenditure
£'000
£'000
Loss on transfer
2,400
Statement of Financial Position
£'000
£'000
Non-current assets:
Property, plant and equipment
896
Heritage assets
127
Intangible assets
123
Trade and other receivables
200
Total non-current assets
1,346
Current assets:
Trade and other receivables
1,298
Cash and cash equivalents
785
Total current assets
2,083
Total assets
3,429
Current liabilities:
Trade payables and other liabilities
(1,029)
Total current liabilities
(1,029)
Non-current assets plus/less net current assets/ liabilities
–
2,400
Non-current Liabilities:
Trade payables and other liabilities
Total non-current liabilities
–
–
Total assets less liabilities
–
2,400
Taxpayers’ equity and other reserves:
General fund
2,197
Revaluation reserve
203
Total equity
–
2,400

Financial Statements
213
28 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 2016, 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 2016-17
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 27.
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 2016-17
Executive Agencies
Insolvency Service
Executive Agency
gov.uk/government/organisations/insolvency-
service
National Measurement and Regulation
Office1
Executive Agency
gov.uk/government/organisations/national-
measurement-and-regulation-office
UK Space Agency
Executive Agency
gov.uk/government/organisations/uk-space-
agency
Oil and Gas Authority2
Executive Agency
https://www.ogauthority.co.uk/
Crown Executive Non
Departmental Public Bodies
(NDPBs)
Advisory Conciliation and Arbitration
Service (ACAS)
Crown Executive 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
NDPBs and other designated
bodies
The Arts and Humanities Research
Council
Executive NDPB
ahrc.ac.uk
The Biotechnology and Biological
Sciences Research Council
Executive NDPB
bbsrc.ac.uk
BIS (Postal Services Act 2011)
Company Limited
Limited Company owned
by BEIS
Website not yet available
BIS (Postal Services Act 2011) B
Company Limited
Limited Company
Consolidated by BIS (Postal Services Act 2011)
Company Limited
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

Annual report and Accounts 2016–17
214
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)
British Business Aspire Holdco Ltd
Limited Company
Consolidated by British Business Bank plc
Capital for Enterprise Limited (CfEL)
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
Competition Service
Executive NDPB
catribunal.org.uk/244/Competition-Service.html
Competition Appeal Tribunal
Tribunal NDPB
catribunal.org.uk
Civil Nuclear Police Authority
Executive NDPB
gov.uk/government/organisations/civil-nuclear-
police-authority
Coal Authority
Executive NDPB
gov.uk/government/organisations/the-coal-
authority
Committee on Fuel Poverty
Advisory NDPB
gov.uk/government/organisations/committee-
on-fuel-poverty
Costs are included in the core Department’s
expenditure.
Committee on Radioactive Waste
Management
Advisory NDPB
gov.uk/government/organisations/committee-
on-radioactive-waste-management
The Copyright Tribunal
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.
Council for Science and Technology
Advisory NDPB
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
Council
Executive NDPB
esrc.ac.uk
The Engineering and Physical
Sciences Research Council
Executive NDPB
epsrc.ac.uk
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
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

Financial Statements
215
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)
Industrial Development Advisory
Board
Advisory NDPB
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.
Insolvency Practitioners Tribunal
Tribunal NDPB
gov.uk/government/organisations/insolvency-
practitioners-tribunal
No accounts produced as costs are included in
the core Department’s expenditure. It is funded
by BEIS and operated by the Insolvency Service.
LLW Repository Limited
Limited Company
llwrsite.com
Site Licence Company – private company, which
operates sites on behalf of, and under contract
from the NDA.
Low Carbon Contracts Company Ltd
Limited Company owned
by BEIS
lowcarboncontracts.uk/
Low Pay Commission
Advisory 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 Council
Executive NDPB
mrc.ac.uk
Midlands Engine Investments Limited
Limited Company owned
by BEIS
british-business-bank.co.uk/ourpartners/
midlands-engine-investment-fund/
The Natural Environment Research
Council
Executive NDPB
nerc.ac.uk
The NESTA Trust
Charitable Trust
nesta.org.uk/faqs/what_is_the_nesta_trust
Northern Powerhouse Investments
Limited
Limited Company owned
by BEIS
british-business-bank.co.uk/ourpartners/
northern-powerhouse-investment-fund/
Nuclear Decommissioning Authority
Executive 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
Advisory NDPB
gov.uk/government/organisations/nuclear-
liabilities-financing-assurance-board
Costs are included in the core Department’s
expenditure.
Office of Manpower Economics
Advisory NDPB
gov.uk/government/organisations/office-of-
manpower-economics
No accounts produced as costs are included in
the core Department’s expenditure.

Annual report and Accounts 2016–17
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)
Oil and Gas Authority2
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
Advisory 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)
Executive NDPB
stfc.ac.uk
STFC Innovations Limited
Limited Company
Consolidated by STFC
South Tees Site Company Limited
Limited Company owned
by BEIS
This is a vehicle for managing the Government
investment in the South Tees Site
Innovate UK (trading name of The
Technology Strategy Board)
Executive NDPB
innovateuk.org
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 Green Investment Bank plc
Public Limited Company
owned by BEIS
greeninvestmentbank.com
Aviva Investors Realm Energy Centres
Limited Partnership
Limited Partnership
Consolidated by UK Green Investment Bank plc
UK Energy Efficiency Investments 1
L.P.
Limited Partnership
Consolidated by UK Green Investment Bank plc
Energy Saving Investments L.P.
Limited Partnership
Consolidated by UK Green Investment Bank plc
UK Green Investment Bank Financial
Services Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Rhyl Flats
Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Sustainable Waste and
Energy Investments L.P.
Limited Partnership
Consolidated by UK Green Investment Bank plc
UK Waste Resources and Energy
Investments L.P.
Limited Partnership
Consolidated by UK Green Investment Bank plc
UK Green Community Lending Ltd
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Rampion
Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Gwynt y Mor
Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Climate
International Limited
Limited Company
Consolidated by UK Green Investment Bank plc
The Recycling and Waste L.P.
Limited Partnership
Consolidated by UK Green Investment Bank plc
Green Investment Bank Offshore Wind
Fund LP
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Offshore Wind
B L.P.
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Co-investment
Lyle Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment FCG Limited
Limited Company
Consolidated by UK Green Investment Bank plc

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)
UK Green Investment LID Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Lyle Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Offshore Wind
C L.P.
Limited Partnership
Consolidated by UK Green Investment Bank plc
UK Green Investment Offshore Wind
Co-Investment L.P.
Limited Partnership
Consolidated by UK Green Investment Bank plc
UK Green Investment OSWF Lyle
Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment (OSW) GP
Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Green Investment Sheringham
Shoal Limited
Limited Company
Consolidated by UK Green Investment Bank plc
GLID Wind Farms TopCo Limited
Limited Company
Consolidated by UK Green Investment Bank plc
Lyle JV Holdings Limited
Limited Company
Consolidated by UK Green Investment Bank plc
UK Shared Business Services Limited
Limited Company
uksbs.co.uk
RCUK Shared Services Centre Limited
Limited Company
Consolidated by UK Shared Business Services
Limited
United Kingdom Atomic Energy
Authority
Executive NDPB
gov.uk/government/organisations/uk-atomic-
energy-authority (corporate)
ccfe.ac.uk (fusion research)
AEA Insurance Ltd
Limited Company
Consolidated by United Kingdom Atomic Energy
Authority
(b) Bodies not consolidated in Departmental Group accounts for 2016-17
Advanced Propulsion Centre UK
Limited
Limited Company
www.apcuk.co.uk/
Turnover and net assets are not material
to Departmental Group accounts.
Aerospace Technology Institute
Limited Company
ati.org.uk/
Turnover and net assets are not material
to Departmental Group accounts.
British Business HoldCo Ltd
Limited Company
No accounts produced as dormant company in
2016-17 prior to being dissolved on 19 April 2016
British Hallmarking Council
Executive NDPB
gov.uk/government/organisations/british-
hallmarking-council
Turnover and net assets are not material
to Departmental Group accounts.
Committee on Climate Change
Executive NDPB
theccc.org.uk/about/
Turnover and net assets are not material
to Departmental Group accounts.
Daresbury SIC (Pub Sec) LLP
(Daresbury Science and Innovation
Campus Public Sector Limited Liability
Partnership)
Limited Liability Partnership
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 (Daresbury Science
and Innovation Campus Limited
Liability Partnership (Sci-Tech
Daresbury))
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.

Annual report and Accounts 2016–17
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)
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 2016/17
as the activities transferred to Magnox
UK Climate Investments VC Limited
Limited Company
Limited company holding investment by
the UK Climate Investments LLP.
Turnover and net assets are not material
to Departmental Group accounts.
Wave Hub Limited3
Limited Company
wavehub.co.uk
Turnover and net assets are not material
to Departmental Group accounts.
1
The activities of the National Measurement and Regulation Office, transferred to BEIS core Department on 1 April 2016
2
The activities of the Oil and Gas Authority (agency) transferred to the Oil and Gas Authority limited company owned by
BEIS from 1 October 2016
3
Wave Hub Limited transferred from BEIS’s ownership to Cornwall Council on 31 March 2017

Financial Statements
219
29 Events after the
Reporting Period
Machinery of Government Changes
Transfer of International Education programmes
to Department for Education
As a result of the Departmental changes
announced in July 2016 and a subsequent
ministerial decision in March 2017, from 1 April
2017 the International Education programme
transferred from the Secretary of State for
Business, Energy and Industrial Strategy to
the Secretary of State for Education. These
programmes encompass:
– European University Institute subscriptions
– Erasmus and other European Education
programmes
– Global Science
A budget of £13 million will be transferred
with the programmes.
Transfer of the BEIS Advisory Legal Team
to the Government Legal Department
On 1 April 2017, the BEIS Advisory Legal team
transferred to the Government Legal Department
(GLD), the Government-shared legal service
for advisory legal work and civil litigation. The
strategic rationale of this transfer enables the
greater critical mass of the GLD to enhance the
flexibility and resilience of BEIS’s legal support.
The move facilitates even closer working
between BEIS Legal and the other parts of GLD
on the many common issues that BEIS faces.
Establishment of UK Research
and Innovation
The Higher Education and Research Bill
received Royal Assent on 27 April 2017. Under
the provisions of this legislation, UK Research
and Innovation will be established as a single,
strategic body that will bring together the 7
research councils, Innovate UK and the research
and knowledge exchange functions of the Higher
Education Funding Council for England, to be
known as Research England. It is anticipated that
UK Research and Innovation will be established
on 1 April 2018.
29.1 Date Accounts authorised for issue
BEIS’s Accounting Officer has authorised these
Accounts to be issued on the same day as they
were certified.

Harwell Campus
Harwell Campus, Oxfordshire
Trust
Statement

Trust Statement
221
Accounting Officer’s Foreword
to the Trust Statement
Scope
The Department of 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 and the Climate
Change Agreements (CCA) Scheme. The
Department is also responsible for: expenses
incurred in the collection of these receipts; the
revenue and expenditure; and the cash flows.
On 1 April, 2015 the Oil and Gas Authority (OGA)
was formed as an Executive Agency of the
Department and was responsible for collection
and allocation of the receipts from the Petroleum
Licensing Regime. In 2015-16 it was agreed on
efficiency grounds that the Petroleum Licence
fees collected by the OGA and paid over to
the Consolidated Fund would be included in
the Departmental Trust Statement for financial
reporting purposes.
As the OGA became a Government company
on 1 October 2016, in 2016-17 the OGA has
prepared its own Trust Statement. This will
include the petroleum licence receipts for 2016-
17 with prior year comparatives. These prior year
comparatives are also in the Departmental Trust
Statement for 2015-16.
The assets and liabilities related to petroleum
licence fees on 1 April 2016 were as follows;
cash of £15.177 million, receivables of £9.109
million and other liabilities of £5.070 million
represented by reserves of £19,216 million. These
were removed from the Departmental Trust
Statement by a movement on reserves, where
£19.216 million represented the amount due to
the Consolidated Fund.
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 2016-
17. These amounts are collected by the
Department for payment into the Consolidated
Fund;
• Revenues, expenditure, assets and liabilities
relating to the receipts of Petroleum Licences
under The Petroleum Act 1998 for the financial
year 2015-16, but not 2016-17. These amounts
are collected and now reported by the OGA
for payment to 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 2016-17. 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 Target 1
reporting period; and
• 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.
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 2016–17
222
Background
EU ETS
The EU Emissions Trading Scheme is designed
to reduce greenhouse gas (GHG) emissions at
the lowest cost to the European 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. 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 small 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 Scheme. 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 companies
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 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 is 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 will
be 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 Department has extended
the contract with ICE by a further 2 years, until
November 2017, the maximum allowed for in
the EU Auctioning Regulation. The full schedule
for Phase III auctions is available on the ICE
emissions auctions web pages at www.theice.
com/emissions/auctions. The UK has completed
an exercise through the Official Journal of the
European Union to re-procure the UK’s auction
platform upon expiry of the current contract
in November 2017. The UK Government has
identified ICE Futures Europe as the preferred
supplier. On 27 April 2017, EU Member States
voted in favour of an amendment to the
Auctioning Regulation for a new listing of the
UK’s auction platform. Following the clearance
of EU Parliament and Council scrutiny, the formal
listing is expected to be complete in Q3 of 2017
to enable the smooth continuation of the UK’s
EU ETS auctions in November 2017.
The UK held 25 auctions of EUA allowances in
2016/17. All but one of these auctions cleared
successfully. The auction on 14 December was
cancelled as a result of the total volume of bids
falling short of the volume of the allowances
being auctioned. The allowances were
distributed over the next 4 auctions,as
required by the Auctioning Regulation.
There was one EUAA auction of 921,000
allowances held in 2016/17. This was held
on the 26 October 2016 and covered the
2016 compliance year. The auction cleared
successfully.

Trust Statement
223
Petroleum Licences
The Petroleum Act 1998 vests in the Crown all
rights to the nation’s petroleum resources. The
Act gives the Secretary of State powers to grant
licences that confer exclusive rights to “search
and bore for and get” petroleum. Each of these
licences confers such rights over a limited area
and for a limited period.
Following the creation of the OGA as an
executive agency of the Department and
the subsequent transfer of operations to the
government company, the OGA is responsible
for issuing and administering these licences
and reporting them through their own Trust
Statement.
The amount reported in 2016-17 in the
Departmental Trust Statement in respect of
licence rental fees is £nil in 2016-17 and £70
million in 2015-16.
CRC
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 2000 participants in the
scheme for the second phase.
The CRC tackles 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 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 (NB
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 would be
the same as the equivalent compliance buy to
comply price. This financial year 2016-17 saw the
third forecast sale for Phase II of the scheme.

Annual report and Accounts 2016–17
224
Climate Change Agreements (CCAs)
Climate Change Agreements (CCAs) are
voluntary agreements that allow eligible energy-
intensive sectors to receive up to a 90%
reduction in the Climate Change Levy (CCL)
if they sign up to stretching energy efficiency
targets agreed with Government.
The new CCA scheme was launched on 1 April
2013 and contains 53 industrial sectors across
more than 8,000 sites. 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.
A number of simplifications were made to the
scheme when it was launched in 2013. These
include:
• The Environment Agency administering
the new scheme on a cost-recovery basis,
providing a simplified and streamlined
approach to administration for both
Government and Industry;
• Participants being able meet their targets
either by direct action, or by using a buy-out
mechanism for any shortfall against targets.
Any over-achievement by a target unit may be
banked and used by that target unit against
future targets without having to be verified by
a third party; and
• The introduction of civil penalties for minor
infractions not warranting decertification
or termination.
These simplifications mean that there are
3 potential money streams:
1. Charging Income – Payments 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.
2. 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.
3. Buy-out Payments – Payments made by
participants at the end of each 2-year target
period in cases where CCA targets are
not met. Payments are calculated on the
basis of £12 per tonne of CO2 by which the
target is exceeded. 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.
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.
Energy Savings Opportunity Scheme
The Energy Savings Opportunity Scheme
(ESOS) is an energy assessment scheme that
is mandatory for all large undertakings in the
UK. 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 carry 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.
The Department’s analysis indicates that
around 7,500 Ultimate Parent organisations will
participate in the scheme. It is estimated that
ESOS would deliver a net benefit to the UK of
£1.6 billion (over 15 years), with the vast majority
being felt by business through lower energy bills.
This benefit will be realised if each participant in
the scheme makes an average energy reduction
of 0.7% as a result of implementing cost effective
energy efficiency opportunities identified through
audits.
The Environment Agency (EA) and equivalent
regulators in the devolved administrations are
responsible for ensuring compliance with ESOS.
Participants who fail to comply with the scheme
could be fined up to £50,000 by the EA.
There are currently no charges for registering
for the scheme. The income stream consists of
penalties for non-compliance with the regulations
and these can only be issued after 29 January
2016 (the grace period allowed for compliance
in the first phase, after the 5 December 2015
regulatory deadline). Confirmation has been given
that no penalties have been issued for 2016-17.

Trust Statement
225
Future developments
EU ETS
The Department has agreed a schedule of
Phase III general allowance auctions through to
November 2017. The Department will announce
further auctions for 2017 following the listing of
the UK’s new auction platform in EU legislation
(expected in Q3 of 2017).
Negotiations on Phase IV of the EU ETS (which
runs from 2021–2030) are expected to conclude
later in 2017. Both the European Council and
European Parliament agreed their negotiation
positions in February 2017 to enter trilogue
negotiations.
Petroleum Licences
The OGA’s Trust Statement for 2016-17 can be
found at: www.ogauthority.co.uk
CRC
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
As part of the Budget in March 2016, the
Government announced that CRC would close
following the 2018-19 compliance year, with
no purchase of allowances required to cover
emissions for energy supplied from April 2019.
The 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 will work with
the devolved administrations on scheme closure
arrangements.
Energy Savings Opportunity Scheme
No future developments are ascertained.
Remote Contingent Liabilities
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 2-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 remote contingent liability is
disclosed. In accordance with accounting
standards, no contingent assets can be
recognised.
During this 2-year period, which includes the
full duration of the next accounting period, the
UK remains a full member of the EU with all the
rights and obligations arising from membership.
There are no significant impacts on the financial
statements in the short term from making the
formal notification.

Annual report and Accounts 2016–17
226
Financial Review
EU ETS
The UK has held 24 EUA auctions and one EUAA
auction between 1 April 2016 and 31 March 2017
that yielded income of £387 million (whereas the
same period in 2015-16 yielded £415 million) as
shown in Note 2.2 of the Trust Statement. All the
auctions were wholly competitive auctions.
For each auction the total amount received was
passed to the Consolidated Fund within a few
days of the auction. The timing of the revenues
in euros and onward transfer in sterling gave
rise to exchange differences in the case of each
auction totalling £211,000 (2015-16: £432,000).
These exchange differences are recognised in
the Statement of Revenue, Other Income and
Expenditure.
In 2016-17, there were 54 civil penalties totalling
£0.97 million levied under the EU ETS scheme
by the Environmental Agency as regulator for the
year under review (2015-16: 242 penalties totaling
£4.9 million). There were also 9 penalties totalling
£1.5 million issued by the Offshore Petroleum
Regulator for Environment and Decommissioning
(OPRED) in 2016-17 which are reported here for
the first time.
Most of the penalties relate to non-compliance
with targets for installations in the UK small
emitter opt-out scheme, who have opted out
of the main requirements of the ETS. The opt-
out requires that installations have to keep their
emissions below a set target; for every tonne
of CO2 emitted above their target, a penalty is
charged, which is not subject to appeal. Some of
these penalties (for example on aviation) relate to
previous compliance years.
However, the offshore industry is regulated by
OPRED, a discrete directorate within BEIS. The
relevant Civil Sanctions Guidance has been
published alongside the civil penalties so far
applied. These are related to a backlog of failures
to surrender sufficient allowances and failures to
comply with a permit condition. OPRED expects
the number of penalties to increase in the near
future as a number of compliance issues are
identified.
The costs associated with administering
the scheme were borne by the Department
as shown in Note 3 and included within the
Department’s Accounts.
CRC
Allowance sales under the CRC Scheme
generated £750 million (2015-16: £755m).
There were 10 civil penalties levied against
companies participating in the CRC Scheme in
the financial year under review. The civil penalties
amounted to £59,420 (2015-16: £110,000).
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.
CCA
Buy-out payments income generated from the
Phase 1 reporting cycle of the CCA generated
£94,000 in 2016-17 (£22.5 million in 2015-16). The
drop in income for 2016-17 is explained by the
fact that this was a period of secondary reporting
for target reporting period 1, where participants
make further top-up buy-out payments after
an audit or they receive a refund if they have
overpaid.
Auditors
These financial statements have been audited,
under the Government Resources and Accounts
Act 2000, by the Comptroller and Auditor
General (C&AG), who is appointed under statute
and reports to Parliament. The audit opinion
is on pages 229 to 230. 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
under section 7(2) of the Government Resources
and Accounts Act 2000, 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 and CCA 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
227
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 in the
financial year and consequently do not require
accounting judgements to be made.
Events after the reporting period
Details of events after the reporting period are
given in Note 11 to the Trust Statement.
Governance Statement
The Department’s Governance Statement,
covering both the Accounts and the Trust
Statement, is included in Governance section of
this Report.
Alex Chisholm
Principal Accounting Officer
and Permanent Secretary
13 July 2017

Annual report and Accounts 2016–17
228
Statement of the Accounting Officer’s
Responsibilities in Respect of the Trust Statement
Under section 7 of the Government Resources
and Accounts Act 2000, 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 Emissions
Trading Scheme (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 CCA,
CRC, ESOS and EU ETS 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 state 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; and
• 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; and
• 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. I have
received appropriate assurances from the former
accounting officers who served this department
and its predecessors, Sir Martin Donnelly and
Stephen Lovegrove. As far as I am aware, there
is no relevant audit information of which the
Department’s auditors are unaware.
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
Principal Accounting Officer
and Permanent Secretary
13 July 2017

Trust Statement
229
The certificate and report of the
Comptroller and Auditor General
to the House of Commons
I certify that I have audited the financial
statements of the Department for Business,
Energy and Industrial Strategy Trust Statement
for the year ended 31 March 2017 under the
Government Resources and Accounts Act 2000.
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. These
financial statements have been prepared under
the accounting policies set out within them.
Respective responsibilities of the
Accounting Officer and Auditor
As explained more fully in the Statement of
Accounting Officer’s Responsibilities in Respect
of 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. My responsibility is to audit,
certify and report on the financial statements in
accordance with the Government Resources
and Accounts Act 2000. I conducted my audit
in accordance with International Standards
on Auditing (UK and Ireland). Those standards
require me and my staff to comply with the
Auditing Practices Board’s Ethical Standards
for Auditors.
Scope of the audit of the financial
statements
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. This includes an assessment of:
whether the accounting policies are appropriate
to the circumstances of the Department for
Business, Energy and Industrial Strategy Trust
Statement and have been consistently applied
and adequately disclosed; the reasonableness
of significant accounting estimates made by the
Department for Business, Energy & Industrial
Strategy; and the overall presentation of the
financial statements. In addition I read all the
financial and non-financial information in the
Accounting Officer’s Foreword to the Trust
Statement to identify material inconsistencies
with the audited financial statements and
to identify any information that is apparently
materially incorrect based on, or materially
inconsistent with, the knowledge acquired by
me in the course of performing the audit. If
I become aware of any apparent material
misstatements or inconsistencies I consider
the implications for my certificate.
I am required to obtain evidence sufficient to
give reasonable assurance that the expenditure
and income recorded in the financial statements
have been applied to the purposes intended
by Parliament and the financial transactions
recorded in the financial statements conform to
the authorities which govern them.
Opinion on regularity
In my opinion, in all material respects 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.

Annual report and Accounts 2016–17
230
Opinion on financial statements
In my opinion:
• the Department for Business, Energy and
Industrial Strategy 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 2017 and of the
net revenue for the year then ended; and
• the financial statements have been properly
prepared in accordance with the Government
Resources and Accounts Act 2000 and HM
Treasury directions issued thereunder.
Opinion on other matters
In my opinion:
• the information given in the Accounting
Officer’s Foreword to the Trust Statement
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 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
17 July 2017
National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

Trust Statement
231
Statement of Revenue,
Other Income and Expenditure
for the year ended 31 March 2017
2016-17
2015-16
Revenue
Note
£’000
£’000
Licence fees and taxes
Carbon Reduction Commitment allowance sales
2.1
750,179
755,026
EU Emissions Trading Scheme auction income
2.2
387,264
415,232
Petroleum licences
2.3
–
70,225
Climate Change Agreements buy-out payments income
2.4
94
22,538
Total licence fees and taxes
1,137,537
1,263,021
Fines and penalties
Civil penalties – EU Emissions Trading scheme
2.5
2,472
4,862
Civil penalties – CRC Scheme
2.5
59
110
Total fines and penalties
2,531
4,972
Total revenue and other income
1,140,068
1,267,993
Expenditure
EU Emissions Trading Scheme costs
3.1
(218)
(437)
Credit losses – debts written off
3.2
(–)
(42)
Total expenditure
(218)
(479)
Disbursements
Northern Ireland Government payments
3.3
–
(1,600)
Total disbursements
–
(1,600)
Total expenditure and disbursements
(218)
(2,079)
Net revenue for the Consolidated Fund
1,139,850
1,265,914
Transfer of petroleum licence net assets to OGA
(19,216)
–
Net revenue for the Consolidated Fund
1,120,634
1,265,914
There were no recognised gains or losses
accounted for outside the above Statement
of Revenue, Other Income and Expenditure.
The notes on pages 234 to 241 form part
of this statement.

Annual report and Accounts 2016–17
232
Statement of Financial Position
as at 31 March 2017
31 March 2017
31 March 2016
Note
£’000
£’000
Current assets
Receivables and accrued fees
4
2,453
11,320
Cash and cash equivalents
5
17,087
28,684
Total current assets
19,540
40,004
Current liabilities
Payables
6
(518)
(1,600)
Deferred revenue
7
(–)
(3,470)
Total current liabilities
(518)
(5,070)
Net current assets
19,022
34,934
Total net assets
19,022
34,934
Represented by:
Balance on Consolidated Fund Account
8
19,022
34,934
The notes on pages 234 to 241 form part
of this statement.
Alex Chisholm
Principal Accounting Officer
and Permanent Secretary
13 July 2017

Trust Statement
233
Statement of Cash Flows
for the year ended 31 March 2017
2016-17
2015-16
Note
£’000
£’000
Net cash flows from operating activities
A
1,140,126
1,263,684
Cash paid to the Consolidated Fund
(1,136,546)
(1,205,942)
Cash for Petroleum Licences paid to the
Consolidated Fund
(15,177)
(72,185)
Increase/(decrease) in cash in this period
B
(11,597)
(14,443)
Notes to the Statement of Cash Flows
2016-17
2015-16
A: Reconciliation of Net Cash Flow
to Movement in Net Funds
Net Revenue for the Consolidated Fund
1,120,634
1,265,914
Non-cash movement – Transfer of petroleum
licences to OGA
8
19,216
–
(Increase)/decrease in receivables and accrued
income
4
(242)
(5,550)
Increase/(decrease) in payables and deferred
income
6, 7
518
3,320
Net cash flows from revenue activities
1,140,126
1,263,684
B: Analysis in changes in Net Funds
Increase/(decrease) in cash in this period
(11,597)
(14,443)
Net Funds as at 1 April (net cash at bank)
5
28,684
43,127
Net Funds as at 31 March (closing balance)
5
17,087
28,684
Please note that the movement in receivables
and payables does note reconcile to prior year
due to the transfer of associated amounts to the
Oil and Gas Authority (OGA). These are included
in the non-cash movement line in section A:
Reconciliation of Net Cash Flow to Movement
in Net Funds. The notes on pages 234 to 241
form part of this statement.

Annual report and Accounts 2016–17
234
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
7(2) of the Government Resources and
Accounts Act 2000. The Trust Statement
is prepared in accordance with the
accounting policies detailed below.
These have been agreed between the
Department of 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. In prior years
the petroleum licences which the OGA
administers were included. However
in 2016-17 the OGA’s operations were
transferred to a government company.
Therefore the OGA is now preparing its
own Trust Statement for the petroleum
licences. This transfer is reflected by use of
absorption accounting principles showing
the transfer of net petroleum licence assets
to the OGA.
The financial information in the Trust
Statement is rounded to the nearest £’1000.
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 Emissions Trading Scheme receipts
represent proceeds from the auction of
carbon allowances under Phase III and
aviation allowances of the EU Emissions
Trading Scheme. 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.
CRC participants may request refunds
for over-surrendered allowances (Note
10 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; and
• 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

Trust Statement
235
are measured at fair value calculated at
the close of each auction and have a
maturity of less than 3 months; and
• civil penalties levied against participants
in the EU ETS, CCA and CRC Schemes,
amounts for which have not been
received at the financial year end.
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 3 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; and
• 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; and
• Deferred revenue which represents
petroleum licence income invoiced and
received in advance relating to a future
financial year.
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.
2 Revenue
2.1
Carbon Reduction Commitment
Allowance sales
2016-17
2015-16
£’000
£’000
Allowance
sales
750,179
755,026
Total
750,179
755,026
2.2
EU Emissions Trading Scheme
auction income
2016-17
2015-16
£’000
£’000
Phase III
Auctions
Income
382,461
401,911
Aviation
Auctions
Income
4,803
13,321
Total
387,264
415,232
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 theice.com/
emissions/auctions.

Annual report and Accounts 2016–17
236
2.3
Petroleum licence income
2016-17
2015-16
£’000
£’000
Fees
receivable
–
70,225
Total
–
70,225
OGA are responsible for petroleum licence
income, which in 2015-16 as reported
in the Departmental Trust statement. In
2016-17 OGA are preparing a separate
Trust Statement so only the prior year
comparatives are shown here.
2.4
Climate Change Agreement income
2016-17
2015-16
£’000
£’000
Buy-out
payment
income
receivable
94
22,538
Total
94
22,538
Buy-out payments income generated from
the Phase 1 reporting cycle of the CCA
generated £94,000 in 2016-17 2015-16:
£22.5 million. The drop in income for 2016-
17 is explained by the fact that this was a
period of secondary reporting for target
reporting period 1, where participants
make further top-up buy-out payments
after an audit, or they receive a refund
if they have overpaid.
2.5
Civil penalties
2016-17
2015-16
£’000
£’000
Levied under
EU ETS
Scheme
2,472
4,862
Levied under
CRC Scheme
59
110
Total
2,531
4,972
There were 64 civil penalties totalling
£2,471,990 (2015-16: 242 penalties totalling
4,861,929), levied under the EU ETS
scheme for the year under review. CRC
penalties of £59,420 were recognised in
2016-17 (2015-16 £110,453).
Additionally for 2016-17, the income
incorporates offshore EU ETS penalties
alongside onshore and aviation EU ETS
penalties.
3 Expenditure and
disbursements
3.1
Costs incurred in the collection
of receipts
2016-17
2015-16
£’000
£’000
Foreign
currency
translation
costs (EU ETS)
211
432
Bank charges
on Euro
auction bank
account (EU
ETS)
7
5
Total
218
437
3.2
Credit losses
2016-17
2015-16
£’000
£’000
Specific bad
debts written
off – EU ETS
penalties
–
42
Total
–
42
A single penalty of £42,217.95 shown as
a receivable in 2014-15 was written off in
2015-16 as the company was dissolved.

Trust Statement
237
3.3
Disbursements
2016-17
2015-16
£’000
£’000
Payments
to Northern
Ireland
Government
–
1,600
Total
–
1,600
Prior to 2016-17, disbursements
represented payments to the Northern
Ireland government. This was to reflect
their share of the proceeds received by the
Department under the Petroleum Licensing
Regime administered by the OGA. These
payments are made under Section 2 of
the Miscellaneous Financial Provisions Act
1968. There are no outstanding amounts
at the reporting date under Payables
(Note 6) as for 2016-17 they are reported
in the OGA’s Trust Statement. In addition
to the costs and disbursements above
the Department incurred expenditure
of £664,175 (2015-16: £1.448 million)
in administering EU ETS and £657,787
(2015-16: £430,882) in respect of the CRC
Scheme. Expenditure to administer the
CCA scheme totalled £457,610 (2015-16:
£501,275). Expenditures on EU ETS, 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
2016-17
2015-16
£’000
£’000
Petroleum
licence fees
receivable
–
8,719
Civil penalties
receivable
2,453
2,211
Accrued
petroleum
licences
receivable
–
390
Total
2,453
11,320
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
2016-17
2015-16
£’000
£’000
Balance as at
1 April
28,684
43,127
Net change in
cash and cash
equivalent
balances
(11,597)
(14,443)
Balance
at 31 March
17,087
28,684
The following
balances at 31
March were
held at:
Government
Banking
Service
17,087
28,684
Total
17,087
28,684

Annual report and Accounts 2016–17
238
6 Payables
2016-17
2015-16
£’000
£’000
Accruals
–
1,600
Other
518
–
Total
518
1,600
7 Deferred revenue
2016-17
2015-16
£’000
£’000
Deferred Petroleum
Licence revenue
–
3,470
Total
–
3,470
8 Balance on the
Consolidated Fund
Account
2016-17
2015-16
£’000
£’000
Balance on the
Consolidated
Fund as at 1
April
34,934
47,147
Net revenue for
the Consolidated
Fund
1,139,850
1,265,914
Transfer of
Petroleum
licences to OGA;
(19,216)
–
Less amounts
paid to the
Consolidated
Fund
(1,136,546)
(1,278,127)
Balance on the
Consolidated
Fund as at 31
March
19,022
34,934
9 Financial instruments
9.1
Classification and categorisation
of financial instruments
2016-17
2015-16
£’000
£’000
Financial
assets:
Cash
5
17,087
28,684
Petroleum
licence fees
receivable
4
–
8,719
Civil penalties
receivable
4
2,453
2,211
Accrued
petroleum
licence fees
receivable
4
–
390
Total
loans and
receivables
19,540
40,004
Financial
liabilities:
Accruals
6
(–)
(1,600)
Other
payables
(518)
(–)
Deferred
revenue
7
(–)
(3,470)
Total other
financial
liabilities
(518)
(5,070)
9.2
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 £211,000
(2015-16: £432,000). 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.

Trust Statement
239
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 one
infrastructure civil penalty was written
off in 2015-16 (Note 3.2) as the company
concerned was dissolved.
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 of the Department’s
Accounts.
10 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. A refund is due where a
participant has undergone review or audit
procedures and it is deemed they have
overpaid. The Department must retain
sufficient funds in order to satisfy this
requirement of the CCA scheme.
11 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.

Annual report and Accounts 2016–17
240
Annex D
Accounts Direction given by HM Treasury
in accordance with section 7(2) of the
Government Resources and Accounts
Act 2000.
1. This direction applies to the Department for
Business, Energy and Industrial Strategy.
2. The Department shall prepare a Trust
Statement (“the Statement”) for the financial
year ended 31 March 2017 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 2016-17.
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.
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.

Vicky Rock
Deputy Director, Government Financial
Reporting Her Majesty’s Treasury
2 June 2017

Trust Statement
241
Appendix 1
Trust Statement for the year ended
31 March 2017
1. The Trust Statement shall include:
• a Foreword by the Principal Accounting Officer;
• a Statement of the Principal Accounting
Officers Responsibilities;
• a Governance Statement;
• a Statement of Revenue, Other Income and
Expenditure;
• a Statement of Financial Position;
• a Cash Flow Statement; and
• 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; and
• any other notes agreed with HM Treasury
and the National Audit Office.
Sponsoring
Department
Income
Stream
Responsible
Entity
Department of
Business, Energy
and Industrial
Strategy
EU Emissions
Allowance
BEIS
Fines and
Penalties
BEIS
CRC
Allowances
BEIS
CCA Buy-Out
Payments
BEIS

Core Technology Facility, Newcastle Univeristy campus
Annexes

Annexes
243
Annex A: Our major projects
and programmes
At the end of September 2016, the Department
had 10 major projects listed in the Government
Major Projects Portfolio (GMPP), summarised in
the table below. Transparency data on project
cost and delivery confidence are published
annually alongside the Infrastructure and Projects
Authority’s Annual Report.
Project
Description
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.
Geological Disposal
Facility (GDF)
Programme
To site and construct a safe, secure and environmentally responsible
permanent geological disposal facility for higher-activity radioactive
waste across England, Wales and Northern Ireland.
Heat Networks
Investment Project
To provide £320 million of time-limited capital support to support
the construction of heat networks projects in England and Wales.
Local Land Charges
(LCC) Programme
To deliver a single LLC Register Service for England to provide a national
resilient service, consistency of customer experience and fees.
Magnox and
Research Sites
Restoration Limited
(RSRL) Parent Body
Organisation (PBO)
Competition
To secure a reduction in the cost and time to deliver the outcomes of
the Magnox Optimised Decommissioning Plan and the Optimised RSRL
baseline by securing a new PBO for the Magnox and RSRL Site Licence
Companies.
New Polar Research
Vessel
Replace 2 existing polar research and supply vessels with
one dual-purpose ship. The single-ship option is planned to save
£102 million over 30 years.
Project Eagle
The Shareholder Executive is taking forward consideration of a sale
of Government’s one-third shareholding in Urenco, a uranium enrichment
company.
Sellafield Model
Change
Creating the environment for success at Sellafield by moving from
a PBO model to a subsidiary model.
Smart Metering
Implementation
Programme
To offer smart electricity and gas meters to every home in Great Britain by
2020, providing accurate bills, and enabling better-informed decisions on
energy consumption, faster switching, and a more flexible energy system.

Annual report and Accounts 2016–17
244
In addition, the Department had one major
project which left the GMPP between September
2015 and September 2016.
Project
Description
Carbon Capture
and Storage (CCS)
Commercialisation
Programme
To support practical experience in the design, construction and operation
of commercial-scale CCS power generation through the CCS competition.

Annexes
245
Annex B: Other Information
Advertising Campaigns
We delivered a £1.75 million UK-wide
communications campaign to raise awareness to
employees and employers of the 1 April increases
in the National Living Wage and National Minimum
Wage. The campaign was launched at the end
of February and included advertising on radio,
online, in regional newspapers and posters –
all up-weighted to the regions where higher
concentrations of the target audience reside.
Its aim was to ensure that eligible workers are
paid the correct rate, with support and guidance
on a campaign website checkyourpay.com.
The campaign drove more than 730,000 visits
to the website, far exceeding initial predictions.
Correspondence
We aim to respond to 80% of correspondence
within 15 working days. In 2016-17, we
responded to 13,094 cases with 71% replied to
within the deadline. The chart below shows the
core department’s performance responding to
correspondence from both Ministers and the public
Complaints to the
Parliamentary Ombudsman
In 2015-16 (latest data available), the ombudsman
accepted 16 complaints for investigation against
the department and the organisations that are
accountable to the department (2014-15: 16) and
upheld or partly upheld 6 complaints (2014-15: 5)16.
16
https://www.ombudsman.org.uk/sites/default/files/Complaints_about_parliamentary_departments_2015-16.pdf
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
73%
90%
83%
76%
53%
58%
82%
84%
78%
75%
61%
59%
Volume
Target Met %

Annual report and Accounts 2016–17
246
Annex C: Regulatory reporting
Table 1 - Public Spending
This table provides a summary of departmental
net expenditure using the same headings as
voted within the Estimate.
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Resource DEL
Deliver an ambitious
industrial strategy
200,403
300,436
288,168
438,821
425,529
189,693
176,681
154,795
Maximise investment
opportunities and
bolster UK interests
27,640
7,535
3,980
19,368
29,916
44,300
63,000
65,000
Promote competitive
markets and
responsible business
practices
55,945
85,943
70,324
71,495
73,852
83,485
83,137
95,914
Delivering
affordable energy
for households and
businesses
65,099
45,947
355,160
342,329
36,365
54,824
39,625
34,703
Ensuring that our
energy system is
reliable and secure
7,073
22,151
18,822
11,560
5,823
16,415
15,945
13,855
Taking action on
climate change and
decarbonisation
54,662
76,446
115,824
95,211
22,971
31,204
36,448
30,058
Managing our energy
legacy safely and
responsibly
340,708
336,433
318,312
306,343
291,203
281,371
258,405
238,786
Science and
Research
53,806
(15,051)
10,819
13,540
(1,985)
3,550
7,148
7,170
Capability
380,370
370,967
408,745
361,322
307,082
477,901
490,879
423,264
Government as
Shareholder
401,055
387,362
243,220
199,823
173,660
160,896
112,468
102,950
Deliver an ambitious
industrial strategy
(ALB) net
16,704
(35,066)
(38,576)
5,619
5,489
3,000
22,080
21,660
Promote competitive
markets and
responsible business
practices (ALB) net
63,058
59,821
49,766
49,295
48,127
54,230
54,302
54,342
Ensuring that our
energy system is
reliable and secure
(ALB) net
0
0
(280)
674
1,707
258
258
258
Taking action on
climate change and
decarbonisation
(ALB) net
3,427
3,710
4,416
4,894
2,399
3,931
3,114
3,114

Annexes
247
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Managing our energy
legacy safely and
responsibly (ALB) net
24,424
29,121
23,188
46,977
39,234
23,177
24,800
23,731
Science and
Research (ALB) net
365,092
84,291
80,272
82,787
257,357
223,749
297,921
297,380
Capability (ALB) Net
59,591
68,597
59,268
39,218
39,818
9,800
9,800
9,800
Government as
Shareholder (ALB) net
99,432
72,153
16,238
(30,023)
(46,890)
(41,068)
(42,901)
(38,261)
NDA and SLC
expenditure
1,259,039
1,413,249
1,431,342
1,414,542
1,287,445
1,360,000
1,342,000
1,261,000
Nuclear
Decommissioning
Authority Income
(CFER)
(784,055)
(892,139) (1,008,787)
(974,558) (1,026,768)
(998,000)
(976,000)
(978,000)
Electricity Market
Reform
3,823
(4,851)
0
0
-
0
0
0
Total Resource DEL 2,697,296
2,417,055 2,450,221 2,499,237 1,972,334
1,982,716
2,019,110
1,821,519
Of which:
Staff costs
498,100
527,935
518,385
548,832
519,891
363,576
429,133
423,796
Purchase of goods
and services
2,016,160
2,279,269
2,200,717
2,231,691
2,017,981
1,951,253
1,924,922
1,811,543
Income from sales of
goods and services
(893,095) (1,027,176) (1,157,876) (1,144,381) (1,173,251) (1,030,906) (1,009,512) (1,018,452)
Current grants to
local government
(net)
14,087
7,253
18,354
25,513
12,055
8,956
6,180
2,177
Current grants to
persons and non-
profit bodies (net)
213,494
167,028
585,126
548,517
196,275
338,068
338,066
273,764
Current grants
abroad (net)
61,993
44,913
31,427
41,307
33,974
70,349
89,401
91,745
Subsidies to private
sector companies
200
0
0
131,476
264,837
1,618
1,465
2,252
Subsidies to public
corporations
350,000
350,250
230,402
183,035
145,239
95,000
60,000
50,000
Net public service
pensions2
15,967
27,640
(7)
0
-
0
0
0
Rentals
24,712
(63,075)
(63,400)
(47,642)
40,608
25,814
26,190
23,910
Depreciation1
304,486
304,701
293,609
268,978
355,397
279,919
279,303
283,669
Take up of provisions
(2,577)
(25)
23
(30)
780
0
0
0
Change in pension
scheme liabilities
204
37
12
35
128
200
200
200
Other resource
93,565
(201,695)
(206,551)
(288,094)
(441,580)
(121,131)
(126,238)
(123,085)

Annual report and Accounts 2016–17
248
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Resource AME
Deliver an ambitious
industrial strategy
(31,763)
(142,334)
(93,804)
(7,428)
215,413
(52,348)
(74,227)
(76,737)
Maximise investment
opportunities and
bolster UK interests
0
0
3,881
(457)
1,844
0
0
0
Promote competitive
markets and
responsible business
practices
38,660
68,858
74,000
102,008
133,331
140,000
145,000
150,000
Ensuring that our
energy system is
reliable and secure
(4,797)
(1,484)
342,599
(309,667)
(3,204)
(1,489)
(85)
(27)
Taking action on
climate change and
decarbonisation
0
0
497,618
841,397 (1,337,205)
0
0
0
Managing our energy
legacy safely and
responsibly
68,415
(396,981)
(96,723)
(308,924)
(258,615)
(213,754)
(172,138)
(162,470)
Science and
Research
82,814
34,544
87,581
49,871
41,888
67,149
74,000
85,000
Capability
(9,289)
(34,742)
(29,793)
(21,783)
(6,013)
(18,502)
(19,012)
(19,776)
Government as
Shareholder
48,248
(21,894)
25,524
(60,526)
(12,644)
119,085
16,554
5,673
Renewable Heat
Incentive
27,416
52,367
158,946
372,420
545,426
780,000
900,000
1,010,000
Deliver an ambitious
industrial strategy
(ALB) net
0
2,479
(4,309)
7,721
(10,378)
22,000
(11,300)
(11,300)
Promote competitive
markets and
responsible business
practices (ALB) net
(11,657)
(561)
(243)
(161)
(58)
(43)
785
181
Taking action on
climate change and
decarbonisation
(ALB) net
0
0
1,987,931
9,281,975
1,065,495
0
0
0
Managing our energy
legacy safely and
responsibly (ALB) net
160,363
378
(65,835) 1,906,630
2,025
11,356
29,221
29,315
Science and
Research (ALB) net
43,462
(24,687)
48,980
107,307
90,936
5,781
7,552
8,985
Capability (ALB) Net
113
(113)
0
2
(400)
0
0
0
Government as
Shareholder (ALB) net
0
(130,671)
(148,034)
(56,337)
(26,653)
(74,961)
(51,825)
(51,825)

Annexes
249
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Nuclear
Decommissioning
Authority
5,137,651
5,309,642
5,644,353 89,797,932
2,850,516
1,794,000
1,105,000
1,069,000
Nuclear
Decommissioning
Authority Income
(CFER)
(711)
(898)
0
0
0
0
0
0
Government as
Shareholder
415,257
316,071
239,776
254,256
231,511
277,000
217,000
212,000
Government as
Shareholder
0
77,341
0
0
0
0
0
0
Total
Resource AME
5,964,182
5,107,315 8,672,448 101,956,236 3,523,215 2,855,274
2,166,525 2,248,019
Of which:
Staff costs
0
0
0
0
0
834
902
903
Purchase of goods
and services
6,612
127,354
19,776
23,450
36,169
1,700
1
(2)
Income from sales of
goods and services
(711)
(10,578)
(152)
0
0
(12,414)
152
152
Current grants to
persons and non-
profit bodies (net)
513,246
448,509
392,622
327,826
385,511
523,940
492,922
499,737
Subsidies to private
sector companies
0
52,367
158,943
372,420
0
780,000
900,000
1,010,000
Net public service
pensions2
24
0
0
0
-
0
0
0
Rentals
0
0
(139)
(81)
(718)
0
0
0
Depreciation1
293,077
53,750
2,653,848 10,126,954
59,846
148,121
52,833
37,625
Take up of provisions
5,743,710
5,400,115
6,022,459 91,967,474
2,984,414
1,909,642
1,263,026
1,229,353
Release of provision
(451,125)
(448,607)
(407,513)
(692,733)
(351,474)
(343,857)
(314,688)
(294,386)
Change in pension
scheme liabilities
25,762
12,337
29,627
19,199
20,375
0
0
(1)
Unwinding of the
discount rate on
pension scheme
liabilities
40,890
1,464
43,398
37,423
38,095
80
80
80
Release of provisions
covering payments of
pension benefits
(15,991)
(27,758)
0
0
-
0
0
0
Other resource
(191,312)
(501,638)
(240,421)
(225,696)
350,997
(152,772)
(228,703)
(235,442)
Total Resource
Budget
8,661,478 7,524,370 11,122,669 104,455,473 5,495,549 4,837,990 4,185,635 4,069,538
Of which:
Depreciation1
597,563
358,451
2,947,457 10,395,932
415,243
428,040
332,136
321,294

Annual report and Accounts 2016–17
250
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Capital DEL
Deliver an ambitious
industrial strategy
(71,647)
9,744
(345,273)
289,783
371,488
590,807
897,069
1,523,028
Maximise investment
opportunities and
bolster UK interests
189,430
374,500
190,635
319,887
308,221
479,094
562,100
642,100
Promote competitive
markets and
responsible business
practices
9,500
446
47
(12,700)
376
1,310
1,010
1,095
Delivering
affordable energy
for households and
businesses
86,404
81,312
137,266
131,102
42,201
56,759
42,080
57,509
Ensuring that our
energy system is
reliable and secure
0
0
1,158
5,071
(548)
300
0
0
Taking action on
climate change and
decarbonisation
30,146
48,575
47,620
54,871
34,875
102,145
218,080
245,981
Managing our energy
legacy safely and
responsibly
6,815
6,883
7,103
5,017
7,747
0
0
0
Science and
Research
328,823
474,623
597,152
518,629
2,596,659
2,712,496
2,369,309
2,168,395
Capability
54,126
26,178
11,027
11,929
10,181
277,185
17,285
(21,244)
Government as
Shareholder
178,322
121,200
106,569
227,462
50,497
110,827
53,160
64,419
Deliver an ambitious
industrial strategy
(ALB) net
394,562
609,293
642,389
728,903
803,985
863,837
800,500
698,000
Promote competitive
markets and
responsible business
practices (ALB) net
879
1,543
1,559
940
1,026
0
0
0
Ensuring that our
energy system is
reliable and secure
(ALB) net
0
0
2,207
975
1,005
(510)
(510)
(510)
Taking action on
climate change and
decarbonisation
(ALB) net
2
0
4,004
959
601
(500)
10
875
Managing our energy
legacy safely and
responsibly (ALB) net
3,443
3,497
5,895
12,243
8,778
17,260
17,250
16,985

Annexes
251
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Science and
Research (ALB) net
4,786,495
5,443,945
5,490,888
5,531,882
3,453,704
3,277,431
3,553,492
3,745,012
Capability (ALB) Net
1,600
7,257
773
641
480
1,500
0
0
Government as
Shareholder (ALB) net
120,113
603,759
616,035
595,189
1,172,665
408,000
163,090
402,729
NDA and SLC
expenditure
1,776,295
1,697,841
1,845,932
1,827,695
1,970,695
1,998,000
1,901,000
1,877,000
Nuclear
Decommissioning
Authority Income
(CFER)
(54,866)
(337)
(2,916)
(51,639)
0
0
0
(176,000)
Total Capital DEL
7,840,442
9,510,259 9,360,070 10,198,839 10,834,636 10,895,941 10,594,925 11,245,374
Of which:
Staff costs
486,510
481,265
499,390
480,109
477,642
401,488
300,294
299,994
Purchase of goods
and services
482,611
598,356
604,949
648,188
400,763
277,614
277,154
277,234
Income from sales of
goods and services
(275,173)
(107,129)
(122,637)
(131,102)
(257,467)
(245,487)
(247,493)
(248,899)
Current grants to
persons and non-
profit bodies (net)
4,223,838
4,248,076
4,465,923
4,666,325
4,800,848
3,132,212
3,514,732
4,148,141
Current grants
abroad (net)
333,655
321,542
317,714
302,460
317,400
481,240
574,064
676,819
Subsidies to private
sector companies
-
-
-
-
0
59,722
61,214
47,893
Subsidies to public
corporations
0
(452)
(1,238)
(2,655)
224,350
154,882
157,825
161,141
Capital support for
local government
(net)
49,075
77,095
21,570
54,528
280
55,500
42,000
57,500
Capital grants to
persons & non-profit
bodies (net)
487,920
1,247,048
968,596
999,113
420,695
1,034,527
914,968
796,641
Capital grants
to private sector
companies (net)
57,986
93,124
131,354
155,115
237,003
240,224
249,316
270,055
Capital grants abroad
(net)
210,070
362,976
203,769
425,981
525,994
511,085
470,058
466,750
Capital support for
public corporations
(1,229)
118,832
90,278
170,203
191,538
79,070
38,010
50,290
Purchase of assets
2,046,889
1,958,591
2,071,328
2,059,177
2,241,911
2,284,773
2,176,534
2,106,868
Income from sales of
assets
(67,184)
(84,335)
(37,628)
(92,106)
(65,427)
(9,193)
(8,910)
(181,504)

Annual report and Accounts 2016–17
252
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Net lending to the
private sector and
abroad
140,708
322,515
519,050
630,964
1,111,541
491,441
14,280
191,170
Other capital
(335,234)
(127,245)
(372,348)
(167,461)
207,565
1,946,843
2,060,879
2,125,281
Capital AME
Deliver an ambitious
industrial strategy
0
0
(35,000)
0
0
0
0
0
Maximise investment
opportunities and
bolster UK interests
0
(19,723)
17,413
2,310
0
0
0
0
Managing our energy
legacy safely and
responsibly
(33,189)
(490,707)
(620,294)
61,891
(38,273)
(39,689)
(44,757)
(45,743)
Science and
Research
0
0
0
0
834
0
0
0
Government as
Shareholder
(61,368)
(763,521)
291,559
210,202
129,181
0
0
0
Renewable Heat
Incentive
12,731
13,770
1,697
(22)
0
0
0
0
Deliver an ambitious
industrial strategy
(ALB) net
0
0
7,159
17,299
84,961
40,000
40,000
40,000
Science and
Research (ALB) net
(57,492)
(1,108)
(71,497)
(55,972)
(61,276)
0
0
0
Government as
Shareholder (ALB) net
0 (1,063,420) (1,206,678)
(430,678)
(129,934)
(166,530)
(109,240)
(77,070)
Government as
Shareholder
0 (1,979,829)
0
0
0
0
0
0
Government as
Shareholder (ALB) net
0
0
0 (1,434,995)
0
0
0
0
Total Capital
Budget
7,701,124
5,205,721
7,744,429
8,568,874 10,820,129 10,729,722 10,480,928 11,162,561
Total departmental
spending3
15,765,039 12,371,640 15,919,641 102,628,415 15,900,435 15,139,672 14,334,427 14,910,805
Of which:
Total DEL
10,233,252 11,622,613 11,516,682 12,429,098 12,451,573 12,598,738 12,334,732 12,783,224
Total AME
5,531,787
749,027 4,402,959
90,199,317 3,448,862
2,540,934
1,999,695
2,127,581
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.

Annexes
253
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 Electricity Market Reform is shown separately in 2012-13 as this expenditure was funded
through a Contingencies Fund advance, pending passage of the Energy Bill through Parliament. Repayment of that
advance in 2013-14 was made against Deliver secure energy on the way to a low carbon energy future Resource DEL,
offset by the credit shown against Electricity Market Reform.
The increase in spend from 2016-17 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.
The figure for Depreciation in Resource AME in 2014-15, 2015-16 and 2016-17 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) net.
Outturn for 2015-16 has not been updated in line with the restated Statement of Comprehensive Net Expenditure, but
does include the reclassification across all years of certain research and development expenditure from Resource to
Capital DEL, which is not reflected in the restated 2015-16 Statement of Comprehensive Net Expenditure and Statement
of Parliamentary Supply.
Table 2 - Administration budgets
Resource DEL
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Deliver an ambitious
industrial strategy
1,941
2,662
1,935
583
0
0
0
0
Promote competitive
markets and
responsible business
practices
781
(528)
796
818
826
830
840
840
Managing our energy
legacy safely and
responsibly
0
0
0
0
(3,801)
0
0
0
Science and
Research
51
53
58
59
0
0
3,598
3,620
Capability
351,444
335,497
345,965
327,944
288,546
326,582
311,573
304,886
Government as
Shareholder
4,394
3,465
3,108
3,885
4,300
4,644
4,644
4,644
Deliver an ambitious
industrial strategy
(ALB) net
5,864
1,968
2,565
1,036
51
3,000
22,080
21,660
Promote competitive
markets and
responsible business
practices (ALB) net
8,532
12,206
10,102
8,630
7,362
8,538
8,580
8,620
Taking action on
climate change and
decarbonisation
(ALB) net
3,427
3,710
4,043
3,752
3,535
3,428
2,611
2,611
Managing our energy
legacy safely and
responsibly (ALB) net
4,403
4,629
5,536
10,191
12,104
5,000
5,050
5,050

Annual report and Accounts 2016–17
254
Resource DEL
2012-13
outturn
2013-14
outturn
2014-15
outturn
2015-16
outturn
2016-17
outturn
2017-18
plans
2018-19
plans
2019-20
plans
Science and
Research (ALB) net
(813)
(1,350)
4,740
3,649
935
1,110
77,885
73,747
Capability (ALB) Net
56,252
68,597
59,268
39,218
39,818
9,800
9,800
9,800
Government as
Shareholder (ALB) net
467
4,626
267
251
162
184
186
187
NDA and SLC
expenditure
38,752
41,790
37,110
34,992
38,195
41,000
44,000
44,000
Nuclear
Decommissioning
Authority Income (CFER)
(2,321)
(1,875)
0
0
0
0
0
0
Electricity Market
Reform
0
(200)
0
0
0
0
0
0
Total
administration
budget
473,174
475,250
475,493
435,008
392,033
404,116
490,847
479,665
Of which:
Staff costs
326,077
349,871
341,753
365,590
329,069
234,879
303,019
295,570
Purchase of goods
and services
183,826
191,654
179,482
145,800
160,756
154,218
182,795
181,367
Income from sales of
goods and services
(81,121)
(115,081)
(123,790)
(135,538)
(39,067)
(32,906)
(33,512)
(40,452)
Current grants to
persons and non-
profit bodies (net)
0
(439)
30
29
38
(4,982)
(10,093)
(3,730)
Current grants
abroad (net)
20
36
18
108
106
0
0
0
Net public service
pensions
1,532
1,219
(7)
0
0
0
0
0
Rentals
20,438
20,131
27,074
31,852
30,117
25,814
26,190
23,910
Depreciation
35,683
33,203
30,738
29,956
27,034
34,777
34,764
34,754
Take up of provisions
0
0
(12)
2
0
0
0
0
Change in pension
scheme liabilities
0
(12)
(65)
25
106
0
0
0
Other resource
(13,281)
(5,332)
20,272
(2,816)
(116,126)
(7,684)
(12,316)
(11,754)

Annexes
255
AME: Annual Managed Expenditure, see box 1 on page 33.
ARAC: Audit and Risk Assurance Committee, see page 56.
Article 50: Under the Lisbon Treaty, states any EU member
state may decide to withdraw from the Union and must
notify the European Council of its intentions. The Union
shall negotiate and conclude an agreement with the state,
setting out the arrangements for its withdrawal, taking
account of the framework for its future relationship with
the union.
BBB: British Business Bank plc
BBSRC: Biotechnology and Biological Sciences Research
Council
BE: British Energy
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
BIS2020: The Business, Innovation and Skills’
transformation programme prior to the Machinery of
Government change that formed BEIS.
BNFL: British Nuclear Fuels Limited
BVCA: British Venture Capital Association
Business Improvement District : Business led partnerships
which are created through a ballot process to deliver
additional services to local businesses.
CAVs: Connected and Autonomous Vehicles
CCA: Climate Change Agreements
CCL: Climate Change Levy
CDEL: Capital Departmental Expenditure Limit,
see box 1 on page 33.
CETV: Cash Equivalent Transfer Value
CFER: Consolidated Fund Extra Receipts, Income
which is not retained by the department but returned
to the Consolidated Fund
CFP: Cavendish Fluor Partnership
Consolidated Fund: The main bank account of the
UK government.
Contracts for Difference (CfDs) : See box 5, page 39
CRC: Carbon Reduction Commitment
CNI: Critical National Infrastructure
CNPP: Combined Nuclear Pension Plan
CSOPS: Civil Service and Other Pension Scheme
D&I: Diversity and inclusion
DDR: Departmental Risk Registers
DECC: Department for Energy and Climate Change,
one of our predecessor departments
DEFRA: Department for Environment, Food and Rural
Affairs
DEL: Departmental Expenditure Limit, see box 1
on page 33.
DExEU: Department for Exiting the European Union
DfE: Department of Education
DIT: Department for International Trade
Dynamic Dispatch Model (DDM): a comprehensive fully
integrated power market model covering the GB power
market over the medium to long term
EDFE: Energy Nuclear Generation Limited
EHL: Enrichment Holdings Limited
Energy Company Obligation (ECO): A government energy
efficiency scheme to help reduce carbon emissions and
tackle fuel poverty.
EPO: European Patent Office
ESA: European Space Agency
ESC: Electricity Settlements Company
ESO: European Southern Observatory
ESOS: Energy Savings Opportunity Scheme
Estimate: See Supply Estimate
EU ETS: EU Emissions Trading Scheme
EUA: EU allowance
EUAA: EU aviation allowance
ExCo: Executive Committee, see page 58.
Fifth Carbon Budget: A carbon budget places a restriction
on the total amount of greenhouse gases the UK can emit
over a 5-year period. The fifth carbon budget covers the
2028 to 2032 period.
FIDeR: Final Investment Decisions enabling Renewables
FLS: Future Leaders Scheme
FReM: Government Financial Reporting Manual
GBS: Government Banking Services
GCIA: Group Chief Internal Auditor
GCRF: Global Challenges Research Fund
GDFC: Green Deal Finance Company
GGCs: Greening Government Commitments
GHG: Greenhouse gas
GIAA: Government Internal Audit Agency
GIB: Green Investment Bank
GMM: Government Major Projects Portfolio
GRAA: Government Resources and Account Act 2000
Green Paper: a set of proposals for discussion and
consideration, and an invitation to others to contribute
collaboratively to their development.
Hinkley Point C (HPC): A project to construct a nuclear
power station in Summerset, England.
HPDS: High Potential Talent Schemes
ICO: Information Commissioner’s Office
IEA: International Energy Agency
IFRS: International Financial Reporting Standards
ILL: Institut Laue Langevin
IPA: Infrastructure and Projects Authority
IRR: Internal Rate of Return
ITEC: International Trade and Export Control
Annex D: Glossary

Annual report and Accounts 2016–17
256
LCCC: Low Carbon Contracts’ Company
LCF: Levy Control Framework
Local Enterprise Partnerships : Partnerships between local
authorities and businesses who decide what the priorities
should be for investment in roads, buildings and facilities
in the area.
Loss of Load Expectation (LOLE): Metric used
to measure the security of the electricity supply
LTP: Life Time Plan
MoG: Machinery of Government
Monte-Carlo Simulation : A computerised mathematical
technique that allows for the account of risk in quantitative
analysis and decision making.
MPS: Mineworkers’ Pension Scheme
MRC: Medical Research Council
NAO: National Audit Office
NDA: Nuclear Decommissioning Authority
NDPBs: Non-departmental public bodies
NEBMs: Non-Executive Board Members
NERC: Natural Environment Research Council
NIF: National Insurance Fund
NMRO: National Measurement Regulation Office
NNLHL: NNL Holdings Limited
NPLML: NPL Management Limited
ODA: Official Development Assistance
OEDC: Organisation for Economic Co-operation and
Development
OGA: Oil and Gas Authority
ONS: Office of National Statistics
OSL: Ordinance Survey Limited
OSTF: Ordinance Survey Trading Fund
Paris Agreement: An agreement within the United Nations
Framework Convention on Climate Change which deals
with greenhouse gas emissions mitigations, adaptation and
finance starting in the year 2020.
PAC: Public Accounts Committee
PBL: Parliament Business and Legislation Committee
PCSPS: Principal Civil Service Pension Scheme
PES: Public Expenditure System
PEVC: Private Equity and Venture Capital
PFR: Performance, Finance and Risk Committee,
see page 60.
POL: Post Office Limited
PPAs: Prior Period Adjustment
PPE: Property, plant and equipment
PSH: Postal Services Holding Company Limited
Pulse Surveys: Shorter surveys carried out between
annual Staff Surveys on staff attitudes.
R&D: Research and Development
Repeal Bill: Sets out the government’s proposals
for ensuring a functioning statute book once UK
has left the EU
RDEL: Resource Departmental Expenditure Limit,
see page 33
RICS: Royal Institute of Charted Surveys
RO: Renewables Obligations
RPS: Redundancy Payment Service
SCS: Senior Civil Service
SDP: Single Departmental Plans
SLS: Senior Leaders Schemes
SLCs: Nuclear Site Licence companies
SME: Small and medium enterprise engagement
SoPS: Statement of Parliamentary Supply
SOSIA: Secretary of State Investor Agreement
SRMC: Short Run Marginal Cost
SSCL: Shared Services Connect Ltd
STSC: South Tees Site Company Limited
Supply Estimates: the means of obtaining from Parliament,
the legal authority to consume resources and spend cash
the government needs to finance department’s agreed
spending programme.
TCD: Target Commissioning Date
TCW: Target Commissioning Window
TME: Total Departmental Managed Expenditure
UKAEA: UK Atomic Energy Authority Decommissioning
UKCES: UK Commission for Employment and Skills
UKIIF: UK Innovation Investment Fund
UKRI: UK Research and Innovation
UKSBS: UK Shared Business Services
Virement: the reallocation of provision in the Estimates
without the need for a Supplementary Estimate to obtain
parliamentary authority. Virement reallocates underspends
on one part of the Estimate to cover overspends on another
part of the Estimate.
WTC: Waste Transfer Contracts

This document was designed by DESIGN102.
Contact us at xxx@xxx.xx