34th Report - Department for Business and Trade Annual Report and Accounts 2023-24

Within the Overturned Convictions Scheme, there are a number of complex cases where claims have not yet been submitted, meaning ongoing delays in compensation for these individuals. The Overturned Convictions Scheme was set up to compensate those who had their … Read more Within the Overturned Convictions Scheme, there are a number of complex cases where claims have not yet been submitted, meaning ongoing delays in compensation for these individuals. The Overturned Convictions Scheme was set up to compensate those who had their convictions overturned by the courts. The scheme is separate from the Horizon Convictions Redress Scheme, which was created to compensate those who had their convictions quashed via Government legislation. 4 There are 111 individuals eligible for financial redress through the Overturned Convictions Scheme. By 31 March 2025, 86 had submitted full and final claims, of which 69 had been paid, one had accepted an offer and was awaiting payment and a further 8 had received offers. The remaining 8 were awaiting offers from the Post Office. It is possible that claims may not be received for the remaining 25 eligible individuals until into 2026 due to the complexity of their cases. These individuals have received an interim payment of £200,000, with a further £250,000 payment to be made on receipt of a claim. With effect from 3 June 2025, the Department will take on direct responsibility for management of the scheme from the Post Office. There is a 3-month transition period underway to transfer the relevant data and handling of claims from the Post Office to the Department. recommendation The Department should outline how it plans to handle remaining cases under the Overturned Convictions Scheme, including how claims will be handled differently following the transition of the scheme from the Post Office to the Department. Show less

The Department has issued a far-reaching letter of support, which commits it to supporting the Post Office to pay its liabilities as they fall due, but there is no clear plan for how long this will continue, or how to … Read more The Department has issued a far-reaching letter of support, which commits it to supporting the Post Office to pay its liabilities as they fall due, but there is no clear plan for how long this will continue, or how to eventually make Post Office Limited financially independent. The Post Office is reliant on the Department for its financial survival. The Department issued a ‘Letter of Support’ to the Post Office in December 2024 which, in addition to the Department’s pre-existing commitment to fund the Post Office’s redress schemes, and an extension of established loan facilities, provides assurance that the Department will continue to provide financial support to help the Post Office to meets its liabilities as they fall due more widely. This includes support for: the running of Horizon remediation matters, Horizon support and technology replacement, taxation related liabilities, and for other potential liabilities. Without this financial support, the Post Office would not be able to meet its liabilities as they fall due. In 2023–24 the Department provided £260 million in grants and subsidies to the Post Office. By 31 March 2024, the Post Office also had total borrowings of £786 million with the Department. The Department has assured the Committee that it is working closely with the Post Office to identify ways to make the Post Office more financially independent. The Department did not consider the Letter of Support to require separate disclosure to Parliament under Managing Public Money requirements. However, the Department has agreed to notify the Committee of the next Letter of Support when it is issued. 5 recommendation a. Alongside its Treasury Minute response to this report, the Department should write to the Committee setting out its assessment of the nature and value of all financial support it might need to provide to Post Office Limited and its plans for working with the Post Office to make it financially independent of government. b. The Department shoul Show less

The Department’s efforts to recover fraud losses incurred through the Bounce Back Loan Scheme have been largely unsuccessful, with only a small fraction of losses recovered to date, for which the Department is unable to confirm the value. The Department … Read more The Department’s efforts to recover fraud losses incurred through the Bounce Back Loan Scheme have been largely unsuccessful, with only a small fraction of losses recovered to date, for which the Department is unable to confirm the value. The Department has estimated it will incur a total loss of at least £1.9 billion due to fraud within the Bounce Back Loan Scheme. The Department remains reliant primarily on lenders to recover losses due to fraud, despite the limited commercial incentives placed on those lenders due to the 100% guarantee provided. Of the amount paid by the Department to lenders under the guarantee, £130 million has been returned, but the Department is unable to confirm how much of this relates to fraud. The highest risk fraud cases were being passed to the National Investigation Service (NATIS) to investigate. But recoveries by NATIS have been minimal, with £8.6 million disclosed in the Department’s Annual Report and Accounts for 2023–24. The significant level of fraud within the Bounce Back Loan Scheme has been well known for years and has been subject to previous scrutiny by this Committee. The low value of recoveries, and the lack of clarity on the value of recoveries that relate to cases of suspected fraud, indicate that the actions taken to date by the Department have not been adequate. Following our evidence session in April, on 15 May 2025 the Department announced that its review of NATIS’ performance had shown public money was not being spent effectively, that NATIS would be audited to determine accurate figures for fraud recovery, and that the Insolvency Service will take over NATIS’s viable investigation cases. recommendation a. The Department should write to the Committee to provide the key findings from the NATIS audit, including the value of recoveries. b. The Department should write to the Committee in one year, to provide information on the performance of the Insolvency Service in recovering amounts lost due to fraud. 6 Show less

The restructuring process which created the Department left it insufficiently resourced to deliver its 2023–24 Annual Report and Accounts on a timely basis and unable to establish appropriate controls and processes across the 2023–24 financial year. The Department inherited limited … Read more The restructuring process which created the Department left it insufficiently resourced to deliver its 2023–24 Annual Report and Accounts on a timely basis and unable to establish appropriate controls and processes across the 2023–24 financial year. The Department inherited limited finance staff from the former Department for Business, Energy and Industrial Strategy and initially relied on the finance team of the former Department for International Trade. The accounts of the new Department are significantly more complex than the accounts of the former Department for International Trade, including hard to value assets and liabilities, and requiring the consolidation of 19 Partner Organisations. The Government Internal Audit Agency was only able to issue a limited assurance opinion for 2023–24, noting that further work was required to strengthen controls, capability and capacity following the restructure. The Department has undertaken a lessons learned exercise and has a clear plan for the laying of its 2024–25 accounts in September 2025 and for its 2025–26 accounts to be laid before Parliament’s 2026 summer recess. recommendation The Department should provide a written update to the Committee if it expects that its planned dates for laying its accounts before Parliament will not be met. If so, it should set out the reasons why, and what actions it is taking to address the problems. 7 1 Horizon Compensation Schemes Introduction Show less

On the basis of its Annual Report and Accounts 2023–24, we took evidence from the Department for Business and Trade (the Department).1 We focused on the Horizon Compensation Schemes, Bounce Back Loan Scheme, and the preparation of its the Annual … Read more On the basis of its Annual Report and Accounts 2023–24, we took evidence from the Department for Business and Trade (the Department).1 We focused on the Horizon Compensation Schemes, Bounce Back Loan Scheme, and the preparation of its the Annual Report and Accounts. Show less

For the 2023–24 external audit, the Comptroller & Auditor General (C&AG) recorded a qualified opinion on the Department’s accounts due to the Department being unable to obtain sufficient appropriate evidence that the value of provisions for the HSS and HCRS … Read more For the 2023–24 external audit, the Comptroller & Auditor General (C&AG) recorded a qualified opinion on the Department’s accounts due to the Department being unable to obtain sufficient appropriate evidence that the value of provisions for the HSS and HCRS were free from material misstatement. This was due to the schemes being at an early stage of receiving and settling claims.5 The HSS had a provision of £671 million and the HCRS had a provision of £698 million in the 2023–24 Annual Report and Accounts.6 We were concerned with the progress of these schemes and the likelihood of being able to lift qualifications in the short term.7 Show less

In the Department’s 2023–24 Annual Report and Accounts, it estimated that £866 million of the combined Horizon Schemes provisions would be settled within 1 year.8 In a letter provided after our oral evidence session, the Department confirmed that it paid … Read more In the Department’s 2023–24 Annual Report and Accounts, it estimated that £866 million of the combined Horizon Schemes provisions would be settled within 1 year.8 In a letter provided after our oral evidence session, the Department confirmed that it paid a total of £701 million in scheme settlements during 2024–25, of which £552 million had been included in the provision in the 2023–24 Accounts.9 The payment figures therefore fell short of the expectations set in the 2023–24 Annual Report and Accounts.10 Show less

For the Horizon Shortfall Scheme (HSS), the main uncertainty when calculating the overall settlement provision is regarding the volume of claimants. The Department told us that in order to establish the number of eligible claimants, the Post Office is writing … Read more For the Horizon Shortfall Scheme (HSS), the main uncertainty when calculating the overall settlement provision is regarding the volume of claimants. The Department told us that in order to establish the number of eligible claimants, the Post Office is writing to postmasters to make them aware of the Scheme and how to apply.11 The Department confirmed that as of 31 March 2025, 18,528 letters had been sent, with approximately a further 5,000 expected to be sent in 2025 to those not yet contacted. The response rate as of 31 March 2025 was 21% but the Post Office estimates that this will 4 Horizon Convictions Redress Scheme, HLWS43, 30 July 2024 5 DBT ARA 2023–24, pp 108-110 6 DBT ARA 2023–24, pp 107-110, 202-203 7 Q 1 8 DBT ARA 2023–24, p 200. ‘Combined Horizon Schemes provisions’ is reported under the headings ‘Post Office Limited’ and ‘Postmaster redress’. 9 Correspondence from Department for Business and Trade, 2 May 2025 10 Qq 12-15 11 Q 3 9 rise to between 25% and 30%.12 On the value per claim, the Department told us it has greater certainty over this figure, with 98% of applicants accepting the £75,000 settlement option.13 Show less

For the HCRS, the Department told us that the uncertainty within this scheme relates to the value per claim, rather than the number of claimants. The Department told us that justice authorities (Ministry of Justice, Justice Directorate Scotland and the … Read more For the HCRS, the Department told us that the uncertainty within this scheme relates to the value per claim, rather than the number of claimants. The Department told us that justice authorities (Ministry of Justice, Justice Directorate Scotland and the Department of Justice Northern Ireland) had issued letters to the approximately 800 individuals who have had their convictions quashed.14 As of 31 March 2025, 536 individuals have applied and 339 had accepted the fixed and final sum of £600,000.15 The Department told us that lawyers representing claimants have indicated that about 85% of those applying to the scheme will accept the £600,000 offer. Other participants in the scheme were deciding whether to accept the fixed sum or go through the detailed assessment process. The Department told us it expects that the first itemised claims for full assessment are unlikely to be received until early autumn 2025, due to claimants seeking external advice relevant to their claims. The Department explained that as these cases are more complex, the spread of potential payments is far greater.16 Show less

The Department told us that it is confident the level of uncertainty over the number of potential claimants in HSS will reduce over the 2025–26 financial year. The uncertainty over the number of potential claimants within the HSS was a … Read more The Department told us that it is confident the level of uncertainty over the number of potential claimants in HSS will reduce over the 2025–26 financial year. The uncertainty over the number of potential claimants within the HSS was a key reason for the C&AG’s qualification of the Annual Report and Accounts 2023–24. For HCRS, the uncertainty over the claim values was a key reason for the C&AG’s qualification.17 The Department confirmed there is ongoing uncertainty over the value of the smaller number of fully assessed claims within the HCRS, as they are expected to take longer to resolve.18 Show less

We were concerned about the potential for further delay of settlements if letters which had not yet received a reply were not being followed up. We therefore asked the Department whether any chasing up of letters had occurred where no … Read more We were concerned about the potential for further delay of settlements if letters which had not yet received a reply were not being followed up. We therefore asked the Department whether any chasing up of letters had occurred where no response had been received.19 The Department explained that it did not believe the Post Office had sent any chaser letters to those who have not yet applied for the HSS. For the HCRS, which the Department administers, the Department was concerned that individuals receiving letters would feel harassed if they had a series of letters asking 12 Q 7; Correspondence from Department for Business and Trade, 2 May 2025 13 Q 1 14 Q 8 15 Department for Business and Trade, Post Office Horizon financial redress data as of 31 March 2025, May 2025 16 Q 1 17 DBT ARA 2023–24, pp 108-110 18 Qq 2, 11 19 Qq 4-9 10 the same thing.20 The Department however agreed to consult the Horizon Compensation Advisory Board on the suggestion that follow-up letters should be sent to potential Horizon Shortfall Scheme applicants who have not yet applied for redress.21 The Department also told us that there is no closure date set for HSS as letters were still being issued.22 Management of the Overturned Convictions Scheme Show less

Following feedback from scheme applicants and the Business and Trade Select Committee in its report published January 2025, the Department has agreed to take on direct responsibility for management of the OC Scheme from 3 June 2025.23 There is a … Read more Following feedback from scheme applicants and the Business and Trade Select Committee in its report published January 2025, the Department has agreed to take on direct responsibility for management of the OC Scheme from 3 June 2025.23 There is a 3-month transition period underway to ensure continuity of service and to transfer the relevant information the Department needs from the Post Office. The Department told us progress during the transition has been positive, that it has had early engagement with the Post Office and good pre-existing relationships with the claimants’ lawyers.24 Show less

As part of the scheme administration, the Department told us it has employed Sir Gary Hickinbottom, a former judge, to hold case management hearings and work through areas of disagreement between claimants and the Post Office or Department. Sir Gary … Read more As part of the scheme administration, the Department told us it has employed Sir Gary Hickinbottom, a former judge, to hold case management hearings and work through areas of disagreement between claimants and the Post Office or Department. Sir Gary Hickinbottom has been praised by the Business and Trade Committee for his support in case management.25 Show less

According to the Department, there are 111 individuals eligible for financial redress through the OC scheme. As at 31 March 2025, 86 had submitted full and final claims, of which 69 had been paid, 1 had accepted an offer and … Read more According to the Department, there are 111 individuals eligible for financial redress through the OC scheme. As at 31 March 2025, 86 had submitted full and final claims, of which 69 had been paid, 1 had accepted an offer and was awaiting payment and a further 8 had received offers. The remaining 8 were awaiting offers from the Post Office.26 Show less

The Department told us it is possible that claims may not be received for the remaining 25 eligible individuals until into 2026 due to the complexity of their cases. The Department hopes however that these 25 individuals will feel more … Read more The Department told us it is possible that claims may not be received for the remaining 25 eligible individuals until into 2026 due to the complexity of their cases. The Department hopes however that these 25 individuals will feel more comfortable in engaging in the process once it is no longer 20 Q 8 21 Correspondence from Department for Business and Trade, 2 May 2025 22 Q 10 23 HC 341 Post Office and Horizon scandal redress: Unfinished business, 1 January 2025; HC 778 Post Office Horizon scandal redress: Unfinished business: Government response, 25 March 2025 24 Qq 16, 20 25 Post Office and Horizon scandal redress: Unfinished business 26 DBT, Post Office Horizon financial redress data as of 31 March 2025, May 2025 11 managed by the Post Office.27 The Department told us that these individuals have received an interim payment of £200,000, with a further £250,000 payment to be made on receipt of a claim.28 Financial sustainability of the Post Office Show less

The Post Office is wholly owned by the Department, although the Department does not have responsibility for the day-to-day running of the Post Office. The Department supports the Post Office through the funding of all Horizon redress compensation schemes. However, … Read more The Post Office is wholly owned by the Department, although the Department does not have responsibility for the day-to-day running of the Post Office. The Department supports the Post Office through the funding of all Horizon redress compensation schemes. However, this funding alone is insufficient to guarantee the financial stability of the Post Office. The Department provides an annual ‘Letter of Support’ to the Post Office, giving assurance that the Department will deliver financial support to help the organisation meet is liabilities as they fall due. The existence of the Letter of Support and a summary of the assurance it provides is disclosed in both the Department and Post Office Annual Report and Accounts. The Post Office Board places significant reliance on this letter annually when stating the Post Office is a going concern.29 Show less

The 2023–24 Annual Report and Accounts show that the Department provided £260 million in grants and subsidies to the Post Office and had total borrowings of £786 million with the Department, made up as follows: 30 Type of Support Description … Read more The 2023–24 Annual Report and Accounts show that the Department provided £260 million in grants and subsidies to the Post Office and had total borrowings of £786 million with the Department, made up as follows: 30 Type of Support Description Value Annual support Capital Grants £90m Annual support Subsidies to support £120m Horizon Inquiry & Compensation Schemes Annual support Subsidies to Post Office £50m Limited to support normal function Loan Limited Term Loan £45m Loan Working Capital Facility £741m Other contractual Funding for future £840m commitments Horizon Redress Scheme (estimated Settlements (Post Office value) Administered Schemes) 27 Q 16 28 Q 24 29 Q 22; DBT ARA 2023–24, p 154; Post Office Limited, Annual Report and Consolidated Financial Statements 2023/24, December 2024, pp 72-74, 86-91, 146-147 30 DBT ARA 2023–24, pp 103, 158, 176, 200, 207 12 Show less

The Letter of Support also provides assurances for other financial risks that, were they to crystallise, may result in the Post Office not being able to meet its liabilities as they fall due.31

We were concerned that the Letter of Support effectively acts as the Post Office having a “blank cheque” from the Department, and asked what conditions were attached to it.32 The Department told us that there is a rolling working capital … Read more We were concerned that the Letter of Support effectively acts as the Post Office having a “blank cheque” from the Department, and asked what conditions were attached to it.32 The Department told us that there is a rolling working capital requirement that the Department manage. The Department explained it involves UK Government Investments (UKGI) to provide assurance around the financial structures of the Post Office. In a subsequent letter from the Department, it confirmed it will provide financial support to the Post Office to enable it to meet its liabilities as they fall due for a period of no less than 15 months from December 2024, but is subject to receiving HM Treasury approval and the application of the Subsidy Control Act 2022. As such it reaffirms the Department’s commitment to support the Post Office but deliberately falls short of being a financial guarantee.33 Show less

The Department told us that it has confidence in the Post Office’s short- term liquidity, through the assurance provided by UKGI and that there is a longer-term question regarding the financial viability of the Post Office. The Department told us … Read more The Department told us that it has confidence in the Post Office’s short- term liquidity, through the assurance provided by UKGI and that there is a longer-term question regarding the financial viability of the Post Office. The Department told us that it is looking at the policy objectives, the most cost-effective way of funding the Post Office and the most efficient way to achieve that in order to put the Post Office onto a long-term footing.34 Show less

The Department did not consider the Letter of Support to require separate notification to Parliament in line with the requirements of Managing Public Money on the basis of the following:35 • Issuing the Letter of Support is not outside of … Read more The Department did not consider the Letter of Support to require separate notification to Parliament in line with the requirements of Managing Public Money on the basis of the following:35 • Issuing the Letter of Support is not outside of the Department’s normal course of business • The Department does not deal with Post Office on a commercial basis • The size of the liability (excluding redress which has separate budgetary cover) is not large relative to the Department’s overall budget • Issuing the letter is neither novel, contentious nor repercussive. Show less

Managing Public Money explains that whilst departments may make commitments to future expenditure without explicit parliamentary authority, Parliament should be notified of the existence of these commitments on a 31 DBT ARA 2023–24, p 154 32 Q 21 33 Correspondence … Read more Managing Public Money explains that whilst departments may make commitments to future expenditure without explicit parliamentary authority, Parliament should be notified of the existence of these commitments on a 31 DBT ARA 2023–24, p 154 32 Q 21 33 Correspondence from Department for Business and Trade, 2 May 2025 34 Q 23 35 Correspondence from Department for Business and Trade, 2 May 2025 13 timely basis. Best practice is to do this via a Written Ministerial Statement and Departmental Minute.36 In this instance, the Department included disclosures regarding the Letter of Support in its 2023–24 Annual Report and Accounts that were published in January 2025, relatively soon after the Letter of Support had been issued.37 In written correspondence after the session the Department agreed to notify the Committee of the next Letter of Support when it is issued.38 36 HM Treasury, Managing Public Money, May 2023, para A5.4.27 37 DBT ARA 2023–24, p 154 38 Correspondence from Department for Business and Trade, 2 May 2025 14 2 Bounce Back Loans Scheme Introduction Show less

The Bounce Back Loan Scheme (BBLS) was established as part of a suite of measures to provide support to small businesses during the COVID-19 pandemic, with a maximum loan value of £50,000. The loans were provided by commercial lenders directly … Read more The Bounce Back Loan Scheme (BBLS) was established as part of a suite of measures to provide support to small businesses during the COVID-19 pandemic, with a maximum loan value of £50,000. The loans were provided by commercial lenders directly to businesses, who were expected to repay the debt in full. Government provided lenders with a 100% guarantee against the loans, meaning if the borrower did not repay the loan, the government will step in and repay the lender. The BBLS is administered by the British Business Bank (BBB), which is fully owned by the Department.39 Show less

The BBLS was open for applications from 4 May 2020 to 31 March 2021, and in that time 1.5 million loans were issued, to a total value of £47.4 billion. The BBLS was designed to reduce the time taken to … Read more The BBLS was open for applications from 4 May 2020 to 31 March 2021, and in that time 1.5 million loans were issued, to a total value of £47.4 billion. The BBLS was designed to reduce the time taken to pay out the loans, in part by reducing the checks which lenders were required to do. This included removing credit and affordability checks, and accepting self-certification by borrowers, rather than requiring any verification of application information. This resulted in increased risk to the taxpayer, which was acknowledged at the time.40 Show less

As at 31 March 2024, there remained 1.03 million loans outstanding, to a value of £17.8 billion.41 The Department estimates that total losses to the taxpayer due to fraud in the scheme will be at least £1.9 billion over its … Read more As at 31 March 2024, there remained 1.03 million loans outstanding, to a value of £17.8 billion.41 The Department estimates that total losses to the taxpayer due to fraud in the scheme will be at least £1.9 billion over its lifetime.42 For the purposes of fraud investigation, the Department grouped suspected fraudulent loans into tiers. The largest cases are passed to the National Investigation Service (NATIS), a fraud investigation service provided by Thurrock Council. Other cases were left to commercial lenders to investigate, who the Department regard to be experts in this field.43 39 The Insolvency Service, Factsheet: Bounce Back Loans, March 2022 40 C&AG’s Report, Bounce Back Loan Scheme: an update, Session 2021–22, HC 861, 3 December 2021, pp 5-8 41 DBT, COVID-19 loan guarantee schemes performance data as at 31 March 2024, August 2024 42 DBT ARA 2023 to 2024, p 105 43 C&AG’s Report, Bounce Back Loan Scheme: an update, Session 2021–22, HC 861, 3 December 2021, p 11 15 Recovery of fraud losses Show less

The Department has estimated that total losses due to fraud on the BBLS will be at least £1.9 billion. This figure is the sum of losses on defaulted loans that lenders have reported as suspected fraud, and future losses estimated … Read more The Department has estimated that total losses due to fraud on the BBLS will be at least £1.9 billion. This figure is the sum of losses on defaulted loans that lenders have reported as suspected fraud, and future losses estimated by the Department by applying its suspected fraud loss rate to the open loan book. The Department has acknowledged that not all cases of fraud will have been identified by lenders and that total losses due to fraud will exceed the figure quoted.44 Show less

The Department told us, for context, that around £20 billion of the loans issued by lenders under its Covid loan guarantee schemes (which included the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme, as well … Read more The Department told us, for context, that around £20 billion of the loans issued by lenders under its Covid loan guarantee schemes (which included the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme, as well as the BBLS) have been repaid in full and that 75% have either been paid back or are being paid according to schedule. The Department also explained that the vast majority of lender defaults were due to company failure rather than being related to fraud and error.45 Show less

The Department told us that it is tackling fraud in a range of ways. These include the in-house fraud team which oversees all the counter-fraud activity, an audit and assurance process carried out by BBB with oversight from a Board, … Read more The Department told us that it is tackling fraud in a range of ways. These include the in-house fraud team which oversees all the counter-fraud activity, an audit and assurance process carried out by BBB with oversight from a Board, which includes representatives from the Treasury and Cabinet Office as well as BBB and the Department.46 Show less

The Department explained that it also outsources the most complex cases to a provider, to follow up on the most extreme and serious cases of fraud. These cases are complex and detailed, and take a while to appear as a … Read more The Department explained that it also outsources the most complex cases to a provider, to follow up on the most extreme and serious cases of fraud. These cases are complex and detailed, and take a while to appear as a recovery.47 The Department’s Annual Report and Accounts states that its external partner, NATIS, recovered £8.6 million from the BBLS in 2023–24.48 Show less

The Department explained that the first and primary responsibility for chasing fraud remains with the lenders. Due to the 100% guarantee provided to lenders under the BBLS, the incentive is not there to recover fraudulent loans. The Department has, however, … Read more The Department explained that the first and primary responsibility for chasing fraud remains with the lenders. Due to the 100% guarantee provided to lenders under the BBLS, the incentive is not there to recover fraudulent loans. The Department has, however, worked with lenders to recoup some of the losses.49 Show less

The Department told us that as a result of assurance activity which has involved data and analytics, £1.1 billion of loans have been withdrawn from guarantee cover, meaning that any losses on these loans are borne by the 44 DBT … Read more The Department told us that as a result of assurance activity which has involved data and analytics, £1.1 billion of loans have been withdrawn from guarantee cover, meaning that any losses on these loans are borne by the 44 DBT ARA 2023 to 2024, pp 105-106 45 Q 27 46 Q 27 47 Q 27 48 DBT ARA 2023 to 2024, p 39 49 Q 27 16 lender rather than by the taxpayer. The Department withdraws loans from guarantee cover where it feels that the lender has not done all that it should have done. The Department told us that it considers its lender assurance activity and the removal of loans from guarantee cover to be an incentive for lenders to maximise recoveries.50 The £1.1 billion figure quoted by the Department is the value of loans removed from guarantee cover across all of its Covid loan guarantee schemes; statistics published by the Department confirm that the value of BBLS loans where the guarantee has been removed is £376 million.51 Show less

The Department told us that at the time the BBLS was set up, the real worry was the number of businesses which could fail, and up to around half a million businesses were sustained by the intervention. However, the scheme … Read more The Department told us that at the time the BBLS was set up, the real worry was the number of businesses which could fail, and up to around half a million businesses were sustained by the intervention. However, the scheme design does not help in terms of tackling fraud and error.52 Show less

We wrote to the Department, following our evidence session on 7 April, to obtain greater clarity on the value of losses to fraud that have since been recovered. We specifically requested the value of losses recovered which were incurred due … Read more We wrote to the Department, following our evidence session on 7 April, to obtain greater clarity on the value of losses to fraud that have since been recovered. We specifically requested the value of losses recovered which were incurred due to suspected fraud within the BBLS. We requested that this be split by method of recovery, distinguishing between amounts recovered by lenders, and those recovered by other enforcement activity. The Department responded that £130 million paid to lenders under the guarantee had subsequently been repaid by them, but it could not confirm how much of this £130 million related to cases of suspected fraud, or how much related to lender recoveries or Department-led enforcement activities.53 Show less

On 15 May 2025 the Minister for Services, Small Business and Exports issued a statement announcing that the Department will not renew the contract with NATIS, instead the Insolvency Service will take over the remaining casework.54 In the accompanying press … Read more On 15 May 2025 the Minister for Services, Small Business and Exports issued a statement announcing that the Department will not renew the contract with NATIS, instead the Insolvency Service will take over the remaining casework.54 In the accompanying press release the Department confirmed that the decision to appoint NATIS has cost the taxpayer approximately £38.5m, resulting in only 14 convictions, with the amount recovered unclear. The Department confirmed problems with NATIS governance and reporting of recoveries, that public money was not being spent effectively, and that the Insolvency Service would take over NATIS’s viable investigation cases. The Government Internal Audit Agency (GIAA) has been asked to conduct an additional audit of NATIS to determine and report accurate recovery figures.55 50 Qq 27, 30 51 DBT, COVID-19 loan guarantee schemes performance data as at 31 March 2024, August 2024 52 Q 31 53 Correspondence from Department for Business and Trade, 2 May 2025 54 Transition of services from NATIS to the Insolvency service, 15 May 2025 55 DBT, Covid fraud investigations to be led by Insolvency Service, 15 May 2025 17 3 Production of the Department’s 2023–24 accounts Introduction Show less

The Department for Business and Trade (the Department) was formed in February 2023 as one of three Government Departments which replaced the Department for Business, Energy and Industrial Strategy (BEIS). This action, is known as a ‘machinery of Government change’. … Read more The Department for Business and Trade (the Department) was formed in February 2023 as one of three Government Departments which replaced the Department for Business, Energy and Industrial Strategy (BEIS). This action, is known as a ‘machinery of Government change’. This brought together the business-focused parts of the former BEIS, and the totality of the former Department for International Trade (DIT).56 Show less

Government departments prepare financial statements in accordance with the International Financial Reporting Standards (IFRS) and the Government Financial Reporting Manual (FReM).57 As a result of the inclusion of the balances and transactions relating to the business-focused elements of BEIS the … Read more Government departments prepare financial statements in accordance with the International Financial Reporting Standards (IFRS) and the Government Financial Reporting Manual (FReM).57 As a result of the inclusion of the balances and transactions relating to the business-focused elements of BEIS the Department was required to prepare financial statements which were wider in scope and complexity when compared to those of DIT. These financial statements also include financial information relating to arm’s length bodies the Department is responsible for, known as a ‘departmental group’. The DIT ‘departmental group’ comprised the core department and one arm’s length body, the Trade Remedies Authority. As part of the changes, the Department became responsible for eighteen further bodies which vary in scale and include the British Business Bank, Companies House and the Insolvency Service.58 Show less

HM Treasury sets timetable expectations for the laying of Departmental resource accounts before Parliament in a ‘Dear Accounting Officer’ letter. This provides direction to Accounting Officers of Departments and other public bodies on preparing their Annual Report and Accounts under … Read more HM Treasury sets timetable expectations for the laying of Departmental resource accounts before Parliament in a ‘Dear Accounting Officer’ letter. This provides direction to Accounting Officers of Departments and other public bodies on preparing their Annual Report and Accounts under IFRS and the FReM. The 2023–24 letter set out that “Departments should aim to lay resource accounts [ … ] by the administrative deadline of 30 June 2024 56 HMG, Making Government Deliver for the British People, February 2023, p 6 57 HM Treasury, DAO 02/24 - Accounts Directions 2023–24, June 2024 58 DBT ARA 2023–24, p 8 18 where possible, and no later than the parliamentary summer recess”.59 The Department published its first set of accounts, for the year ended 31 March 2024, on 30 January 2025–ten months following the financial year end, and seven months after HM Treasury’s administrative deadline.60 The Production of the 2023–24 accounts and the Department’s plan for future accounts Show less

The Department told us that the delay in publishing its 2023–24 accounts was due to three key reasons. These were: the requirement to merge the financial information of its predecessor departments; the challenging learning curve required to account for more … Read more The Department told us that the delay in publishing its 2023–24 accounts was due to three key reasons. These were: the requirement to merge the financial information of its predecessor departments; the challenging learning curve required to account for more complex balances aligned with insufficient resources; and the complexity inherent in the accounting for the Post Office compensation provisions.61 Show less

The Department explained challenges it faced in being required to merge the financial information of its predecessor departments to present three years of financial information. As instructed by the FReM, the Department was required to restate comparatives for the previous … Read more The Department explained challenges it faced in being required to merge the financial information of its predecessor departments to present three years of financial information. As instructed by the FReM, the Department was required to restate comparatives for the previous period in accordance with IAS 1 Presentation of Financial Statements.62 This required the production and audit of three statements of financial position, in addition to comparatives for all other relevant statements and notes in the financial statements and comparatives in the Annual Report. The Department described the amount of work to produce and audit this information as a “huge endeavour”.63 Show less

The Department said that the increased complexity of its accounts when compared to those of DIT was driven by balances moving across from BEIS.64 These balances had to be accounted for to a much higher level of precision due to … Read more The Department said that the increased complexity of its accounts when compared to those of DIT was driven by balances moving across from BEIS.64 These balances had to be accounted for to a much higher level of precision due to the accounting concept of ‘materiality’. The materiality level set in BEIS for the audit of the Core Department was £575 million.65 The new department’s gross expenditure is significantly lower than that spent by BEIS and accordingly, the materiality level for the 2023–24 accounts of the Department was £43.5 million.66 This meant that some 59 HM Treasury, DAO 06/23 - Accounts Directions 2023–24, December 2023 60 DBT ARA 2023–24 61 Q 35 62 HM Treasury, Government Financial Reporting Manual: 2023–24, December 2023, p 84 63 Q 35 64 Q 35 65 BEIS, Annual report and accounts 2022 to 2023, p 179 66 DBT ARA 2023–24, p 123 19 balances which were previously immaterial in BEIS became highly material to the new department, necessitating increased work by the Department’s finance team. Show less

The second key reason the Department gave for the delay in the completion of its 2023–24 accounts was that the finance team who were tasked with producing the accounts previously worked in DIT and had to understand the complex balances … Read more The second key reason the Department gave for the delay in the completion of its 2023–24 accounts was that the finance team who were tasked with producing the accounts previously worked in DIT and had to understand the complex balances which the Department inherited from BEIS.67 DIT had total operating expenditure in 2022–23 of £588 million across its departmental group.68 This represents a fraction of the £3,951 million in the Department’s group operating expenditure when restated for the equivalent period which includes the relevant portion of BEIS expenditure.69 The finance team’s experience from producing the DIT accounts was therefore insufficient to provide the capability to prepare the Department’s accounts. The Department considers the complexity of its balance sheet is “different by orders of magnitude” compared to DIT70 and that the 2023–24 accounts production process was a steep learning curve.71 The Department said it had needed to recruit “literally a couple of hundred” finance staff to provide sufficient capability within its finance function.72 Show less

The third reason given by the Department for delays to the completion of its 2023–24 accounts was the Post Office provisions. This was due to: the complexity in estimating the provision liabilities; the effort required to justify those estimates; and … Read more The third reason given by the Department for delays to the completion of its 2023–24 accounts was the Post Office provisions. This was due to: the complexity in estimating the provision liabilities; the effort required to justify those estimates; and the need to ensure the alignment of estimates with the Post Office Limited’s own accounts.73 As set out earlier in this report, the C&AG qualified his opinion on two of the compensation scheme provisions. This was due to the significant uncertainty associated with the value and volume of future redress payments and the limited data available to support the Department’s assumptions.74 Show less

The Department stated that it has worked to bring forward the delivery of its 2024–25 accounts to September 2025, a four-month improvement in timeliness. To do so, the Department said it had performed a significant lessons-learned exercise alongside the National … Read more The Department stated that it has worked to bring forward the delivery of its 2024–25 accounts to September 2025, a four-month improvement in timeliness. To do so, the Department said it had performed a significant lessons-learned exercise alongside the National Audit Office and increased the capability and capacity of its finance team. HM Treasury’s accounts direction for the 2024–25 resource accounts retains the equivalent deadlines 67 Q 35 68 Department for International Trade, Annual report and accounts 2022 to 2023, July 2023, p 179 69 DBT ARA 2023–24, p 133 70 Q 37 71 Q 35 72 Q 40 73 Q 35 74 National Audit Office, Department for Business and Trade Annual Report and Accounts 2023–24, January 2025 20 as for 2023–24.75 The Department acknowledged that the knock-on impact of the late delivery of the 2023–24 accounts means it will fail to deliver the 2024–25 accounts on time and in accordance with the directions.76 National Audit Office guidance on achieving high quality, timely and efficient audits states “timely reporting supports Parliamentary scrutiny of public spending and gives the public assurance over the way in which public money is being used.”77 The delayed publication of the Department’s accounts therefore undermines Parliamentary scrutiny and the public’s assurance over the spending of public money. The Department stated that it has agreed a detailed timetable and expectations with the National Audit Office to achieve the September laying of its 2024–25 accounts. The Department aims to publish its 2025–26 accounts in line with the timetable set out in HM Treasury’s accounts directions, which would mean in time for the parliamentary summer recess.78 Show less

Alongside producing a more complex set of accounts in a timely manner, the Machinery of Government change meant that the Department had to develop a new framework of governance, risk management and control for an organisation comprised of teams from … Read more Alongside producing a more complex set of accounts in a timely manner, the Machinery of Government change meant that the Department had to develop a new framework of governance, risk management and control for an organisation comprised of teams from the former DIT and BEIS. There was a further need to put in place a system of common and consistent controls where previously teams had worked in differing control environments.79 Show less

This control framework is subject to annual review by the Government Internal Audit Agency (GIAA). GIAA provides four levels of assurance opinion following its reviews: substantial, moderate, limited or unsatisfactory.80 The conclusion for the Department in 2023–24 was ‘limited’, indicating … Read more This control framework is subject to annual review by the Government Internal Audit Agency (GIAA). GIAA provides four levels of assurance opinion following its reviews: substantial, moderate, limited or unsatisfactory.80 The conclusion for the Department in 2023–24 was ‘limited’, indicating there were significant weaknesses in the framework of governance, risk management and control such that it could be, or could become inadequate and ineffective. This was based upon 35 individual reviews of the Department’s governance, risk management, financial processes and other controls.81 Show less

The GIAA highlighted six themes which required action to strengthen controls: Machinery of Government Change; Capacity and Capability; Governance; Strategy and Business Planning; First Line of Defence; and 75 HM Treasury, DAO 03/24 Accounts Directions 2024–25, January 2025 76 Q … Read more The GIAA highlighted six themes which required action to strengthen controls: Machinery of Government Change; Capacity and Capability; Governance; Strategy and Business Planning; First Line of Defence; and 75 HM Treasury, DAO 03/24 Accounts Directions 2024–25, January 2025 76 Q 35 77 National Audit Office, Working together to achieve high quality, timely and efficient audits, February 2025, p 5 78 Q 35 79 DBT ARA 2023–24, p 53 80 Definitions for each of these assurance conclusions can be found within: Cabinet Office, Government efficiencies and savings (2022/23): Technical note, January 2025 81 DBT ARA 2023–24, p 55 21 Second Line of Defence. The Department stated in its Governance Statement that the Machinery of Government changes were a contributary factor for all themes identified.82 Show less

The Department said that the need to build up teams due to the organisational changes was the key factor in this opinion being received and that appropriate governance structures were not in place for the full financial year. The Department … Read more The Department said that the need to build up teams due to the organisational changes was the key factor in this opinion being received and that appropriate governance structures were not in place for the full financial year. The Department considers that by the end of financial year 2023–24 the capability and capacity necessary to implement a sufficient framework of governance was in place.83 The Department said that internal audit concerns were reasonable given the scale of the changes which occurred. The first four months of the financial year, the Department considered it was working on an “interim-type” model before moving to a “steady-state position” from Autumn 2023 onwards.84 Based upon the improvements it considers were implemented by the end of the 2023–24 financial year, the Department expects that it will receive a ‘moderate’ assurance opinion from GIAA for its 2024–25 accounts.85 This is defined as “some improvements are required to enhance the adequacy and effectiveness of the framework of governance, risk management and control”.86 82 DBT ARA 2023–24, p 55 83 Q 38 84 Q 40 85 Q 39 86 Cabinet Office, Government efficiencies and savings (2022/23): Technical note, January 2025 22 Show less