The Cabinet Office has published its 2024-25 accounts. Gareth Davies, the Comptroller and Auditor General (C&AG), has modified his audit opinion to Parliament due to a limitation of the scope of his true and fair opinion in respect of Infected Blood Compensation Scheme provisions.
Limited data held by the Infected Blood Compensation Authority has meant that except for individuals already registered on an existing Infected Blood Support Scheme, the Departmental Group has not provided sufficient evidence of its assumptions on the volume of eligible claimants that may apply to the Infected Blood Compensation Scheme in the future.
For more details see Basis for qualified opinion on the financial statements.
Here we share highlights from the C&AG’s audit certificate. You can read the full certificate and the report in context in the Cabinet Office’s annual report and accounts.
Qualified opinion on financial statements
In my opinion, except for the effects of the matters described in the Basis for qualified opinion on the financial statements section below, the financial statements:
- give a true and fair view of the state of the Department and the Departmental Group’s affairs as at 31 March 2025 and their net expenditure for the year then ended; and
- have been properly prepared in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions issued thereunder.
Opinion on regularity
In my opinion, in all material respects:
- the Statement of Outturn against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2025 and shows that those totals have not been exceeded; and
- the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.
Basis for qualified opinion on the financial statements
In respect of the provisions held by the Departmental Group, the evidence available to me was limited as the Departmental Group was unable to provide sufficient evidence to support its key assumptions on the expected volume of claimants for three of the four cohorts within the Infected Blood Compensation Scheme. I was unable to satisfy myself by using alternative means as other available data sources were not appropriate to support alternative audit procedures to obtain the required evidence.
Consequently, I have been unable to obtain sufficient appropriate evidence to support the value of £6,987 million of the £9,582 million Infected Blood Compensation Scheme provisions included within the Departmental Group Statement of Financial Position as at 31 March 2025, comprising liabilities for compensation due to infected non-registered people (£1,415 million), estates of infected people who have died (£2,819 million) and affected people (£2,753 million). I have also been unable to obtain sufficient appropriate evidence to support the related expenditure of £6,987 million included within the Departmental Group Statement of Comprehensive Net Expenditure for the recognition of provisions during the period.
Whilst I have not been able to reliably quantify the effect of this matter due to the limitations described, I consider the effect of these issues to be potentially material in terms of the valuation of these liabilities and the accuracy of the related expenditure. I was unable to determine whether any adjustment to the valuation of the provisions or the related expenditure was necessary.
My assessment of the matters giving rise to qualified opinion
Recognition and Measurement of the Infected Blood Compensation Scheme Provision
Matter giving rise to the qualification
The Departmental Group has recognised a provision of £9,582 million for the first time during the financial year ended 31 March 2025 in respect of the Infected Blood Compensation Scheme and estimated compensation due to individuals who have suffered as a result of infected blood and infected blood products. Note 14 to the financial statements discloses further information on the Infected Blood Compensation Scheme.
I have qualified my opinion on the Departmental Group’s financial statements as the Departmental Group, through the Infected Blood Compensation Authority, has been unable to provide sufficient evidence to support its key assumptions on the expected volume of claimants for three of the four cohorts within the Infected Blood Compensation Scheme, amounting to £6,987 million of the provision as at 31 March 2025 and the related expenditure incurred on recognition.
The Departmental Group, through the Infected Blood Compensation Authority, has however been able to provide sufficient evidence to support the £2,595 million provision for compensation to infected individuals registered on an existing Infected Blood Support Scheme and the £60 million compensation payments made from the provision during the year.
Scope of my work
My audit work on the Infected Blood Compensation Scheme provision included:
- assessing the design and implementation of the Departmental Group’s controls related to the recognition and measurement of the provision;
- assessing the completeness of provisions recognised by reference to the Victims and Prisoners Act 2024, The Infected Blood Compensation Scheme Regulations 2025, and public announcements made in response to recommendations from the Infected Blood Public Inquiry;
- evaluating the reasonableness of assumptions made by the Infected Blood Compensation Authority in relation to the number of expected claimants for each cohort;
- evaluating the reasonableness of other key medical and financial assumptions, utilising support from a medical expert as appropriate;
- testing of input data used within the provision model including review of consistency with The Infected Blood Compensation Scheme Regulations 2025;
- assessing the operation and mathematical integrity of the provision model;
- sample testing compensation payments made during the year; and
- evaluating management’s related disclosures.
Why I was unable to obtain sufficient appropriate evidence
As at 31 March 2025 the Infected Blood Compensation Authority had not opened its claim service for infected individuals not yet registered, the estates of infected individuals who have died, and affected individuals. The infancy of the Compensation Scheme means there is minimal historic data available, if any, for these three cohorts, and the Infected Blood Compensation Authority and Departmental Group has not provided sufficient evidence to support its key assumptions on the number of expected claimants. The key assumptions on claimant volumes have a material impact on the provisions calculated and therefore I limited the scope of my audit opinion in relation to £6,987 million of the £9,582 million Infected Blood Compensation Scheme provisions.
Key audit matters
Assets under construction held by the Government Property Agency
Description of risk
This key audit matter was one of the most significant assessed risks of material misstatement in both the year ended 31 March 2025 and the presentation of prior year comparatives. I qualified my opinion on the Department and Departmental Group financial statements for the year ended 31 March 2024 in respect of limited evidence available from the Government Property Agency to support £28 million of the £330 million payments on accounts and assets under construction represented in the Department and its Group’s Statement of Financial Position at 31 March 2024, and £127 million of the £295 million payments on account and assets under construction at 31 March 2023. The evidence available during the prior year was also insufficient to support £108 million of reclassifications and £27 million of impairments from assets under construction for the year ended 31 March 2024 and £22 million of reclassifications and £8 million of impairments from assets under construction for the year ended 31 March 2023, into the operational asset categories of intangible assets, IT, plant and machinery and leasehold improvements. Consequently, I was also unable to assess the completeness and accuracy of the depreciation, amortisation and impairment transactions in the Department and its Group’s Statement of Comprehensive Net Expenditure for the years ended 31 March 2024 and 31 March 2023. My report on the financial statements for the year ended 31 March 2024 provided further details of these matters.
During 2024-25, the Government Property Agency planned to complete a project to review all of its assets under construction transactions and balances. As a result of my prior year qualification and the scale of work to be completed by management, I considered there was a significant risk of material misstatement related to the valuation and classification of assets under construction and the completeness and valuation of depreciation and amortisation charges for 2024-25. This risk related to balances recognised in the Department and Departmental Group Statement of Financial Position as at 31 March 2025, 31 March 2024 and 1 April 2023 and transactions in the 2024-25 and 2023‑24 Statements of Comprehensive Net Expenditure.
Key observations
I found management’s controls were designed and implemented sufficiently to address the risk of material misstatement. Through the substantive procedures completed I have obtained sufficient appropriate assurance overt the valuation of the Department and Departmental Group’s assets under construction and the reclassification and other adjustments made to operational asset categories as at 31 March 2025, 31 March 2024 and 1 April 2023. I have also obtained sufficient assurance over the depreciation, amortisation and impairment transactions within the Statements of Comprehensive Net Expenditure for the years ended 31 March 2025 and 31 March 2024.
Management of non-current assets at the core department
Description of risk
The core department held property, plant and equipment of £144 million (note 6) and intangible assets of £61 million (note 8) at 31 March 2025. During the prior year’s audit, I found that the core department had not properly maintained its non-current asset register for the 2023 to 2024 financial year. In particular, it had not processed additions in the non-current asset register on a timely basis or reclassified assets which were already in operational use from assets under construction to other asset categories. Through testing completed for the year ended 31 March 2025, I found that the core department had corrected the non-current asset register to include all 2023-24 activity but had not properly maintained the non‑current asset register for the activity in the 2024-25 financial year. In particular, it had not processed additions in the non-current asset register on a timely basis nor reclassified assets which were already in operational use from assets under construction to other asset categories. I identified a risk that plant and equipment plus intangible assets were incorrectly classified and that depreciation, amortisation, impairment and indexation had not been correctly recognised.
Key observations
I found that the core department had corrected the non-current asset register to include all 2023-24 activity but deficiencies still exist in the processes to maintain the non-current asset register for the activity in the 2024-25 financial year. Management undertook processes to assess the impact of this after the year end and I have sufficient evidence to support my opinion.
Accounting for leasehold properties under IFRS 16 Leases
Description of risk
Through the Government Property Agency, the Department holds leasehold properties, which it sub-lets to other government bodies. The accounting treatment of the properties depends on whether the sub‑leases are operating leases or finance leases in line with the definitions set out in IFRS 16 Leases. Where the sub‑lease is an operating lease, the Department and Departmental Group recognises a right of use asset. Where the sub-lease is a finance lease, a finance lease receivable is recognised. At 31 March 2025, the Departmental Group held £295 million of right of use assets (Note 7.1) and £840 million of finance lease receivables (Note 7.2) (2024 restated: £354 million of right of use assets and £822 million of finance lease receivables). There are judgments and assumptions involved in both the classification of the leases and the calculation of the associated assets and liabilities. There is also judgment in ensuring that all related assets and liabilities, such as dilapidation provisions, have been recognised. Any subsequent changes to lease terms need to be identified and assessed to ensure the accounting remains appropriate. Therefore, I identified a risk that lease-related assets and liabilities were not complete, appropriately classified and correctly valued.
Key observations
I found that the Group’s key controls in relation to recognition, measurement and completeness of leases had been designed and implemented adequately. I also found that lease arrangements were materially complete and for a sample of lease arrangements, I observed that transactions and balances had been accounted for appropriately in accordance with IFRS 16 Leases.
Valuation of freehold land and buildings
Description of risk
The Departmental Group recognises £1,335 million of land and buildings assets on its consolidated statement of financial position as at 31 March 2025 (£1,337 million as at 31 March 2024). The Government Property Agency (a significant component of the group) recognises £1,250 million (Note 6) of these assets (£1,252 million as at 31 March 2024).
As described in note 1.18 the Government Property Agency engaged external property valuation specialists to estimate the fair value of its properties. Each property is revalued on a rotational basis on a five-year cycle, commencing at the point of acquisition or on its transfer to the Government Property Agency. In the intervening years, changes in valuation are determined using a desktop valuation exercise undertaken by the Government Property Agency’s external property specialists without reinspection. The valuation of property is a significant estimate in the financial statements and a key source of estimation uncertainty, as a reasonable change in assumptions used can have a significant impact on the valuation. The assumptions include estimates of future rental income, anticipated future costs, floor areas and the discount rate.
Key observations
I found that the Departmental Group’s key controls over the valuation process had been designed and implemented adequately and that asset valuations had been prepared using an appropriate methodology and appropriate assumptions. I also found that for a sample of individual properties the valuations were materially appropriate.
Application of materiality
Departmental Group
Materiality for the group financial statements as a whole: £191.6 million
Basis for determining materiality: 2% of the value of the Infected Blood Compensation Scheme provision
Rationale for the benchmark applied: The Infected Blood Compensation Scheme provision is of interest to the users of the accounts as the largest and most complex balance being managed by the Departmental Group. Its valuation is subject to significant uncertainty arising from the complexity of estimating the expected number of claimants, and other key assumptions. I have therefore set materiality at a level intended to reflect my view that a greater level of precision would potentially overstate the confidence that users may place on using this information for their decision making.
Particular classes of transactions, account balances and disclosures where this level of materiality has been applied: This materiality has been used to assess the accuracy of the Infected Blood Compensation Scheme provisions (excluding provisions utilisation) and the related expenditure.
Additional materiality for transactions, balances and disclosures unrelated to the Infected Blood Compensation Scheme: £39.2 million
Basis for determining materiality: 1% of the value of gross assets
Rationale for the benchmark applied: There are activities and financial statement values unconnected with the provision that will be of interest and misstatements of a lesser amount than overall materiality could influence the decisions of users of the accounts. The group manages a significant proportion of the governmental estate which is also considered a key focus of users of the account.
Particular classes of transactions, account balances and disclosures where this level of materiality has been applied: All classes of transactions, balances and disclosures within the Group financial statements that are not directly related to the Infected Blood Compensation Scheme provision.
Materiality for Infected Blood Compensation Scheme payments: £1.2 million
Basis for determining materiality: 2% of Infected Blood Compensation Scheme provisions utilisation representing the compensation payments made.
Rationale for the benchmark applied: There is a high degree of public and parliamentary interest in the speed of claims being paid, the average value of claims and whether individual claims have been calculated accurately in accordance with the Scheme regulations.
Particular classes of transactions, account balances and disclosures where this level of materiality has been applied: Applicable to compensation payments made for the infected blood compensation scheme.
Department
Materiality for the parent financial statements as a whole: £39.0 million
Basis for determining materiality: 1% of the value of gross assets
Rationale for the benchmark applied: Assets are the largest item in the Department’s statement of financial position and are considered to be the key focus of users of the account.
Particular classes of transactions, account balances and disclosures where this level of materiality has been applied: All assets, liabilities, income and expenditure in the parent with the exception of Public Duty Costs Allowance expenditure.
Materiality for Public Duty Cost Allowance: £15,650
Basis for determining materiality: 2% of total Public Duty Cost Allowance expenditure
Rationale for the benchmark applied: Payments to the offices of former Prime Ministers are separately disclosed in the financial statements as Public Duty Costs are of high public interest.
Particular classes of transactions, account balances and disclosures where this level of materiality has been applied: Applicable to Public Duty Costs Allowance expenditure reported within both the Parent and Group financial statements.
