Annual Report and Accounts 2020-21 July 2021 HC 436 Annual Report and Accounts 2020-21 Presented to the house of Commons pursuant to Section 6(4) of the Government Resources and Accounts Act 2000. Ordered by the House of Commons to be printed on 20 July 2021 HC 436 July 2021 This is part of a series of departmental publications which, along with the Main Estimates 2020-21 and the document Public Expenditure: Statistical Analysis 2020, present the government’s outturn for 2020-21 and planned expenditure for 2021- 22. © Crown copyright 2021 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open- government-licence/version/3. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at: www.gov.uk/official-documents. Any enquiries regarding this publication should be sent to us at [email protected] ISBN: 978-1-5286-2754-2 PU: 3131 Preface About this Annual Report and Accounts This document integrates performance and financial data with analysis to help readers gain a better understanding of the work of the Treasury and how it spends taxpayers’ money to deliver the government’s economic and fiscal policies. It covers the activities of the Treasury from April 2020 to March 2021 (inclusive), and is split into 4 main sections: • the Performance report includes a summary of progress and key milestones achieved during 2020-2021 (the Performance overview), followed by a deeper dive into the department’s achievements over the year against each of the 3 policy objectives and the Treasury’s own corporate objective (the Performance analysis) • the Accountability report is further split into 3 sub sections and includes: a Corporate governance report where the Treasury reports on the operating structure of the department and important transparency matters such as conflicts of interest and whistle blowing. It also includes a statement of the Accounting Officer’s responsibilities, and a Governance Statement on how the Treasury manages risk; a Remuneration and staff report setting out an open account of the pay and benefits received by ministers, executive and non-executive members of the Board, disclosures on Treasury’s pay and pensions policies, and details of staff numbers and costs; and a Parliamentary accountability and audit report allowing readers to understand the department’s expenditure against the money provided to it by Parliament by examining the Statement of Outturn against Parliamentary Supply. A copy of the audit certificate and report made to Parliament by the head of the National Audit Office setting out his opinion on the financial statements is also included in this section • the Financial statements show the Treasury Group’s income and expenditure for the financial year, the financial position of the department as at 31 March 2021, and additional information designed to enable readers to understand these results • the Trust Statement provides a record of fine and levy income collected by Treasury on behalf of government during the financial year Contents Foreword by the Exchequer Secretary to the Treasury 2 Chapter 1 Performance report 3 Chapter 2 Accountability report 52 Chapter 3 Financial statements 148 Chapter 4 Trust Statement 223 Chapter 5 Better regulation 234 Chapter 6 Sustainability report 236 Chapter 7 The Treasury Group 247 1 Foreword by the Exchequer Secretary to the Treasury Over the past few months, the easing of COVID-19 restrictions, facilitated by the UK’s world-leading vaccination programme, has brought about the initial phase of our nation’s recovery from the devasting hold of the pandemic. While the lifting of restrictions is encouraging, we must not forget the significant impact that the pandemic has wrought on lives and livelihoods across our country. I am proud of the central role that HM Treasury took – and continues to take – in the government’s COVID-19 response. Over the course of the pandemic, HM Treasury has provided one of the world’s most comprehensive economic support packages to people and businesses. From the Plan for Jobs, including our flagship Coronavirus Job Retention Scheme and Self Employment Income Support Scheme; to ensuring access to finance for businesses of all sizes; to providing extra financial support for our vital public services, the package of support announced by the government since the start of the pandemic totals £352 billion. The past year has also forged the path to building back better from COVID-19. At the 2020 Spending Review, the Chancellor confirmed £100 billion of capital expenditure, a £27 billion real terms increase on 2019-20. At Budget 2021, together with the Prime Minister, he cemented his plan to invest in the economy of the future via the plan for growth, with significant investment in infrastructure, skills and innovation. Through this plan, the government will pursue growth that benefits the whole of the United Kingdom, creates quality jobs, enables the transition to net zero, and supports our vision for Global Britain. At the same time, the government took steps at the Budget to return the public finances to a more sustainable path over the medium- term. HM Treasury has also achieved a number of important milestones outside of the response to the pandemic. In October 2020, HM Treasury introduced the Financial Services Act 2021, which will ensure the UK’s world-leading financial services sector continues to thrive. In December 2020, HM Treasury was closely involved in the delivery of the UK-EU Trade and Co-operation Agreement. In February 2021, the Review into the Economics of Biodiversity, led by Professor Sir Partha Dasgupta, was published. I am proud of what HM Treasury has achieved over the past year. HM Treasury has proven itself once more to be a professional, dynamic department. I have confidence that it will continue to rise creatively and rigorously to the challenges ahead. Kemi Badenoch MP Exchequer Secretary to the Treasury 16 July 2021 2 Chapter 1 Performance report Performance overview This performance overview sets out how HM Treasury has worked to deliver its policy and corporate objectives, highlighting its key achievements. HM Treasury is the government’s economics and finance ministry, maintaining control over public spending, setting the direction of the UK’s economic policy, and working to achieve strong and sustainable economic growth. HM treasury has a very broad remit, and its work touches every UK citizen, as it covers public spending policy (including departmental spending, public sector pay and pensions, annually managed expenditure and welfare policy, and capital investment); financial services policy (including banking and financial services regulation, financial stability, and ensuring competitiveness); strategic oversight of the UK tax system (including direct, indirect, business, property, personal tax and Corporation Tax); and ensuring the economy is growing sustainably, including through decarbonisation of the economy. And over the last year, in response to the COVID-19 pandemic, the Treasury has been at the heart of the government’s economic response to the crisis, developing and implementing unprecedented packages of support to help millions of people, families and businesses. Led by The Rt Hon Rishi Sunak MP, Chancellor of the Exchequer, HM Treasury is committed to: taking a balanced approach to supporting the economy, maintaining financial and macroeconomic stability while investing in Britain’s future; spending taxpayers’ money responsibly while maintaining long-term fiscal sustainability; and, creating stronger and safer banks while improving regulation of the financial sector and making it easier for people to access and use financial services. The Chancellor of the Exchequer is supported by his ministerial team: The Rt Hon Stephen Barclay MP (Chief Secretary), The Rt Hon Jesse Norman MP (Financial Secretary to the Treasury), Kemi Badenoch MP (Exchequer Secretary to the Treasury), John Glen MP (Economic Secretary to the Treasury), and The Rt Hon The Lord Agnew of Oulton (Minister of State, jointly with the Cabinet Office). HM Treasury had three policy objectives for 2020-21: 1 placing the public finances on a sustainable footing, ensuring value for money and improved outcomes in public services; 2 ensuring the stability of the macro economic environment and financial system, enabling strong, sustainable and balanced growth as we leave the EU; and 3 3 increasing employment and productivity and ensuring strong growth and competitiveness across all regions of the UK through a comprehensive package of structural reforms, taking advantage of the opportunities provided by leaving the EU. At Spending Review 2020, HM Treasury set out its three priority outcomes for 2021- 22, published in its 2021-22 Outcome Delivery Plan: 1 place the public finances on a sustainable footing by controlling public spending and designing sustainable taxes; 2 level up the economy, by ensuring strong employment and increasing productivity across the regions and nations of the UK; and 3 ensure the stability of the macro economic environment and financial system. A highly engaged workforce enables the Treasury to operate as a high-performing organisation. As part of their commitment to continued corporate progress, the Executive Management Board sustained the ‘Building a Great Treasury’ change management programme for delivering our corporate objective: creating a more open, inclusive and diverse department, underpinned by professionalism, skills and management excellence. The department has subsequently updated its change programme, in line with the Government’s ambitions for a Modern Civil Service that is skilled, innovative and ambitious. Key issues and risks The Treasury faces a range of issues and risks in its dual role as the UK’s economics and finance ministry and a central government department and employer. The issues and risks faced are diverse in nature and severity and will sometimes be determined by external forces over which the department may have influence but no control.