The Department for Transport has published its 2024-25 accounts. Gareth Davies, the Comptroller and Auditor General (C&AG), has issued a clean audit opinion, providing assurance to Parliament on the financial statements.

Here we share highlights from his audit certificate. You can read the full certificate and report on the accounts in context in the Department for Transport’s annual report and accounts.

Opinion on financial statements

In my opinion, 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 of 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.

Key audit matters

Valuation of the Railway Network

Description of risk

The Railway Network – as described in Notes 1.4.3 and 5.1 – is valued in these financial statements at fair value using depreciated replacement cost (DRC) methodology, in line with the requirements of HM Treasury’s Financial Reporting Manual and the Royal Institute of Charted Surveyors (RICS) Red Book. This provides a proxy for fair value in the absence of income or market-based sources. As at 31 March 2025, the Department valued the rail network at £490.4 billion (31 March 2024 – £471.9 billion).

A DRC valuation involves determining the current cost of replacing an asset with its modern equivalent and adjusting this to reflect the asset’s condition and capacity. A full revaluation is performed every five years, with the last such valuation in the 2023-24 financial year. The full revaluation exercise involved significant judgement in defining the ‘modern equivalent asset’ as well as the revaluation of the core costing rates used for track, stations and other networked assets.

Recognising the effect of inflation on the costing rates, management has used indexation to revalue the assets in 2024- 25, as is the practice in interim valuation years. The upward revaluation of the Railway Network is predominantly driven by the impact of inflation on relevant cost indices described in note 5.

Management discusses the nature and extent of estimation uncertainty associated with the valuation of the Railway Network in Notes 1.4.3 and 5.1. Uncertainty arises principally in respect of the ongoing appropriateness of the engineering assumptions made in assessing the design of the modern equivalent asset, the appropriateness of the costing rates applied, and the assessment of useful economic lives. I treat this matter as a significant risk for the audit because of the inherent complexity, judgement and estimation uncertainty in these areas.

Key observations

The assumptions supporting useful lives and design of the modern equivalent asset are consistent with the evidence I have obtained, and indexation has been properly applied to networked asset classes. I did not identify any unadjusted material misstatements in the course of completing this work.

Valuation of the Strategic Road Network

Description of risk

The Strategic Road Network (SRN) valuation comprises an estimate of the depreciated replacement cost (DRC) of the SRN, and is valued in these financial statements at fair value using DRC methodology, in line with the requirements of HM Treasury’s Financial Reporting Manual and the Royal Institute of Charted Surveyors (RICS) Red Book. The valuation comprises an estimate of the depreciated replacement cost of the SRN, to reflect its fair value in the absence of income or market-based sources. The estimate is derived from the actual costs of recent schemes, together with records about the number, type, and condition of physical assets. As at 31 March 2025, the SRN is valued at £151.6 billion – including SRN assets held in the core Department (31 March 2024: £159.7 billion).

The SRN valuation contains multiple areas of judgement and estimation uncertainty. Management discusses the critical judgements and estimates relating to the SRN in Notes 1.4.3 and 5.2.

As at 31 March 2025, management carried out a quinquennial review (QQR) of land and road assets (net book value of £103.8 billion at 31 March 2025). For roads, the valuation approach involved an exercise to identify modern equivalent road assets from recent construction schemes, extract cost data for each type of road constructed in those schemes, and use this to derive average cost rates for each type of road making up the SRN. For land, the approach involved obtaining expert advice on appropriate cost rates for the various areas and regions, split by urban or rural status, and applying these rates to the actual areas of land that make up the SRN. The valuation approach for structures, such as bridges, which were not subject to a QQR in the year ended 31 March 2025, involved adjusting the cost rates used in the valuation to reflect movements in relevant indices.

I treat this matter as a significant risk for the audit because of the inherent complexity and estimation uncertainty. Significant audit effort is involved in addressing risk around asset volumes, costing rates, indexation and assumptions, as well in assessing management’s methodology and testing the application of the valuation model.

Key observations

In concluding my audit work on the SRN, I found management’s key assumptions were consistent with the evidence obtained. These assumptions are disclosed in notes 1.4.3 and 5.2 of the financial statements.

My audit procedures found that cost indexation and management’s assessment of condition were also consistent with the evidence obtained.

As a result of my audit the Department posted material adjustments of £19.8 billion to correct errors in calculating the costing rates used for the road valuation and further immaterial adjustments, including £1.0 billion to correct an error in the application of location factors for roads and structures.

I did not identify any unadjusted material misstatements in the valuation of the road network recognised and disclosed in the financial statements.

Defined Benefit Pension Schemes

Description of Risk

The Departmental Group has obligations under several defined benefit pension schemes described in Note 24. These are funded schemes with significant assets under management. The pension schemes of the Train Operating Companies, which are not consolidated in the Department’s accounts, are not included here but the most recent published information on their financial position, including pension deficits, is provided at Note 27.

Based on risk and value, I focused my audit work principally on the Network Rail section of the Railway Pensions Scheme (‘RPS’), the British Transport Police Force Superannuation Fund, the British Transport Police section of the RPS, and the core Department 1994 Section of the RPS. The total value of gross pension liabilities for all schemes recognised by the Department on the Statement of Financial Position is £614 million (31 March 2024: £719m), including those in scope of this key audit matter.

There is significant complexity, and estimation uncertainty, in the valuation of both the assets and liabilities contributing to the net scheme positions, as described in Note 24 to the financial statements.

At 31 March 2025, the Network Rail section of the RPS and the British Transport Police schemes were in surplus positions. Management assessed the terms of these schemes against the requirements of the relevant accounting standards, in particular the ‘IFRIC 14’ interpretation of ‘IAS 19 – Employee Benefits’. The Group recognised assets of £1.2 billion on the Statement of Financial Position with respect to these schemes (31 March 2024: asset of £92m).

Scheme Liabilities

As with all defined benefit pension schemes, an actuarial estimate of the liability reflecting amounts to be paid out to members in the future (£624 million as at 31 March 2025 including members’ share) involves significant estimation in respect of determining appropriate financial assumptions and other assumptions, including demographic assumptions.

Scheme assets

I placed particular emphasis on assurance over unquoted equity instrument valuations, particularly in respect of timing risk. The standard practice of the scheme assets managers is to value investments using the most recent evidence available, and to adjust for subsequent cash flows where necessary. This leads to a risk of unrecognised fair value differences where the valuations are for a period before the year end (typically, the end of the previous quarter). At 31 March 2025, harder-to-value investments (Level 3 instruments) represented £2.7 billion out of total group assets (excluding members’ share) of £9.2 billion.

Key observations

In the course of completing this work, I did not identify any material misstatements in the valuation of defined benefit pension balances in the financial statements.

Application of materiality

Departmental Group

Materiality: £6,300 million

Basis for determining overall account materiality: Approx. 1% of the net book value of prior year infrastructure assets (note 5).

Rationale for the benchmark applied: Infrastructure assets are the largest item in the Departmental Group Statement of Financial Position. Significant economic activity relies on the road and rail networks, and there is significant user interest in the extent and condition of those networks.

I used the prior year amount for prudence, as in-year infrastructure assets balances have increased.

Additional Group threshold

Materiality: £410 million

Basis for determining overall account materiality: Approx. 1% of prior year group gross expenditure excluding depreciation but including capital additions.

Rationale for the benchmark applied: To reflect the sensitivity of financial statement users to transactions and balances reflecting taxpayer-backed financial activity. Capital additions are included since these reflect cash spending, and depreciation is excluded as – where relevant to Infrastructure assets – it is assessed against the Departmental Group materiality.

Despite a slight decrease in the benchmark at year-end, I used the prior year amount as I deemed there not to have been a corresponding increase in risk.

Department (Parent) materiality

Materiality: £340 million

Basis for determining overall account materiality: Approx. 1% of prior year gross expenditure.

Rationale for the benchmark applied: Aside from intra-Departmental loan balances, expenditure is the most significant financial statements element for the parent and is a fair proxy for user sensitivity given the Department’s role as a spending Department. This materiality relates to the transactions and balances reported in the Core & Agencies columns.

Despite a slight decrease in the benchmark at year-end, I used the prior year amount as I deemed there not to have been a corresponding increase in risk.

Department for Transport Annual Report and Accounts 2024–25

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