The Department of Health & Social Care (DHSC) 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. This is the first time the C&AG has provided a clean opinion on the DHSC financial statements since 2018-19.
Here we share highlights from his audit certificate. You can read the full certificate and report on the accounts in context in DHSC’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 its 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 and disclosure of the clinical negligence provision in the departmental group accounts
Description of risk
The departmental group recognised provisions in relation to clinical negligence totalling £60.0 billion at 31 March 2025 (31 March 2024: £58.2 billion). See note 16 to the financial statements.
There are significant judgements implicit in the valuation of the clinical negligence provisions. The valuation requires the support of actuarial experts and involves the use of actuarial assumptions, models, and data held within the NHS Resolution Claims Management System. The ‘incurred but not reported’ (IBNR) provision includes a greater level of estimation uncertainty, as judgements are required by management in respect of the level of claims that will be received for incidents that occurred prior to the reporting date but have not yet been reported to NHS Resolution.
The highly material value of the provisions and the level of judgement and estimation uncertainty inherent in the calculation could have resulted in material misstatement of the departmental group’s financial statements.
This key audit matter has been considered to be one of the most significant assessed risks of material misstatement.
Key observations
I draw attention to the disclosures made in note 16 to the financial statements concerning the uncertainties inherent in the claims provision for the Clinical Negligence Scheme for Trusts. As set out in note 16, given the long-term nature of the assumptions on which the estimate of the provision is based, a considerable degree of uncertainty remains over the value of the liability recorded by the department. Significant changes to the liability could occur as a result of subsequent information and events that are different from the current assumptions adopted by the department. My opinion is not modified in respect of this matter.
I have obtained sufficient assurance over this risk through my testing. I did not identify significant misstatements in the valuation or disclosure of the NHS Resolution clinical negligence provisions as a result of the work I have performed.
Property valuations in the departmental group accounts
Description of risk
The departmental group reported property recognised under IAS 16: Property, Plant and Equipment with a net book value £54.4 billion and property recognised under IFRS 16: Leases as right-of-use assets of net book value £3.7 billion (31 March 2024: Property recognised under IAS 16 £52.7 billion and property recognised as Accountability report 225 right-of-use assets under IFRS 16 £3.8 billion). See notes 6 and 8 to the financial statements.
The net book value of property is highly material to the departmental group’s financial statements; the majority of the departmental group’s property is owned by individual NHS providers, mainly consisting of hospitals and other healthcare buildings. NHS providers are required by the department to value their specialised property assets on a depreciated replacement cost (DRC) basis using the modern equivalent asset (MEA) approach. The valuation of these property assets represents a significant accounting estimate in each NHS provider’s accounts, which is sensitive to key assumptions made by management at each NHS provider. Due to the complexities involved, support is often sought from external valuers, operating in line with guidance issued by the Royal Institute of Chartered Surveyors (RICS). Valuers needed to consider the impact of factors such as the presence of reinforced autoclaved aerated concrete (RAAC) and movements in the inflation rate in reaching their valuations as at 31 March 2025.
There is a high level of judgement involved in the selection and application of the assumptions utilised for estimating the value of these property assets. There is also a risk that estimates may be manipulated by NHS provider management in response to NHS system incentives to achieve a desired valuation outcome.
This key audit matter has been considered to be one of the most significant assessed risks of material misstatement.
Key observations
I have obtained sufficient assurance over this risk through my testing. I did not identify significant misstatements in the valuation of property as a result of the work I have performed.
Valuation of the infected blood provision in the core and agencies accounts and departmental group accounts
Description of risk
The department recognised provisions in relation to the infected blood support scheme totalling £0.2 billion as at 31 March 2025 (31 March 2024: £2.0 billion). The provision represents the department’s estimate of its liabilities due to individuals who were infected with HIV and/or hepatitis C following treatment with NHS-supplied blood or blood products, and their bereaved partners. See note 16 to the financial statements.
Provisions are inherently risky as they are estimates determined by management and include judgements and assumptions made by management. Based on my risk assessment procedures, I identified the infected blood provision as a significant risk based on its material value and the complexity of the model used to arrive at the estimate.
The final report of the Infected Blood Inquiry was published in May 2024, and recommended a compensation scheme, to be administered by the newly-formed Infected Blood Compensation Authority (IBCA), an arms-length body of the Cabinet Office. IBCA is responsible for payments from 23 March 2026 based on the legislation in force at the reporting date. Accordingly, the department has derecognised from its accounts the liability for future payments expected from 23 March 2026, with £0.2 billion remaining at 31 March 2025 in respect of payment it expects to make up to 23 March 2026. Draft legislation was laid in Parliament in October 2025 to delay the date of transfer to 23 March 2027, however this does not require adjustment in the financial statements.
Key observations
The accounts presented for audit included provision for all future English Infected Blood Support Scheme payments. I concluded that the constructive obligation at the reporting date for payments to be made on or after 23 March 2026 resides with IBCA. In response to my challenge, the department reduced the value of its provision by £1.4 billion so that its accounts only reflected payments to be made up to 23 March 2026. I have obtained sufficient assurance over this risk through my substantive testing. I did not identify further significant misstatements in the valuation of the infected blood provision as a result of the work I have performed.
Classification, existence, rights and obligations, presentation, and valuation of the department’s financial assets in the core and agencies accounts
Description of risk
The department held financial assets valued at £45.3 billion as at 31 March 2025 (31 March 2024: £43.8 billion). See note 11 to the financial statements. The department holds four categories of financial assets, three of which had material balances at 31 March 2025:
- Public Dividend Capital (PDC) to NHS providers of £39.4 billion (31 March 2024: £37.4 billion);
- Share capital investments of £3.9 billion (31 March 2024: £4.3 billion);
- Loans to NHS providers of £1.8 billion (31 March 2024: £1.9 billion); and
- Loans to other bodies of £0.2 billion (31 March 2024: £0.2 billion).
This key audit matter is in relation to the department’s Public Dividend Capital (PDC) to NHS providers and its share in capital investments.
The department is required to value its share capital investments at ‘fair value’, which results in a level of inherent uncertainty on estimating the value as at 31 March 2025.
The department undertook a desk-based valuation exercise of its share capital investments as at 31 March 2025 with the assistance of an investments expert.
I identified a risk of misclassification between PDC and loans to NHS providers, and inherent risks regarding the existence and rights and obligations of financial assets. I identified a further a risk that the presentation of the department’s financial assets may not be in accordance with the requirements of the reporting framework.
The majority of the department’s financial assets are held in the NHS providers, Community Health Partnerships Limited, Genomics England Limited, NHS Property Services Limited, and Supply Chain Coordination Limited and are eliminated on consolidation in the departmental group financial statements.
Key observations
I have obtained sufficient assurance over this risk through my substantive testing. I did not identify significant misstatements in the classification, existence, rights and obligations, presentation, and valuation of the department’s financial assets as a result of the work I have performed.
Application of materiality
Departmental Group
Materiality: £1.9 billion
Basis for determining materiality: Approximately 1% of departmental group gross expenditure (£220.7 billion). Materiality set at planning based on a lower gross expenditure level has been retained.
The basis for determining materiality for the 2024-25 financial statements remains largely the same as that used in 2023-24, when materiality was £2.0 billion. The previous basis adjusted gross expenditure to exclude expenditure arising from changes in the discount rate for provisions, which would otherwise have resulted in significant year-on-year changes in materiality, given the significant fluctuations in the discount rate between 2020 and 2023.
Discount rates have stabilised since 2023 and, therefore, no such adjustment is now made.
Rationale for the benchmark applied: As a public sector department responsible for the provision of health and social care services, the departmental group is primarily funded by amounts drawn down from the Consolidated Fund. Gross expenditure is the primary driver of the departmental group financial statements; the provision of health and social care in England is the department’s primary purpose and a focus of both Parliamentary and public interest. In line with Practice Note 10, I have therefore chosen gross expenditure as the appropriate benchmark to apply.
Department (parent)
Materiality: £1.9 billion
Basis for determining materiality: Approximately 1% of core and agencies gross expenditure (£207.3 billion). Materiality set at planning based on a lower gross expenditure level has been retained.
The basis for determining materiality for the 2024-25 financial statements remains largely the same as that used in 2023-24, when materiality was £1.8 billion. The previous basis capped materiality as lower than departmental group materiality.
Revisions to auditing standards mean that materiality for the department does not need to be capped, as the component performance materiality set for the department reduces the risk of material aggregated misstatements for the departmental group.
Rationale for the benchmark applied: The rationale for the benchmark applied is consistent with that of the departmental group.