Corporate report

The Insolvency Service Annual Report and Accounts 2021-2022

Published 27 October 2022

1. Annual Report and Accounts 2021/22

Presented to the House of Commons pursuant to Section 7 of the Government Resources and Accounts Act 2000

Ordered by the House of Commons to be printed on 27 October 2022

HC 722

© Crown copyright 2022

ISBN 978-1-5286-3670-4

2. Performance Report

Performance overview

Chief Executive’s foreword

As the Government Agency responsible for the country’s insolvency framework, the Insolvency Service has a key role to play in supporting those experiencing financial difficulty. Although the country has now emerged from the COVID-19 pandemic, 2021-22 started with continuing pandemic related restrictions. Since then, there have been new economic challenges with significant rises to the cost of living, instability in the energy markets and global events impacting the longer-term economic outlook.

This report sets out the good progress we have made during the last year, supporting our customers and ensuring that we have an Agency fit for the future in what has been a challenging environment. 2021-22 was the first full year delivering our five-year strategy and in May 2021 we successfully launched Breathing Space. This new scheme allows people in financial distress to obtain a period of protection from enforcement action by their creditors. By the end of the year, we had received over 58,400 successful applications, which included over 900 people in a mental health crisis situation. In addition, extending the monetary eligibility criteria to obtain a debt relief order has enabled an additional 6,500 of the most financially vulnerable individuals to obtain relief from their debts, with over 22,600 orders made during the year.

The year also saw us introduce new guidance for directors of micro and small businesses to help identify the early warning signs of financial trouble, with signposting for where to get advice and information about their responsibilities as directors to help prevent financial misconduct.

Where there is evidence of misconduct or breaches of the law, undermining confidence in business, we have taken action to prevent further harm. Over the year we have removed 802 unfit directors from the marketplace and achieved 119 successful criminal convictions. We have increased the number of investigations into live companies from 143 last year to 167 this year and secured 304 bankruptcy restriction orders and undertakings. We continue to investigate a significant number of cases where there has been misconduct in relation to government backed COVID‑19 financial support schemes including Bounce Back Loans, and by the year end we had secured 141 director disqualifications and 58 bankruptcy restrictions.

Over the last two years we have seen decreases in business insolvencies, likely to be the result of government support measures during the pandemic and widespread creditor forbearance as businesses faced unprecedented trading challenges. The number of cases handled by Official Receivers fell by 27% and the number of claims to the Redundancy Payments Service also dropped from 96,219 last year to 44,895 this year. Next year we expect to see an increase in company insolvencies as temporary support measures come to an end and the insolvency regime returns to pre-pandemic operating.

To deliver our services more effectively and efficiently in the future we finalised our long-term estate plans and have now begun a programme to transform our workplaces, providing the right locations for our customers, with modern, collaborative workspaces for our people, supporting the long-term ambitions set out in the government’s Levelling Up and Places for Growth strategies.

In 2021 we welcomed four new non-executive members including a new chair, Mark Austen, to our Insolvency Service Board. The Board is responsible for the long-term success of the Agency and its new members have brought significant experience from their respective fields, providing valuable support and guidance to the Executive Leadership Team. I would also like to recognise the immense contribution and support of the outgoing board members whose hard work, dedication and expertise over the past few years has supported us to consistently deliver our objectives.

Overall, the Agency produced a solid performance in 2021-22 and I am very proud of how our people delivered for our customers and other stakeholders through such difficult times.

Looking ahead we will continue to build on what we have learned over the last 12 months to ensure the Agency continues to grow and improve its service delivery, delivering economic confidence for businesses and citizens and supporting the country’s economic growth.

Dean Beale
Chief Executive
Date: 21 October 2022

Who we are and what we do

This overview is designed to give a snapshot of the Agency’s activities and results. More detailed analysis can be found in our accountability report and financial statements.

Who we are

The Insolvency Service is an Executive Agency of the Department of Business, Energy, and Industrial Strategy (BEIS), currently based in 22 locations across Great Britain.

BEIS retains financial and operational supervision over the work we do and approves our strategies and budgets.

We are governed by the Insolvency Service Board, comprised of executive and non-executive members. The Board is responsible for the long-term success of the Agency, which includes setting strategic aims and objectives, making sure that leadership and other resources are in place, challenging and supporting management performance, and reporting to BEIS.

Our governance statement has more detail about our Board and various committees.

For more information on our status as an Executive Agency, the Classification of public bodies: information and guidance summarise the main characteristics of different types of public bodies.

What we do

We oversee and foster a world class insolvency regime. Our core objective is to deliver economic confidence by supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors.

Our Official Receivers deal with people subject to bankruptcy and insolvent businesses, realising and distributing assets, helping people to get back on their feet, and carrying out investigations to support the integrity of the insolvency system and the wider business and lending economy.

Our investigators scrutinise director and corporate behaviour, investigating those who abuse the system, and work to disqualify unfit directors, to protect the public and business from future harm. We also investigate trading companies and take action to wind them up where they have been operating against the public interest. We investigate and prosecute breaches of company and insolvency legislation and other criminal offences on behalf of BEIS.

Our Redundancy Payments Service makes sure people receive redundancy pay from the National Insurance Fund (NIF) and other statutory entitlements when a business fails.

Our adjudicator, Debt Relief Order (DRO) and Breathing Space teams help to support those in financial distress by managing and administering bankruptcy, DRO and Breathing Space applications.

We act as an impartial source of information for the public on insolvency and redundancy matters and advise BEIS ministers and other government departments.

Our objectives

This Annual Report and Accounts describes the Agency’s performance and achievements for, and reports on, the delivery of objectives we set in our Annual Plan for 2021-22.

Those objectives were:

Delivering economic confidence

• Work to ensure the insolvency regime supports individuals and businesses to help with the economic recovery as the country emerges from the pandemic

Result: Objective achieved. We worked closely with stakeholders as part of the government response to help ensure that businesses impacted by pandemic related restrictions were supported to avoid unnecessary insolvency. We worked to ensure that the temporary legislative measures put in place as part of that support remained in place only for as long as necessary.

• Work with stakeholders on proposals to incorporate new UNCITRAL model laws on cross-border insolvency into the insolvency regime

Result: Objective achieved. We have continued to work with key stakeholders to develop proposals to implement two new United Nations Commission on International Trade Law (UNCITRAL) model laws. A consultation was published in July 2022.

• Develop proposals to strengthen the regulatory regime for Insolvency Practitioners

Result: Objective achieved. We published a consultation in December 2021 which closed on 25 March 2022, with over 100 responses from a wide range of stakeholders.

• Embed new customer satisfaction measures and improve our overall performance, achieving a score of 84% or greater

Result: Objective achieved. Our customer satisfaction score was 84%.

Supporting those in financial distress

• Deliver on the government’s commitment to implement a new breathing space for people with challenging debt

Result: Objective achieved. The Breathing Space scheme went live in May 2021 and by 31 March 2022 it had received over 58,400 successful applications.

• Process redundancy payment claims in an average time of 14 days or less

Result: Objective achieved. The average time for processing redundancy claims across the year was 12 days compared to 12.8 days in 2020-21.

• Make 95% of bankruptcy orders sought by individuals within two working days.

Result: Objective achieved. 98% of bankruptcy orders were made within two working days which was broadly in line with last year’s performance of 97.2%.

• Determine 95% of Debt Relief Order applications within 48 hours

Result: Objective achieved: 99% of Debt Relief Orders were determined within 48 hours matching last year’s performance.

• Answer 85% or greater of calls to Agency enquiry lines within two minutes and successfully answer 95% of calls to our enquiry lines

Result: Objective achieved. 94% of calls were answered within two minutes and 97% of calls were successfully answered. Agency enquiry lines were closed last year due to COVID-19 so there are no 2020-21 figures available.

• Extend Debt Relief Orders to support more vulnerable people in problem debt

Result: Objective achieved. New regulations came into force on 29 June 2021 and during last year this meant that 6,500 more people were eligible to obtain debt relief through this route than otherwise would have been the case.

Tackling financial wrongdoing

• Develop a new strategic assessment of enforcement priorities which will allow us to better target our activities and respond to challenges and risks as they evolve

Result: Objective achieved. A strategic assessment was developed which provided an overview of the current and longer-term challenges that are likely to affect our investigation and enforcement activities. This will be used to inform our enforcement activity over the coming year.

• Harness the benefits of technological developments to conduct interviews and court hearings remotely and share documents

Result: Objective achieved. Our investigators and lawyers have been able to conduct interviews and attend court hearings remotely this year, and throughout the pandemic. Court hearings continue to be conducted remotely, where directed by the court. We continue to offer remote interviews in appropriate cases, and we are making increased use of document sharing technologies.

• Build upon our quarterly published report of enforcement activity

Result: Objective achieved. We developed our quarterly scorecard to include details of the range of misconduct and criminal offences where we have acted. These include abuse of COVID-19 financial support schemes and investigations enabled by the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021.

• Continue to work to prevent financial misconduct and avoid insolvency before it occurs by delivering the initial phase of director education

Result: Objective achieved. We delivered on our objective to publish a suite of new guidance materials on GOV.UK which also signposts directors to free sources of advice. We also engaged externally with partner organisations on our future phases of activity and work is ongoing to deliver an online toolkit to help directors assess the state of their business and take suitable action if required. This is expected to be delivered in 2022-23.

Maximising returns to creditors

• Issue a report to creditors within 15 days of interviewing (or a decision that no interview is required) in at least 92% of cases

Result: Objective achieved. 95% of cases had a report issued to creditors within 15 days of an interview. This is a significant improvement on 2020-21 performance which was 66.5% against a target of 91%.

People

• Improve our outcomes in the Civil Service People Survey (CSPS)

Result: Objective not achieved. The CSPS21 Employee Engagement Index score decreased from 65% to 62%. The Civil Service benchmark score was 66%. Comparing results with the CSPS20 we showed a downturn against eight of the nine themes, and one remained static. We have drawn up an action plan to attain incremental targets for the next three years.

• Increase our attraction of diverse applicants for vacancies by 10% or greater

Result: Objective achieved. 35% of applicants for vacancies were from underrepresented backgrounds.

• Increase our benchmark scores from diversity assessments

Result: Objective achieved. We climbed 401 places to be ranked as one of Stonewall’s top 100 Employers for LGBT+ people and achieved the Gold employer award in their Workplace Equality Index.

• 2.3% of all new staff to be recruited into apprentice positions

Result: Objective achieved. 2.3% of all new staff presented a target of 41 apprentices and we achieved 46. This was down from the 126 recruited last year but still exceeded the target for this year.

Corporate responsibility

• Expand our Sustainability approach to include Social and Economic Factors in addition to our Environmental commitments

Result: Objective achieved. We have undertaken an initial Sustainability Appraisal of our five-year strategy to identify ongoing opportunities to improve our social, environmental, and economic sustainability.

• Ensure that all relevant procurements include social value and sustainability evaluation criteria at a minimum of 10% of overall score

Result: Objective achieved. We have a new Social Value policy and our new procurement documents contain requirements for environmental sustainability including meeting the objectives of our new Environmental Policy.

• Meet or exceed the Government target of 33% of spend going to Small and Medium-sized Enterprises (SMEs) by March 2022

Result: Objective achieved. 35% of spend went to SMEs by the end of March 2022 compared to 35% in 2020-21.

Our finances

• Deliver a balanced budget, with Agency costs being matched by funding and income

Result: Objective achieved. We are reporting a surplus position for the year of £0.9m against budget. This compares favourably with our original budgeted deficit of £13.5m, as stated in our 2021-22 Annual Plan.

• Pay 80% of supplier invoices within five working days and 100% within 30 calendar days

Result: Objective achieved. 96% of supplier invoices were paid within five working days and 100% paid within 30 calendar days. This matched the performance level achieved in 2020-21.

• Ensure our Suppliers adhere to the Prompt Payment Code

Result: Objective not applicable. The Prompt Payment Code only applies to contracts over £5m and there were no contracts that fulfilled this criterion in the 2021-22.

Issues and risks

The key issues and risks that could affect us delivering our objectives are set out in our Governance Statement.

How we performed

Supporting those in financial distress

8,467 New insolvency cases handled by our Official Receivers

22,601 Debt Relief Orders

6,669 Online Debtor bankruptcy orders

58,476 Successful Breathing Space applications including 908 people in a mental health crisis situation

1,089 Creditor petition bankruptcies

44,895 Redundancy payment claims

712 Compulsory Liquidations

12 Average calendar days taken to action redundancy payments

Tackling financial wrongdoing

119 Criminal prosecutions

167 Live Company Investigations

802 Directors disqualified for misconduct

6% Directors disqualified for 10 years or more

316 Bankruptcy restrictions

Maximising returns to creditors

£42.7m Dividends returned to creditors and debtors

95% Report to Creditors issued within 15 days of an attended interview

Customer satisfaction

84% Customers satisfied with our work

Performance analysis

Delivering economic confidence

Temporary pandemic-related insolvency measures

We worked closely with stakeholders as part of the government response to the difficult trading conditions created by the lockdown periods, to help ensure that businesses impacted by pandemic related restrictions were supported to avoid unnecessary insolvency. We worked to ensure that the temporary legislative measures put in place as part of that support remained in place only for as long as necessary. Most of the temporary provisions expired at the end of September 2021.

Restrictions on winding up companies were extended until the end of March 2022 to give companies more time to recover through trading without being unnecessarily threatened by aggressive enforcement by creditors. The extended restrictions were tapered in their effect by restoring some creditors’ rights to pursue debts. This continued to protect companies most affected by the further lockdown periods but were otherwise viable, whilst allowing creditors in defined circumstances to act against companies that were protected by the previous restrictions. All insolvency temporary pandemic-related measures expired at the end of March 2022 and the insolvency regime returned to its pre-pandemic operation.

The temporary insolvency measures helped prevent unnecessary insolvencies of otherwise viable companies in the short term. The new permanent measures implemented in the Corporate Insolvency and Governance Act 2020 are designed to give companies in financial distress new tools to be able to restructure and return to normal trading. Evaluation of these new measures is ongoing, supported by new primary research that will be published in 2022-23.

The work undertaken by the Agency to support companies since the start of the pandemic was recognised at the annual Turnaround, Restructuring & Insolvency (TRI) Awards where the Agency won the ‘Insolvency Team of the Year’ category in December.

Developing proposals to strengthen the regulatory regime for Insolvency Practitioners

We published a consultation in December 2021 on proposals to strengthen the regulatory regime for Insolvency Practitioners. This consultation closed on 25th March 2022, with over 100 responses from a wide range of stakeholders. We are analysing these, and the government will publish its response in due course.

The key proposals were:

• Establishing a single independent a single independent regulator to sit within the Insolvency Service, replacing the current system of recognised bodies.
• Extending regulation to firms that offer insolvency services
• Creating a system of compensation
• Amendments to the current arrangements for Insolvency Practitioners to hold security (bonding)

Oversight of Insolvency Practitioner regulation

During 2021, we undertook a full monitoring visit to the Insolvency Practitioners Association (IPA), publishing our findings in February 2022. The report welcomed innovations and improvements made by the IPA, especially in relation to monitoring. It also noted that good progress had been made in implementing previous recommendations to ensure that the IPAs complaints and monitoring teams worked collaboratively. The report found that this had contributed to a significant reduction in delays previously identified in the progression of complaints and following up insolvency practitioner monitoring visits. Recommendations included more comprehensive minuting of the rationale for decisions made at committee and the need for further training in relation to the application of mitigating and aggravating factors when considering allegations of misconduct.

We also conducted a monitoring visit to the Institute of Chartered Accountants of England and Wales (ICAEW) and published a report on how complaints about their Insolvency Practitioners were handled. The report highlighted the steps made to implement recommendations made by us following a monitoring visit in 2019 and there were further recommendations to target a reduction in complaints over 12 months old.

We published the Annual Review of Insolvency Regulation setting out data in relation to Recognised Public Body (RPBs) licensing, monitoring, complaint handling and regulatory outcomes. The data shows a continuing strong programme of monitoring activity undertaken by the RPBs.

We also commenced a thematic review of RPB monitoring of Insolvency Practitioner engagement with the Redundancy Payment Service.

Insolvency Practitioner Engagement

We have continued regular engagement with the insolvency profession, R3 (the trade body representing the UKs insolvency and restructuring professionals), creditor representatives and the free debt advice sector. We have collaborated on several projects including on the advertising of personal insolvency solutions, insolvencies of energy companies, and in relation to referrals made to Individual Voluntary Arrangement (IVA) providers by debt-packagers. In 2021-22, we issued 20 editions of the Dear IP newsletter to ensure insolvency professionals were kept up to date with changing professional guidance and procedural matters across a wide range of issues including tax, arrangements in relation to COVID-19 measures, employment issues, security, and legislative changes.

In November we held our first Insolvency Research and Technical conference for several years. Entitled ‘Forward Thinking: insolvency strategies for a post pandemic economy’, the conference facilitated a link between academia, the insolvency sector and policymakers, providing a platform for current insolvency research and a forum for technical discussion. The conference was attended by a range of academics and insolvency professionals. It was very well received, and we intend to make it a regular feature, with plans underway to run a further event later this year.

Diversity and Inclusion Steering Group

As part of our commitment to improving diversity in the insolvency profession, we have continued to work with R3 as joint founder members of the Diversity and Inclusion Steering Group. The group is made up of professionals and academics from across the insolvency and diversity sectors. It aims to identify and understand barriers to joining, progressing, and succeeding in the insolvency profession.

In July 2021 the group conducted a survey of R3 members, which was widely welcomed across the sector. The results were used to develop the group’s first action plan and this was published in December 2021.

International Insolvency

We have continued to work with key stakeholders to develop proposals to implement two new United Nations Commission on International Trade Law (UNCITRAL) model laws. A consultation was published in July 2022 (Implementation of two UNCITRAL Model Laws on Insolvency - GOV.UK (www.gov.uk)).

Our international work also included our ongoing contribution to the work of the International Association of Insolvency Regulators (IAIR), participating in a number of webinars about how the global insolvency sector responded to the challenges posed by the pandemic, and contributing to a World Bank publication on the effects of the pandemic from an insolvency perspective.

Supporting those in financial distress

We administer debt solutions that help people get back on their feet, including Debt Relief Orders (DROs) and bankruptcy orders and the work of our Official Receivers and Redundancy Payments Service plays a vital role in helping and supporting people in times of financial distress.

Bankruptcy orders

Our online adjudicator service enables an individual with insurmountable debt to access the bankruptcy process and obtain a bankruptcy order through GOV.UK, 24 hours a day, seven days a week.

This year 6,669 bankruptcy orders were made by the adjudicator and 98% of those were within two working days of receipt of the application. This was a 1% increase on the previous year.

The adjudicator service has continued to receive very positive feedback, with 84% of those made bankrupt saying they were satisfied or very satisfied with the service.

Debt Relief Order changes

We provide debt solutions to some of the most vulnerable people in society through Debt Relief Orders (DROs). These are specifically aimed at those with low levels of unmanageable debt, minimal surplus income, and few assets.

DROs are applied for by authorised debt advisers and approved by an Official Receiver. They are a way of writing off an individual’s debt when they are in financial difficulty with no way of paying their creditors, providing they meet statutory monetary criteria. In 2021-22 we approved 22,601 DROs and 99% of these were approved within two working days.

New monetary eligibility requirements for individuals to obtain a DRO were implemented in June 2021 after a consultation with stakeholders. This meant that 6,500 more people were eligible to obtain debt relief through this route than otherwise would have been the case. As part of its announcement about the new criteria, the government also announced that it would undertake a review of the personal insolvency framework. This work will start during 2022 with a Call for Evidence.

Individual Voluntary Arrangements

During 2021-22 there were 83,442 Individual Voluntary Arrangements (IVAs). We continued to work closely with RPBs and other stakeholders to develop and publish a revised protocol. The protocol provides a standard framework for dealing with consumer IVAs and is widely used by insolvency practitioners and creditors.

Changes were introduced to make the equity provisions relating to homeowners easier to navigate and to ensure that vulnerable consumers are identified and obtain appropriate support to understand the process. During the year we also continued to review and make amendments to the COVID-19 support guidance which was put in place to support the protocol in April 2020. That guidance expired on 31 December 2021, following the removal of most pandemic related restrictions across the economy. We have worked with other stakeholders to tackle poor and misleading advertisements by both IVA providers and those that refer work to them. This includes publishing revised guidance for the RPBs on monitoring of marketing. We have worked with RPBs, Advertisement Standards Agency and Financial Conduct Authority on enforcement to ensure consumers receive appropriate information and advice for their circumstances.

Redundancy Payments Service

Our Redundancy Payments Service provides crucial funds to people who have lost their jobs and whose employers cannot pay them statutory redundancy entitlements, primarily as a result of insolvency.

In 2021-22, this essential service saw us receive 44,895 claims. The number of new claims received was lower than in recent years, however we saw an increase in protective awards issued by Employment Tribunals, including to the former employees of companies such as Thomas Cook and Flybe.

A new team has been created to assess cases prior to the payment, ensuring we can identify anomalies early and increase anti-fraud processes so only those eligible receive payments, protecting public funds. We have projects underway to improve the collection of data early in more complex claims to improve accuracy and timeliness which are expected to begin delivery early in 2022-23.

Breathing Space

The Breathing Space scheme was launched in May 2021 and gives people legal protections from their creditors for 60 days. During that time, most interest and penalty charges are frozen and enforcement action is halted. Because problem debt can be linked to mental health issues, these protections are also available for people in mental health crisis treatment for the full duration of the treatment plus another 30 days.

Breathing space is applied for by an authorised money advisor through an online service that we administer.

Between the launch of the Breathing Space scheme and the end of the year there were 58,476 registrations. These were made up of 57,568 standard registrations and 908 for mental health.

The breathing space project was recognised at the TRI Awards, winning the Best Use of Technology award.

Measuring satisfaction

Each year we measure satisfaction with our range of communications and services. We measure customer satisfaction derived from key measures around our contact, service and process.

In 2021-22, our research agency surveyed four key groups: users of the redundancy payments service, bankrupts, non-institutional creditors, and people who received a debt relief order. They conducted 684 telephone interviews which typically lasted 15 minutes.

The research uses a comprehensive set of measures to help us gain an understanding of how we are performing and how we can continue to improve to better meet the needs and expectations of our service users.

The research found that 84% of those surveyed were satisfied with the service they received, which meets the target of 84% set out in our annual plan.

We issued email surveys to our delivery partner groups, including insolvency practitioners and approved intermediaries.

This year we joined the Institute of Customer Service. We have conducted their business benchmarking survey with one of our key user groups this year, issuing the survey to users of the redundancy payments service.

The Post Office

Between 2000 and 2014, due to errors in the Post Office’s Horizon IT system, some sub-postmasters and sub-postmistresses were left with shortfalls in cash and stock on their system. Affected individuals were personally required to make good the shortfall and some were prosecuted for theft. In certain cases, this led to bankruptcy.

The Post Office opened a compensation scheme, the Post Office Historical Shortfall Scheme (HSS), offering compensation for the ordeal endured by the affected individuals. The complex nature of the compensation claims means that where compensation is awarded to someone who has been bankrupt, part of it may be paid to them but other elements form part of their bankruptcy estate and will need to be dealt with accordingly. The Official Receiver (OR) has identified and reviewed these cases, writing to each affected individual explaining why the OR is managing their HSS claim. Any element of the compensation due personally to the former bankrupt will be paid over to the individuals as soon as possible. The OR is assisting people who were subject to bankruptcy to cancel the bankruptcy where appropriate.

The Agency continues to liaise with the Post Office, providing information when required and supporting former bankrupts; to date the OR has enabled 30 HSS claims to be processed.

Complaints

In 2021-22, the Agency received 339 complaints, compared to 406 in 2020-21 and 1,183 in 2019-20. There were 259 Tier one complaints, 59 Tier two and 21 Tier three.

We answered 90% of complaints within ten working days. We answered 97% within 20 working days with acknowledgement within five working days which is broadly similar to Agency performance in the previous two years. We are continuing to focus on learning lessons from complaints, and 166 improvements were identified in 2021-22 through this process.

Looking forward, we are working with the Parliamentary and Health Service Ombudsman on a review of government complaint standards. The standards/guidelines are intended to provide a unified approach that will benefit complaint staff and complainants alike and will support better communication between providers and the public, leading to improved, more efficient public services. Developed in collaboration with government complaint handlers, advocacy groups and advice organisations, the new standards will mean complaints are easier to make and quicker to resolve offering an excellent opportunity to bring best practice into our processes and allow the public to better understand the complaints handling process for our services.

Tackling financial wrongdoing

New power to disqualify directors of dissolved companies

Rogue directors who dissolve their companies and avoid paying liabilities including to their employees, creditors and the taxpayer, can now be pursued. New legislation has extended our powers, on behalf of the Business Secretary, to investigate, disqualify and prosecute company directors who abuse the company dissolution process.

The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act, which received Royal Assent in December 2021, will also help tackle directors that dissolve companies to avoid repaying government backed loans put in place to support businesses during the COVID-19 pandemic.

COVID-19 support scheme abuse

We have taken both civil and criminal action against companies and individuals where COVID-19 support schemes, including Bounce Back Loans, have been abused.

In 2021-22, 141 allegations (17%) in director disqualification outcomes related to COVID-19 financial support scheme abuse. The average length of director disqualifications in these cases was seven years and two months, and in 16% of cases the period of disqualification was ten years or more. 58 (18%) of our bankruptcy restrictions and debt relief restrictions related to COVID-19 financial support scheme abuse. The average length of restrictions in these cases was seven years and in 8% of cases the length of restrictions was ten years or more.

Director disqualification case study – undermining the regime:

Colleagues across Official Receiver Services and Investigation and Enforcement Services worked on the investigation and evidence gathering that resulted in the court making a disqualification order against an individual for 15 years, after he was found to be a de facto director of a company which was wound up in the public interest.

The company promised companies in financial difficulties that it would enable them to wipe their business debts and avoid formal insolvency proceedings for a fee of £5,000 or 10% of the failing company’s total liabilities, whichever was the higher. Directors were also able to buy back assets of value to use in new companies. The de facto director assured directors that they could walk away from any financial or legal responsibility in the company that was in financial difficulty, which was not true and the company’s website described itself as an ‘unlicensed Insolvency Practitioners’ which do not exist. Over 70 client companies were acquired by the company prior to its winding up which received over £1.5M from clients. The de facto director benefitted financially from the company’s activities while no money was returned to creditors.

Director disqualification case study – Bounce Back Loan:

A ten-year Disqualification Undertaking was given by a director who obtained a £40,000 Bounce Back Loan by overstating the company’s turnover and then spending nearly half of the loan for his own personal benefit. Recovery of the funds is ongoing with £8,000 recovered to date.

Criminal Investigation case study – transferring assets:

Following a trial at Kings Lynn Crown Court, an individual was convicted of concealing property within 12 months of his petition for bankruptcy. He petitioned for his own bankruptcy in April 2015, and in his application, he referred to £50,000 which he said he had ‘given away, transferred or sold’. When asked to provide further details by the Official Receiver he claimed that he had burnt the money in a fire.

He was sentenced to 15 months’ imprisonment suspended for 21 months on 1 July 2021.

Public interest winding up case study – wine investment scam:

An investigation carried out by a team in Investigation and Enforcement Services resulted in a wine investment company being wound up in the public interest. The company offered members of the public the opportunity to invest in fine wines, misleading many investors, including many who were vulnerable and elderly, with the promise of significant returns. In a nine-month period the company received more than £1 million in payments of which only £333,000 was used to purchase wine. Following the winding up of the company, enquiries into the affairs and business of the company including the conduct of the director are ongoing.

Bankruptcy restrictions case study – Bounce Back Loan spent on drugs

A six-year Bankruptcy Restrictions Undertaking was given by a bankrupt who obtained a £50,000 Bounce Back Loan by overstating his projected income and then spending more than half on Class A drugs. He filed for his own bankruptcy, which triggered an investigation into his financial affairs.

Antecedent Recovery

Two companies which provided IT support and repair services via an Indian company were wound up in the public interest. Both companies sold IT support packages to members of the public and inferred that they were, or were agents of, well known IT security companies.

Bounce back loans totalling £95,000 were received by both companies and an investigation by the Official Receiver established that the majority of the funds were paid/loaned to the director and two associated companies.

The Official Receiver took action against the director and associated companies and has recovered £23,700. Additional recoveries of £73,000 have also been agreed with the director.

Maximising returns to creditors

We paid out over £42.7 million in distributions back to creditors and debtors (where their creditors had been paid in full). This is an increase on the previous year of more than £3.2 million.

We issued reports to creditors within 15 days of an attended interview in 95% of our cases against a target of 92%. This has provided creditors with information in an expedient manner, keeping them informed of key issues and progress in cases. This has allowed them to make informed decisions regarding the appointment of trustees and liquidators in relevant cases and supports progressing the administration of cases more quickly to distribution.

In 2021-22 we recovered more than 35,000 separate assets in bankruptcy and liquidation cases, with a total value of £49 million.

Supporting an engaged and effective workforce

Making the Agency a great place to work for our people will help ensure that we deliver well for our customers. We continued to build a well led, flexible and capable workforce while ensuring our people are able to bring their whole selves to work in an inclusive environment, to perform at their best.

During the year, we:

• delivered our new People Strategy, measuring the effectiveness of our various programmes and initiatives through the annual People Survey and other internal feedback mechanisms
• · supported our people to attain the right skills and qualifications so that we can successfully improve capability and professionalism
• · invested in our wellbeing strategy including mental wellbeing training for managers, directorate briefings and our employee assistance programme
• · made progress against our diversity and inclusion priorities by increasing our declaration rates amongst ethnic minority and disabled colleagues and reducing our gender pay gap.

Our most important resource is our people, and we have invested in our workforce to ensure that we have the right people in the right place with the right skills and experience. We are developing strategic workforce plans and making use of technology to ensure we have robust workforce planning.

Our primary people measure continues to be the Civil Service People Survey (CSPS). In 2021 we obtained an employee engagement index (EEI) of 62%. This was a decrease of 3% from the previous survey and a return to pre-COVID-19 engagement levels. We achieved our ambition of being a high performing Agency against the ‘My Manager’ measure, as well as in the ‘Organisational Objectives and purpose’.

Improving capability and professionalism

We have continued to focus on building a positive apprenticeship experience which encourages ongoing learning and career development. We are proud of our apprenticeship achievement and have supported apprentices across a range of business areas.

The Level 3 Operational Delivery apprenticeship was a valuable experience and has been a great foundation for me in terms of my personal development. The apprenticeship has encouraged me to explore developmental opportunities within my team, and beyond.

Case Strategy Officer

As the government’s statutory apprenticeship target ended in March, we will update our Apprenticeship Strategy in 2022-23. We will look at how we provide both internal and external quality apprenticeships and strive to achieve new government measures, including 5% of our workforce on an apprenticeship programme to increase our capability and ‘grow our own’ talent.

We have also invested in our people’s career-long learning and development through facilitating access to a range of recognised professional qualifications.

The Joint Insolvency Examination Board (JIEB) exams are recognised by the Insolvency Profession and tests the knowledge and skills that are required for the profession and covers the broader insolvency regime. It is also requirement for becoming a licenced Insolvency Practitioner.

We have had great success with several colleagues passing their JIEB exams, demonstrating the capability of our staff in the insolvency profession and investing in our people to be able to provide highly skilled staff to undertake complex National Interest Cases, such as Carillion and British Steel. Achieving the JIEB standards is a visible demonstration of our professionalism and expertise and investment in our people.

I was delighted to be given the opportunity to study for the JIEB exams and immensely proud to have passed. I found the study programme hugely beneficial, and I have been able to apply my learning to the work of ORS and support the development of our people, at an important time as we professionalise our work

Official Receiver

Some of our Deputy Official Receivers have also studied and passed the ICAEW Certificate in Insolvency. The Certificate in Insolvency is recognised by the industry and provides a practical introduction to principles of insolvency and further supports our staff in their role and future development. A further nine have registered to study towards it in 2022-23.

Twenty colleagues have successfully completed our assessed and accredited Insolvency Service Investigator Programme (ISIP) in the last 12 months. This professional development programme has flexibility at its heart, designed around core skills and knowledge common to all investigation roles as well as additional modules to support specialist capability. With this design it supports movement for business needs or individual career planning.

ISIP helped me develop my case analysis, identifying assets from company records and putting together a good quality instruction to our solicitors for recovery to make returns to creditors. It also developed my own behaviours and strengths and helped me progress to become a Deputy Official Receiver after qualifying.

Deputy Official Receiver

The Insolvency Service was one of the founding members of the Government Counter Fraud Profession and currently has over 400 members (approximately 24% of total staff) registered in the profession. We have the third largest number of members behind His Majesty’s Revenue Customs and the Department for Work and Pensions. GCFP membership provides developmental opportunities and supports continuous professional development. Our ISIP programme is aligned to GCFP principles allowing staff to become members of the profession upon successful completion of the programme.

We offer a pathway for staff to obtain legal qualifications and our Legal Services Directorate currently have three staff enrolled with the Chartered Institute of Legal Executives (CILEX) to grow our in-house legal capability, with a view for further opportunities in the coming year. CILEX is the professional association and governing body for Chartered Legal Executive Lawyers, other legal practitioners, and paralegals.

Inclusion First strategy

During 2021-22 we launched ‘Inclusion First’, our Diversity and Inclusion (D&I) strategy, which will further improve our approach and progress on diversity and inclusion in every part of our business. In March 2022, The Civil Service also published its Diversity and Inclusion Strategy. We will now look to benchmark our own Inclusion First strategy against it, but early signs are that we exceed in some areas.

In addition, we have created three new Networks: The Shed (Men’s network), No Limits (Socio-economics network) and The Carers network. We have worked hard to ensure that the networks created continue to allow all our staff to feel included.

Summer Diversity Internship Programme

Increasing diversity is a key part of our People Strategy. The Summer Diversity Internship Programme (SDIP) has given people from diverse backgrounds an opportunity to see what a career in the Civil Service is like.

The SDIP puts talented undergraduates and graduates (from an ethnic minority, socially or economically disadvantaged background or with a disability) on a work placement in a government department. It is a great way to prepare for entry into many different career paths in the UK government. During the summer we hosted six SDIP interns in the Agency.

We are again seeking to host SDIP and given our success in the programme, we have increased the request to 14 interns, a 56% increase on our bid last year. We have also submitted a bid for five interns from the Autistic Internship Programme, a 66% increase on last year.

Corporate and social responsibility

Sustainable Development

During the year we successfully recruited a new Head of Sustainability. The role will assist us in our focus on our key sustainability considerations, which include meeting existing and emerging international and national priorities including the Sustainable Development Goals (SDGs) and the Greening Government Commitments (GGCs).

A sustainability review of the Agency is underway to baseline the impact of our current activities, and following that, we will be preparing a sustainability strategy for delivery. Further details of this will be reported on in next year’s annual report.

As an Agency that is committed to the sustainability of our operations, we have introduced a new sustainability appraisal tool to assess plans, policies, and strategies against social, environmental, and economic sustainability metrics. During the year we undertook an initial sustainability appraisal of our five-year strategy and will be applying the tool to future plans across the Agency, including the upcoming estate rationalisation project ‘Transforming Workplaces’.

Greening Government Commitments

We continue to support the government’s commitment to reduce its impact on the environment. The BEIS family emissions reduction target for the GGCs (2021-25) has been set at a 62% reduction overall, with a 30% reduction required from direct emissions (this includes emissions arising from fuel use and fugitive emissions across the in-scope estate). We have a target of 55% overall reduction in emissions from the 2017-18 figures by 2025 in support of the Departmental Net Zero target.

	Baseline year 2017-18	GGC reporting year 2021-22
Business travel (km)	1,849,291	780,132
Energy (KWH)	Reported under BEIS totals	438,398
Water (m3)	3,888	4,242
Total waste (t)	91.86	150.82
Total waste recycled (t)	25.85	44.98
Paper (A4 reams equivalent)	24,363	2,228

Note that some of the figures above refer to our office locations where another public sector entity is responsible for reporting for GGC purposes.

Environmental policy

We are committed to protecting and enhancing the environment both locally and globally and during the year we committed to a new environmental policy. Detailed science-based targets will be set in the upcoming sustainability strategy to underpin delivery of the policy’s objectives.

Engagement activities

An engaged and effective workforce is essential to the delivery of our sustainability objectives. Further to the activities listed in the section earlier in this report (Supporting an engaged and effective workforce) we have introduced several sustainability-themed networks that cover environmental issues as well as social mobility.

We also support our staff to undertake community engagement activities in the form of volunteering, and during the year our staff undertook volunteering with a wide range of organisations. In the upcoming year we will be investigating more formal approaches to engage staff in the delivery of our sustainability commitments for example, through a Sustainability Champions scheme and carbon literacy training.

Sustainable procurement

Our commercial function has progressed on our target from last year to incorporate social value and sustainability measures into all relevant procurements. We have included social value and sustainability evaluation criteria into two upcoming strategic and complex procurement activities, including additional requirements for suppliers to demonstrate how they will meet the objectives of our new Environmental Policy.

Our Digital Technology Services Directorate oversaw a refresh of our office desktop equipment, ensuring that the redundant IT equipment was both reused (0.326 tonnes) and recycled (0.544 tonnes) as appropriate, with a zero-to-landfill approach.

We also introduced a PPE recycling service to minimise the amount of COVID-19 related waste (PPE) going to landfill or incineration. This enabled us to divert this waste (1.34 tonnes) into a recycling stream, reconstituting the materials into plastic boards for use in construction, joinery, and furniture manufacture.

Rural proofing

We are committed to meeting the needs of rural businesses and communities. As part of our upcoming estate rationalisation project ‘Transforming Workplaces’, we have ensured that we will maintain office locations in Scotland, Wales and each of the English regions.

Financial performance analysis

Financing

We are financed through a combination of funding and income from three sources.

1. Funding from our sponsor Department, the Department for Business, Energy, and Industrial Strategy (BEIS). During 2021-22 this amounted to £71.8m (20-21: £53.7m) of which £2.3m was for capital (2020-21: £4.3m) (see Statement of Changes in Taxpayers Equity)
2. Income from HMRC National Insurance Fund (NIF) to undertake administration of the Redundancy Payment Scheme. For 2021-22 this amounted to £10.0m (2020-21: £9.1m) (see Note 4); We also received funding from HMRC NIF to make payments to individuals who have been made redundant where the employer cannot pay. The funding for these payments for 2021-22 was £256m (2020-21: £456m) (see Statement of Changes in Taxpayers Equity)
3. Income generated from fees charged for work carried out on Insolvency Case administration by the Official Receiver Services (ORS). Income recognised in 2021-22 was £47m (2020-21: £104.6m) (see Note 5)

Financial results

We are reporting a £0.9m surplus against budget for the financial year 2021-22.

This was due to a lower than expected outturn against our budget allocation for activities funded by BEIS of £14.4m. These were primarily a result of lower than anticipated Breathing Space volumes and lower than anticipated costs of major case investigations and enforcement.

The underspend is offset by a deficit on our fee funded activity of £13.5m (see Note 5). This was lower than expected, the forecast deficit resulting from OR cases expected to continue to be lower than pre-pandemic levels. Whilst the trend in OR cases did continue, during the year the deficit was significantly offset by asset realisations in our National Interest Cases.

Expenditure

Our total operating expenditure compared to 2020-21 has fallen by £211m to £414m (see Statement of Comprehensive Net Expenditure). The decrease is largely driven by lower Redundancy Payment Service payments due a reduction in the volume of claims and the type of cases compared to 2020-21.

Income

Note 4 shows that total operating income has decreased by £75m to £82m reflecting significantly lower income from Payment Protection Insurance (PPI) settlements as the costs of the cases impacted have now been recognised in full. The reduction also relates to lower volumes of Official Receiver cases. This was primarily due to the impact of COVID-19. Government financial support for businesses and temporary restrictions on statutory demands and winding up petitions reduced the number of new insolvency cases across the year.

Assets

As at 31 March 2022, we had assets of £446m. Our assets include property, plant and equipment, intangible assets, financial assets, trade receivables, cash, and cash equivalents. £133m of this related to debt assets or receivables and £283m to cash and cash equivalents. Assets have increased this year by £52m compared to last year. This is due to cash received on fees charged on settlement of historic PPI claims on insolvent estates and the adoption of the new accountancy standard (IFRS 16) which has created Right of Use assets for leases (see Note 1a and Note 6).

Liabilities

As at 31 March 2022, we had liabilities of £117m of which £38m related to trade payables and provisions. Liabilities have overall increased compared to last year by £58m. This is due to deferred fee income for cash received on the historic PPI claims, as well as the creation of a new Lease Liability due to the adoption of IFRS 16 (see Note 1a and Note 13).

The overall position of assets and liabilities held by us on 31 March 2022 was £329m (see Statement of Financial Position).

Capital

In 2021-22, our capital expenditure was £2.6m (2020-21: £4.2m). Most of this expenditure related to software licenses (£1.0m) and assets under construction (£1.0m). See Notes 6 and 7.

Where we spent our money

RPS £283.9m. We are responsible for making payments from the National Insurance Fund to employees who have been made redundant because of an insolvency, and/or where the employer has certain debts due to its employees other than redundancy (e.g., unpaid wages, holiday pay, notice pay etc.). We then seek recovery of the amounts paid, either directly from a solvent employer or by lodging a claim in the insolvency case. This amount also includes any National Insurance contributions payable by us to HM Revenue and Customs. The National Insurance Fund re-imburses us daily for the claims paid out.

Permanent and non-permanent staffing £81.6m. This represents payment for salaries inclusive of pension and National Insurance contributions and is net of recoveries relating to outward secondees.

IT Infrastructure £22.3m. We spent this to provide functions such as Service Governance, Cyber Security, Information Governance, Service Architecture, Business Relationship Management and Application Services. In addition, we continued our journey to modernise the technology used by our customers and our people. This expenditure also includes the costs of our Data Strategy which ensures that we get the best out of the data visualisations and business intelligence opportunities.

Investigations £2.3m. We spent this externally on investigations and enforcement to support National Interest Cases and other investigations, director and corporate behaviour and those who abuse the system. We undertook a range of investigation and enforcement activity which helped maintain confidence in the UK as a great place to work and do business. We undertook investigations into live companies and company directors’ conduct in relation to companies in formal insolvency. We also investigated criminal misconduct in company and personal insolvency cases.

Civil and Criminal Legal costs £4.2m. These costs cover civil litigation work to disqualify company directors for misconduct, the winding up of companies acting contrary to the public interest and providing advice on the conduct of statutory enquires and insolvent investigations. These costs also include criminal enforcement activity including the prosecution of a wide range of offences, providing advice for example on drafting new criminal offences and enforcement strategies. Criminal casework ranges from general prosecution matters through to complex and challenging fraud cases. As part of our criminal enforcement activity, we pursued confiscation to deprive criminals of the proceeds of their crime.

Estates £3.9m. We spent this on accommodation costs, including operating leases.

Non-cash items £9.2m. We spent this on non-cash items. This included depreciation and amortisation (which represents the reduction in value of tangible and intangible assets over time), write-offs and expected losses, provisions for obligations payable in the future, accounting adjustments for the time value of money (discounting) and audit fee. This item also includes adjustment for adoption of IFRS 16.

Other costs and general administration £6.7m. We spent this on administration of HR & payroll costs (for shared services), non-salary related staff costs (e.g., training, travel, subsistence, welfare, recruitment), office supplies (e.g., print, postage, stationery, telephony), property maintenance and furniture costs not capitalised, financing costs and consultancy costs.

Where we received Income

Insolvency Case administration fees. £41.2m This is income the Agency has recognised for trustee liquidator, administration and general fees from all of our cases.

Redundancy Payment Scheme recovery £23.6m This is income from cash receipts and estimated future recoveries.

Debt relief order fee income £2.2m. This relates to income received regarding Debt Relief Orders which is a low-cost alternative debt solution following a submission from a specialist debt adviser.

Income from Online Debt Solutions and other debt solutions £2.1m. This includes Individual Voluntary Arrangements and Deeds of Arrangements fees.

Investigation, enforcement, and criminal enforcement £1.6m. This is income relating to civil and criminal costs which have been recovered.

Regulation of insolvency practitioners’ income and banking fee income £1.3m.

Rental income £0.7m. This was from office space shared with other public sector occupants.

Dean Beale
Chief Executive
Date: 21 October 2022

3. Accountability report

The accountability report is comprised of three sections:

• · Corporate governance report
• · Remuneration and staff report
• · Parliamentary accountability and audit report

The corporate governance report explains the composition and organisation of the Insolvency Service’s governance structures and how they support the achievement of our objectives. It is comprised of three sections:

• · Directors’ report
• · Statement of principal accounting officer’s responsibilities
• · Governance statement

The remuneration and staff report sets out our remuneration policy for directors, reports on how policy has been implemented and sets out the amounts awarded to directors and where relevant the link between performance and remuneration (such as bonuses). It provides details on remuneration and staff that parliament and other users see as key to accountability. It also reports on staff matters, such as (but not limited to) staff numbers and costs, staff composition, sickness absence data, expenditure on consultancy and off-payroll engagements.

The parliamentary accountability and audit report brings together key parliamentary accountability documents within the annual report and accounts. It comprises:

• · regularity of expenditure
• · parliamentary accountability disclosures
• · the Certificate and Report of the Comptroller and Auditor General to the House of Commons.

By following the Government Financial Reporting Manual requirements and best practice with corporate governance norms and codes, we can effectively demonstrate accountability to Parliament though the Accountability Report.

Corporate governance report

Directors’ report

The composition of our management boards (including advisory and non-executive members) having authority or responsibility for directing or controlling the major activities of the entity during the year are as follows:

Executive members

Dean Beale, Inspector General and Chief Executive

Alec Pybus, Chief Operating Officer

Chris Pleass, Finance and Commercial Director

Dan Goad, People and Capability Director

Angela Crossley, Strategy, Policy and Analysis Director

Non-Executive members

Mark Austen

Alan Graham (until May 2021)

Robert Hunt

Richard Oirschot (until May 2021)

Mary Chapman

Samantha Durrant

Gary Kildare

Eoin Parker

Company directorship conflicts

No members had company directorships and other significant interests conflicting with their management responsibilities.

Information on personal-data-related incidents

During the year, there were two significant lapses of protective security. One was formally reported to the Information Commissioner’s Office (ICO) who took no further action. The second incident was reported to BEIS’ data protection officer and was deemed not reportable to the Information Commissioner.

Statement of Accounting Officer’s responsibilities

Under the Government Resources Accounts Act 2000, HM Treasury has directed the Insolvency Service to prepare for each financial year a Statement of Accounts in the form and on the basis set out in the Accounts Direction.

The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Insolvency service and of its income and expenditure, Statement of Financial Position and cash flows for the financial year.

In preparing the accounts, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by HM Treasury, including the relevant accounting and disclosure requirements and apply suitable accounting policies on a consistent basis
• make judgements and estimates on a reasonable basis
• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the Accounts; and prepare the Accounts on a going concern basis
• confirm the Annual Report and Accounts as a whole is fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable.

The Department for Business, Energy, and Industrial Strategy has appointed the Chief Executive as Accounting Officer of the Insolvency Service.

The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the Insolvency Service’s assets, are set out in Managing Public Money published by HM Treasury.

As the Accounting Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the Insolvency’s Service auditors are aware of that information. So far as I am aware, there is no relevant audit information of which auditors are unaware.

Dean Beale
Chief Executive
Date: 21 October 2022

Governance statement

Introduction

As Accounting Officer, I am responsible for the governance, risk management and internal controls within the Insolvency Service. These controls ensure that the Agency meets its objectives whilst adhering to the principles of ‘Managing Public Money’, ensuring that public funds are used in a proper and effective manner.

Governance structure

This section describes the governance arrangements in place during 2021-22.

As Chief Executive I am supported and challenged by the Insolvency Service Board. The Agency adopts relevant principles and protocols outlined in HM Treasury’s Corporate Governance in Central Government Departments: Code of Good Practice.

The governance structure within the Agency is shown in the following diagram.

The Insolvency Service Board (ISB) provides strategic leadership within a framework of prudent and effective controls which enable risk to be assessed and managed. It is collectively responsible for the long-term success of the Agency. This includes setting strategic aims and objectives, ensuring that necessary leadership and resources are in place to deliver these aims, challenging and supporting management performance, and reporting to the Business Energy and Industrial Strategy (BEIS) Department and externally on its stewardship.

The prescribed composition of ISB is for a greater number of non-executive board members (NEBMs) than executive members, designed to give an appropriate balance of skills, experience, independence and knowledge to enable the board to effectively discharge its duties and responsibilities.

The ISB is independently chaired and led by a non-executive chair who ensures its ongoing effectiveness and the high standards of regularity and propriety expected of a public body. The chair also ensures that the board both supports and holds the executive team to account for the Agency’s performance and takes a collective responsibility for the Insolvency Service’s overall success.

The ISB met ten times during the year. Matters considered by it included:

• regular review and scrutiny of progress against the 2021-22 annual plan and targets, including performance on all key aspects of Agency operations including finance, people and capability, and customer feedback
• implementation of the Agency’s five-year strategy
• approval of the Agency’s budget for 2021-22
• securing adequate resources to deliver the Agency’s strategic objectives
• business continuity response to COVID-19 and the impact on operations, people, and wellbeing, as well as the phased re-introduction of working in offices
• strategic priorities for the Agency set in the context of developing the future long-term objectives for the Insolvency Service, departmental and wider government aims, and changes to external insolvency markets
• major projects delivering organisational change
• topical items such as technology principles and customer satisfaction, progress on major cases of political and public interest
• feedback from board committees including reviewing the annual report produced by the Audit and Risk Assurance Committee
• regular assessment of exposure to and management of risk.

Data is used extensively by the ISB to monitor Agency risk and performance. An Operational performance pack is presented to the Board by the Chief Operating Officer, highlighting progress against key targets, and risks are reviewed quarterly. The information presented to the board is closely monitored and challenged by directors at their monthly performance meeting before being presented to the board.

There have been no ministerial directions given to the Agency during 2021-22.

The ISB has two sub-committees:

• The Audit and Risk Assurance Committee (ARAC)
• People Committee (PC).

The Audit and Risk Assurance Committee is chaired by an appropriately qualified independent NEBM. Its membership comprises two further NEBMs. I attend along with the Finance and Commercial Director, and internal and external auditors. Other senior leaders attend as required.

ARAC supports me as Accounting Officer and receives reports from both internal and external auditors. It reviews the annual financial statements prior to publication and provides assurance to the Insolvency Service Board on controls and risk. ARAC met four times during the year. The resource impacts of COVID-19 (on both Agency and NAO staff) meant that the annual report and accounts were laid in Parliament in November 2021.

Matters considered by ARAC included:

• approval of the internal audit plan, review of all internal audit reports issued, review of progress against the annual internal audit plan and annual audit opinion on risk management, governance, and internal control
• work on the preparation and completion of both the Agency annual report and accounts and ISA (White Paper) accounts was regularly reviewed
• regular reviews of the Agency risk register and risk management including distinct risks and issues related to people capacity and capability and the impact of COVID-19 on the Agency
• scrutiny of fraud and error incidents
• engagement with external auditors
• regular reviews of the Agency’s finance management reports

• assurance reviews of the following areas

  • Litigation risks
  • Commercial capability and outcomes of Cabinet Office peer review
  • Cyber security.

The People Committee is an advisory committee of the Insolvency Service Board. It provides governance oversight, advice and support relating to the following key areas:

• Development, implementation, and review of the People Strategy including capacity and capability within directorates
• Staff engagement and culture change
• Diversity, inclusion, and wellbeing
• Health and safety
• Appraisal and development processes for senior executives and non-executive board members
• Succession planning for senior executive roles and non-executive board members

The People Committee is chaired by a Lead Non-executive board member. It also includes two other Non-Executive Board Members, two executive board members and one external committee member.

Matters considered by People Committee included:

• Reviews of the people impacts on Agency strategies and policies, such as Inclusion First, Wellbeing, and Raising a Concern
• Agency reward schemes
• People Survey results

The Executive Committee (ExCom) meets twice monthly to review Agency performance, finance, and strategy. I share chairing responsibilities for ExCom meetings with the Chief Operating Officer and all Directors, collectively known as the Executive Leadership Team (ELT) are involved in decision making at these meetings. The ELT is responsible for discussing Agency risks and issues, and management information produced monthly including but not limited to the Agency’s performance targets.

The following table summarises NEBM attendance at Insolvency Service Board, Audit and Risk Assurance Committee and People Committee meetings held during 2021-22.

Non-Executive Board Members	Insolvency Service Board (ISB)	Audit and Risk Assurance Committee(ARAC)	People Committee
Mark Austen (Chair ISB)	10/10	N/A	4/4
Alan Graham (Chair of ARAC to May 2021)	2/2	1/1	N/A
Robert Hunt (Chair of ARAC from 1 June 2022)	10/10	4/4	N/A
Richard Oirschot (ARAC member to May 2021)	1/1	1/1	N/A
Mary Chapman (Chair People Committee)	9/10	2/2	4/4
Samantha Durrant	7/10	3/4	N/A
Gary Kildare	9/10	4/4	N/A
Eoin Parker	9/10	N/A	4/4

Compliance with the Corporate Governance Code

In accordance with the Corporate Governance in Central Government Departments: Code of Good Practice, the Agency conducts an internal review of the board’s effectiveness annually, with an external independent review being carried out once every three years. An internal review was undertaken during January and February 2022.

Five of the six non-executive board members were appointed for the first time in April 2021, making for an essentially new board. The focus of this year’s review was to assess, through targeted questionnaires and interviews with board members, how effectively the new board is meeting its purpose, role and responsibilities and identify areas for development.

A draft report of findings was presented to the board in March 2022; overall the report was satisfactory but did contain some suggestions for further development. The board discussed the report in March 2022 and agreed an action plan for implementing recommendations in 2022-23.

Strategic planning

Last year the Agency launched a new five-year strategy underpinned by seven strategic themes which described the vision and objectives for the Agency’s operational and corporate centre functions. During 2021-22, the Agency has successfully delivered a programme of projects to begin the implementation of its transformation plans. Through this year’s comprehensive spending review process (CSR21), we have secured funding from HM Treasury to enable the continued implementation of the long-term strategy and deliver a modernised, responsive and sustainable service that efficiently and effectively meets the needs of our customers.

The risk and internal control framework

Risk management framework

Risk management is a key aspect of the Agency’s internal control framework. A key part of the Agency’s risk management process is the regular review of the management of individual risks by the ELT. Agency risks are maintained in a register that captures strategic, financial, reputational, operational and compliance risks and details the controls and actions required to mitigate those risks to a manageable level.

During the year, the key risks and issues which were likely to impact on our ability to meet our objectives were identified and assessed for likelihood and impact. Each risk or issue is owned by a director and these are reviewed by the ELT at each monthly meeting whereby we challenge the mitigating actions put forward and collectively agree the approach to be taken to manage the risk. When considering proposed mitigating action, the ELT will consider the cost and benefit of such action.

The Risk Management process and register is scrutinised by the Audit and Risk Assurance Committee at every meeting to ensure that it is operating effectively. Risks and issues are reported to the Board regularly. The register is also used to inform the annual audit plan.

ARAC and the board maintain oversight and monitor the mechanisms for the assessment and management of risk; ELT horizon scan and define new risks across the organisation to ensure that appropriate mitigating measures are in place.

Risk profile

Impact of the COVID-19 pandemic

The Agency continued to deal with the following risks and issue due to the impact of the COVID-19 pandemic.

Issue: Impact of COVID-19 restrictions on working practices and productivity

Disruption to productivity caused by those with whom we interact (including stakeholders, directors, bankrupts) not being able, or in some instances unwilling, to engage as effectively as they did pre-COVID-19 continued to have an impact in 2021-22.

Health and social issues, external factors such as access to customer sites and access to courts, or the fact that external resources have been re-prioritised away from assisting us with our enquiries remained factors, ultimately resulted in the Agency not achieving all of its performance targets.

This issue was closed in March 2022 as COVID-19 restrictions ended.

To help ensure the Agency returns to its pre-pandemic levels of performance, the Agency Performance Group (APG) continues to analyse and monitor performance against targets, determining what further mitigating or corrective actions should be taken, and reports on performance to ExCom each month.

Risk: Impact of economic effect of COVID-19 on case volumes

A plan was developed to deal with any sharp increases in cases. This set out priorities for work that had to be done, as opposed to being discretionary. Work to ensure resilience across operational areas was put in place, including potential for tactical contracting out of some work to free up resources for redeployment if required. A new operating model in Official Receiver Services provided more flexibility to cope with variations in workloads. This risk was closed in September 2021.

Risk: Ability to provide COVID-19 secure workplaces for staff

COVID-19 secure compliant status of all offices was confirmed and assured by means of a property risk assessment and Senior Responsible Officer confirmation at each office that all social distancing and attendance protocols were in place. The COVID-19 Business Continuity Group was in place to oversee ongoing compliance, identify systemic issues and act as an escalation point. This risk was closed in September 2021.

Risk: Impact of return to office working on staff welfare

Consistent and clear communications, whole Agency sessions and live question and answer are providing reassurance and mitigating risk. Executive Leadership Team looked at future ways of working, and the need for consistent application of the working practices guidelines, whilst continuing to manage individual circumstances sensitively.

Significant issues

The Agency has dealt with the following other significant issues this year.

Official Receiver Services case volumes and funding

This issue first materialised in December 2020 as bankruptcy and compulsory liquidation numbers dropped much lower than pre-COVID-19 levels, resulting in a significant reduction in income generated from case fees. The reduction in case numbers was a direct result of Government intervention to mitigate the risk of insolvency and it continued into 2021-22.

In 2021-22, case numbers were only 45% of the average annual volumes directly before the pandemic, resulting in case income materially below normal planning assumptions.  To mitigate the impact on the financial position, significant reductions have been made to recruitment plans and staff have been redeployed. Whilst these measures reduced the size of the forecast budget deficit, the shortfall in fees remained significantly higher than could be managed without funding from BEIS.

By year end the fee-funded deficit had reduced to £7.3m due to reduced staff costs in Official Receiver Services and increases in other fee income. To reduce the risk of future income shortfalls in ORS, the Agency has initiated a project to develop a

long-term financial solution. Funding for this project was agreed as part of the 2021 Spending Review bid.

Compensatory notice pay error

In 2020-21 it was reported that in 2018-19 incorrect payments to claimants were made due to errors in the treatment of Compensatory Notice Pay (CNP). The calculation applied was incorrect as National Insurance (NI) was not correctly deducted. In addition, the tax deducted had not at that time been passed to HMRC.

The value of the overpayments due to the under-deduction of National Insurance Contributions (NIC) in relation to CNP was revised to £5.5m in 2020-21 and there has been no further change.

All relevant information has been submitted to HMRC during 2021-22 so that individuals’ tax and NI records are now correct. The amounts owed by claimants have been formally written-off in the accounts. The matter is now concluded and this issue was closed in September 2021.

Redundancy Payments Service Calculations

The Agency’s RPS calculation engine was built, following consultation with HMRC, to apply one week’s primary threshold to each individual week within a calculation, with national insurance and tax applied at the point of calculation and to each component individually. In December 2021, HMRC, as part of their regular engagement with RPS, advised that RPS’s current approach to the application of national insurance deductions was incorrect. Following further enquiries, the correct approach is complex and subject to legislative ambiguity; however, the application of national insurance deductions is determined by a number of factors including the redundancy component being paid and the individual claimant’s earnings period.

The Agency has modelled scenarios to assess the impact of the change, taken prospectively from the date the new advice was given, estimating an annualised £1.6m under deduction and a £1.2m over deduction of national insurance. In a large number of cases, the impact per claim is small. Based on an assumption of a monthly taxation cycle, the median impact of this issue was an over-deduction of £17. Within those individuals with under-deductions, the median was £29; within those with over-deductions, the median was £35. Considering NI under- and over-deductions relative to individuals’ gross taxable amounts due, the median discrepancy was a 2.3% under-deduction; and 95% of individuals fell within the range between an under-deduction of 8.6%, and an over-deduction of 4.8%.

In order to allow the RPS to continue to provide support to those in financial distress, the Agency has had to continue to make RPS payments under the current methodology. The Agency is continuing to work with HMRC to consider what changes could and should be made to the RPS payments. The Agency hopes to resolve the issue as soon as practicable but until this is done, RPS payments will continue to be made under the superseded guidance.

Key strategic risks

The Agency has dealt with the following significant strategic risks this year.

The Executive Leadership Team’s ability to engage the broader organisation behind the delivery of the new strategy

Controls for this risk include ongoing engagement activities around the strategy becoming embedded as Business as usual, and benchmarking of awareness and understanding by colleagues of how their role fits into the strategy.

The Agency’s ability to recruit a diverse workforce and to recruit or retain people into critical roles

Work has been done to improve external communications and inclusive recruitment products to improve diversity. Strategic workforce, succession and capability planning are in place to mitigate the risk of problems in recruitment and retention. Controls are in place to ensure compliance with Cabinet Office requirements on contingent labour. Continuous improvement techniques are being used to conduct an end-to-end recruitment process and develop the concept of ‘grow your own’ – taking on apprentices and focussing their development on roles within the Agency.

The Agency’s funding being insufficient to modernise our technology

During the year the Agency had developed contingency plans in the event that funding was not sufficient to cover necessary modernisation of our technology. Funding has now been secured and this risk has been closed.

Uncertainty over future funding

There was potential that the funding allocated by BEIS would not be sufficient for all the Agency’s planned change activity or would necessitate reductions in the cost base and operational outputs. BEIS funding was confirmed at the required level in March 2022 and budget requirements for redundancy payments service have been funded by HMRC. This risk has been closed.

Key operational risks

The Agency has dealt with the following operational risks this year.

The Agency’s capability to respond to National Interest Cases

A NIC support strategy has been developed to better understand the pressures brought on Business as usual operations due to the resourcing demands of NICs. The securing of a panel of solicitors to call upon will provide choice and drive best value. Costs associated with NICs are mitigated by the introduction of a system to recover Official Receiver time supervising special managers. The Chief Technical Officer and Official Receiver liaise across government and externally to ensure that the operational team get sufficient financial, legal and special manager support.

The Agency’s vulnerability to cyber attack

Cyber risk will remain a feature of all corporate life for the foreseeable future. The Agency is working on a range of measures including training, reviewing of back up policies and processes, updating technical documentation and making full use of the relevant National Cyber Security Centre’s Active Cyber Defence capabilities. Full implementation of all proposed measures should act to reduce that risk as much as is practical, without unduly impacting the ability of staff to work effectively.

The Agency’s vulnerability to fraud

The Agency investigates and pursues all instances of fraud. Where fraud incidents have occurred, attack tree sessions, reviews of end-to-end processes have been implemented and lessons learned recorded. Fraud risk assessments are conducted at directorate and Agency level and if fraud risks are identified action plans are developed to further reduce the likelihood of successful large-scale fraud attacks.

Vulnerability to potential fraud and error in the process of payments to third parties

Controls relating to payee administration groups and the governance around centrally managed payees are now in place. There is updated guidance for staff and all necessary IT changes have been made in order to mitigate the risk. This risk was de-escalated in October 2021.

GDPR compliance

We now have a formal data retention policy for all data across the Insolvency Service, and various projects have taken place to bring systems into line with this policy. A full review of our information assets has now been completed, and individual asset owners appointed for every asset. This work will continue under business as usual as assets retire, change, or are added. This risk was de-escalated in March 2022.

Insufficient detail in business requirements for commercial contracts

Training was delivered and updated guidance provided to all business areas. A new process for instructing the commercial team was introduced. This risk was de-escalated in November 2021.

Lack of clear strategic direction

High level strategic objectives were agreed by the Minister. The strategic business plan has been developed and is being used to report to the ELT and the board on delivery progress. Strategic Key Performance Indicators (KPIs) and year one operational KPIs have been agreed and are being developed to include baselines and five-year targets. This risk was de-escalated in June 2021.

Impact of EU exit on Agency’s goals

Following the UK’s exit from the European Union, the framework for automatic recognition and enforcement of insolvency proceedings under the EU Insolvency Regulation is not available in respect of new UK or EU insolvency proceedings. In addressing this, we have initially focused on providing insolvency practitioners with guidance on how to obtain recognition for UK insolvency proceedings in individual EU states, particularly those with which we have the most significant volume of trade. Over the longer term, we are continuing to develop the UK framework for managing international insolvencies, with a forthcoming consultation on implementing two United Nations Commission on International Trade Law (UNCITRAL) Model Laws in this area. We continue to encourage other countries, including EU members, to implement the UNICTRAL Model Law on Cross-Border Insolvency (as the UK has already done) and so provide a predictable and effective route for cross-border insolvency cooperation between us.

Internal Controls

Quality Assurance of Analytical Models

There are two business-critical models used by the Agency in relation to planning assumptions for case inputs and fee income. The models contain separate workings used for forecasting for the four main elements of Official Receiver Services fee income arising from Payment Protection Insurance (PPI), National Interest Cases, Redundancy Payments Service (RPS) and Business as Usual (BAU) cases.

The models used have been subject to a separate review by Government Internal Audit Agency (GIAA) to provide assurance that the Agency is compliant with:

• the MacPherson Review of Quality Assurance (QA) of Government Analytical Models
• HMT guidance on producing quality analysis for government contained in the Aqua Book.

The review made recommendations relating to the documentation associated with the models and key assumptions, QA processes and high levels of dependency on specific individuals.

Since the review, significant progress continues to be made in addressing the recommendations including: the development of robust QA arrangements, a process of independent review, documentation, and a cross training programme.

The GIAA review concluded that the Agency income modelling processes are largely compliant with best practice when assessed against the MacPherson Report and the expectations of BEIS, as the Agency’s sponsor department. The QA logs for financial models were ‘not fully compliant’ in two areas. Enhancements to ensure full compliance and future financial sustainability has been incorporated as part of a formal project within the five-year strategy. It is prudent for the Agency to remain in the amber rating.

Effectiveness of whistleblowing policy

We work in partnership with our parent department, BEIS, to give independent oversight and assurance to our whistleblowing policy. The policy and procedure we use was adopted from Civil Service Employee Policy and has been written with reference to the Public Interest Disclosure Act 1998, which offers protection to those in both the private and public sectors, who blow the whistle, in certain circumstances. Our aim is to raise and encourage an awareness of our whistleblowing policies and procedures, and to create a culture where it is a safe place to complain so that employees speak up and challenge suspected wrongdoing at work.

The Agency has a dedicated whistleblowing Nominated Officer responsible for providing support to the whistle blower whilst undertaking an impartial review of the concerns raised to determine whether they fall under the whistleblowing policy and decide on the most appropriate way to take the matter forward; they are also the central point of contact for the whistle blower and any investigation.

Our whistleblowing policy, procedures and guidance are on our intranet which is available to all employees.

One allegation was investigated during 2021-22, but no evidence was found to support the allegation.

Customer feedback and complaints process

The Insolvency Service gathers feedback using an annual customer satisfaction survey, annual surveys with delivery partners, and our complaints process. A target is set for customer satisfaction in the Agency annual plan. The yearly survey captures the perceptions and experiences of the main groups using our services.

The customer satisfaction survey is conducted by an independent research agency who uses computer-assisted telephone interviews that typically last around 15 minutes. The delivery partner surveys are conducted in house via an online survey.

The Insolvency Service’s complaints process comprises of three internal complaint tiers, with Tier three complaints investigated and responded to by my office.

An integral lessons-learned procedure advances our complaints performance and embeds a culture of continuous improvement.

Delegated Financial Authorities

The context for delegated authorities is an established business planning process. All directorates have local plans linked to the Insolvency Service annual plan. These are reviewed and updated as necessary. Directorate plans in turn are supported by individual performance agreements. The Agency’s budgets are allocated at

director-level, in line with directorate plans, and monitored by the board at Agency level and ELT at directorate level.

A system of delegations and approvals is in place throughout the Agency to ensure that proper processes exist for the assessment, approval, and authorisation of new expenditure. My financial delegations as Accounting Officer are set by BEIS and sub-delegated to directors and senior leaders.

Protective Security

Information Security

The Agency’s senior information risk owner oversees information risk and is supported in the role by several security focused officers. A network of information asset owners exists in a manner consistent with government guidance on this subject.

Compliance with statutory timescales for the provision of information were adequate over the reporting year, with 99% of Freedom of Information and Subject Access Request responses within statutory timescales. The Agency replied to one Subject Access Request and two Freedom of Information requests outside the statutory timescales.

The Agency experienced two significant lapses of protective security in 2021-22. The first involved the omission of the intended recipient’s name in the ‘to’ field for some early postal Breathing Space notifications. The notifications were all posted to the correct address and didn’t include any sensitive personal data such as National Insurance numbers or information about the type of debt. A fix was applied 24 hours after the Agency became aware of the issue, and we have seen no reoccurrence. The Information Commissioner’s Office were informed but took no further action. The second involved the misdirection of removable media, which was recovered soon after leaving our possession. The incident was reported to BEIS’s data protection officer and was deemed not reportable to the Information Commissioner.

Physical Security

The Insolvency Service currently has 22 sites across England, Wales, and Scotland. The vast majority of our sites have excellent protective security controls. However, some sites, which house multiple non-government tenants, are less well protected due to the Landlord, Landlord Managing Agent and other tenants dismissing our protective security recommendations. All sites deploy a layered physical security approach.

The Agency ensures that the Centre for the Protection of National Infrastructure (CPNI) Operational Requirements (OR) inspections and secure by design principles are adhered to.  The CPNI methodology has enabled the Physical Security Team to identify and remediate meaningful areas for improvement across the estate.

The Agency will always implement proportionate protective security controls to ensure safety of personnel and protection of sensitive assets/material at the official (sensitive) level.

In this reporting period, the Agency has not experienced any significant lapses in relation to protective (physical and personnel) security.

Government Functional Standards

Heads of Function, and Function Leads where necessary, are in place in all appropriate areas.

The Functional Standards have been addressed in two areas:

• GovS001 where business plans compliant with the standard’s requirements have been constructed for each function for 2022-23 and are being reflected in the Agency Annual Plan; a Governance statement for each function has been submitted demonstrating their current levels of compliance and are being built into the Agency corporate governance processes; and the structure and positioning of the Corporate Governance Function itself is being examined within the Agency Organisational Design Project with a view to compliance. The overall assessment here is compliant with continuous improvements planned for 2022-23.

• GovS002-14 (GovS015 does not apply to this Agency) All functions are preparing for their individual standards and are ensuring compliance as each standard is published, taking advantage of peer reviews and submitting appropriate self-assessments.

Accounting Officer Annual Review of Governance Effectiveness

As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review is informed by internal audit together with senior leaders within the Insolvency Service who have responsibility for the development and maintenance of the internal control framework. The effectiveness of the system of internal control is reviewed by directors who provide a statement of governance, including an assessment of effectiveness against six key indicators (Leadership and Governance, Culture and Capability, Partnership and Stakeholder Management, Risk Management, and Financial Management) for the areas of the business for which they have responsibility. These reviews are conducted in collaboration with the Corporate Governance Team. A representative from the Corporate Governance team, Head of Internal Audit and Chair of the Audit and Risk Assurance Committee also met a sample of directors to discuss any key issues.

Internal Audit

The audit programme is delivered by the Government Internal Audit Agency and complies with government internal audit standards. The annual audit plan is substantially informed by the Agency’s key risks and is reassessed throughout the year to ensure assignments due are still in areas deemed at highest risk. The internal audit plan is approved annually by the Audit and Risk Assurance Committee which receives copies of all reports and reviews progress at each meeting.

Internal Audit Annual Assurance Opinion

The Head of Internal Audit provides a report annually on the internal audit activity during the year. An overall Moderate opinion was provided on the framework of governance, risk management and control within the Insolvency Service (‘the Agency’) for 2021-22, with a distribution of individual report ratings broadly consistent with previous years. The opinion is based on the results of individual audit engagements undertaken throughout the year, attendance at board and committees, and regular meetings with senior management.

The assurance activities were aligned to the key risks to strategic objectives of the organisation, focussing on:

• delivery of key programmes and projects, such as Breathing Space

• reviews (on a rotational basis) of operational processes in the ORS, RPS and other areas

• cyber security

• an ongoing plan of rotational reviews of corporate systems.

As the country has come out of the pandemic, the Agency has adapted and developed its processes and operations. Internal Audit are pleased to note that the Agency has maintained appropriate levels of operational governance and risk management and continues to successfully deliver core services. The Agency has also seen success in delivering formal projects, for example, taking Breathing Space into the Business as usual environment.

The Agency continues to maintain a proportionate level of key controls, and no significant weaknesses were identified. Some Limited assurance opinions were issued (Starters & Leavers; and Post Implementation Review: Debt Recovery Provider), with themes emerging that there is a capacity risk around the delivery of projects and improvement activities. Internal Audit also noted that the Agency would benefit from a more strategic approach to risk, which we have recently commenced research into.

During the year, agreed management actions as a result of recommendations were actively followed up. In line with the Agency’s risk appetite, all high, medium and low priority actions are monitored to closure. The two Limited assurance reports, resulted in four high priority actions, which have been successfully closed during this year.

Looking forward, Internal Audit suggested that areas for continued focus should include: introducing more strategic aspects to the risk register; delivering the cyber security action plan; making progress on recruitment and retention, including developing a workforce strategy with a multi-year horizon; improving the approach to fraud risk assessments; and improving the management of all change as a portfolio of projects and programmes, aligned to strategic priorities and available resources.

Accounting Officer Conclusion

I have considered the evidence provided regarding the production of the Annual Governance Statement and the independent advice and assurance provided by the Audit and Risk Assurance Committee. I conclude that the Agency has satisfactory governance and risk management systems with effective plans to ensure continuous improvement.

Dean Beale
Chief Executive
Date: 21 October 2022

Remuneration and Staff Report

Remuneration report

Service Contracts

The Constitutional Reform and Governance Act 2010 requires Civil Service appointments to be made on merit on the basis of fair and open competition. The Recruitment Principles published by the Civil Service Commission specify the circumstances when appointments may be made otherwise.

Unless otherwise stated below, the officials covered by this report hold appointments which are open-ended. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Further information about the work of the Civil Service Commission can be found at www.civilservicecommission.org.uk .

Remuneration Policy

The remuneration of senior civil servants is set by the government following independent advice from the Review Body on Senior Salaries.

In reaching its recommendations, the review body is to have regard to the following considerations:

• the need to recruit, retain and motivate suitably able and qualified people to exercise their different responsibilities
• regional/local variations in labour markets and their effects on the recruitment and retention of staff
• government policies for improving the public services including the requirement on departments to meet the output targets for the delivery of departmental services
• the funds available to departments as set out in the government’s departmental expenditure limits
• the government’s inflation target

The review body will also take account of the evidence it receives about wider economic considerations and the affordability of its recommendations.

Further information about the work of the review body can be found at www.gov.uk/government/organisations/review-body-on-senior-salaries

Remuneration (including salary) and pensions entitlements

The following sections provide details of the remuneration and pension interests of the most senior management of the Insolvency Service: the members of the Insolvency Service Board.

Remuneration – including salary, benefits in kind and pensions (audited)

Officials	Salary (£’000) 2021-22	Salary (£’000) 2020-21	Bonus Payments (£’000) 2021-22	Bonus Payments (£’000) 2020-21	Benefits in Kind (to nearest £100) 2021-22	Benefits in Kind (to nearest £100) 2020-21	Pension benefits (£’000) 2021-22	Pension benefits (£’000) 2020-21	Total (£’000) 2021-22	Total (£’000) 2020-21
Alec PybusChief Operating Officer	95-100	95-100	5-10	Nil	Nil	Nil	39	39	140-145	135-140
Angela Crossley Strategy & Change Director	85-90	85-90	Nil	0-5	Nil	Nil	17	65	105-110	155-160
Christopher Pleass Finance & Commercial Director	90-95	90-95	Nil	Nil	Nil	Nil	28	38	120-125	130-135
Daniel Goad People & Capability Director	95-100	95-100	5-10	Nil	Nil	Nil	37	37	135-140	130-135
Dean Beale Chief Executive	100-105	100-105	5-10	Nil	Nil	Nil	20	86	125-130	185-190

_{Note: The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The value of pension benefits accrued during the year is calculated by My CSP for each individual. The real increases exclude increases due to inflation or any increase or decreases due to a transfer of pension rights.}

Salary

‘Salary’ includes gross salary, overtime, reserved rights to London weighting or London allowances; recruitment and retention allowances, private office allowances, and any other allowance to the extent that it is subject to UK taxation. This report is based on accrued payments made by the Insolvency Service and thus recorded in these accounts.

Benefits in kind

The monetary value of benefits in kind covers any benefits provided by the Insolvency Service and treated by HM Revenue and Customs as a taxable emolument.

Bonuses

Bonuses are based on performance levels attained and are made as part of the appraisal process. Bonuses relate to the performance in the year in which they become payable to the individual. The bonuses reported in 2021-22 relate to performance in 2021-22 and the comparative bonuses reported for 2020-21 relate to the performance in 2020-21.

Pay multiples (audited)

Reporting bodies are required to disclose the banded percentage change from previous financial year in respect of the highest paid director and an average in respect of all employees taken as a whole.

Banded percentage change from 2021-22	Salary and allowances	Performance Pay and bonuses
For highest paid director	0%	-
For average employee2	4%	45%

_{Note: Calculated on the midpoint of the £5k rounded pay band. The highest paid director did not receive a bonus in 2020-21, however did receive a bonus of £5-10k in 2021-22.}

Based on the total pay for all employees on an annualised basis, excluding the highest paid director, divided by the full-time equivalent number of employees (also excluding the highest paid director).</sub>

Reporting bodies are also required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the quartile remuneration of the organisation’s workforce.

Year	25th percentile pay ratio	50th percentile Median pay ratio	75th percentile pay ratio
As at 31 March 2022	4.9:1	3.6:1	2.5:1
As at 31 March 2021	4.8:1	3.5:1	2.5:1

_{Note: Calculated on the midpoint of the £5k rounded pay band for the highest paid director.}

The minimal change in the current financial year’s pay ratios compared to the pay ratios of the previous financial year is due to the banded remuneration remaining identical and there not being a material change in the workforce, or a change in the highest paid director’s remuneration. The change in the ratios is consistent with the pay, reward and progression policies of the Agency as salary increases during 2021-22 were targeted to the lowest paid employees therefore increasing the 25th and 50th percentile and not changing the 75th percentile.

	25th percentile pay	50th percentile Median pay	75th percentile pay
As at 31 March 2022
Total remuneration	£22,036	£30,282	£42,175
Salary component only	£21,127	£29,319	£41,059
As at 31 March 2021
Total remuneration	£21,137	£29,151	£41,431
Salary component only	£20,877	£27,651	£41,059

As at 31 March 2022 remuneration ranged from £15,000 to £395,000 (31 March 2021, £15,000-£185,000). This range includes agency workers and contractors where a derived annualised salary has been calculated as if they were employed for a full year.

Total remuneration includes salary, allowances, overtime, non-consolidated performance-related pay and benefits-in-kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.

Remuneration of Insolvency Service Board Members (audited)

The Insolvency Service Board comprises ten members although there have been movements throughout the year where members have joined and left the Insolvency Service Board or the Insolvency Service.

Five of the roles are civil servants, shown on earlier pages:

• Agency Chief Executive
• Chief Operating Officer
• People & Capability Director
• Finance & Commercial Director
• Strategy & Change Director

Their remuneration is borne by the Insolvency Service and is disclosed above.

The costs of Debbie Gillatt and Eoin Parker were borne by BEIS and they did not receive any additional amount for board duties from the Insolvency Service.

Non-Executive Board Members	Salary 2021-22 £000	Salary 2020-21 £000
Stephen Allinson (Chair from 1 January 2017 – 15 April 2021)	0-5	15-20
Alan Graham MBE (from 1 September 2014 – 31 May 2021)	0-5	10-15
Richard Oirschot (from 1 August 2017 – 30 April 2021)	0-5	15-20
Mary Chapman (from 1 August 2017)	10-15	10-15
Mark Austen (from 6 April 2021, Chair from 16 April 2021)	15-20	N/A
Robert Hunt (from 6 April 2021)	10-15	N/A
Samantha Durrant (from 6 April 2021)	10-15	N/A
Gary Kildare (from 6 April 2021)	10-15	N/A
Eoin Parker (from 1 April 2021)	Nil	N/A
Debbie Gillatt (from 1 September 2018 -31 March 2021)	N/A	Nil

_{Note: Stephen Allinson, Richard Oirschot, Mark Austen all have full year equivalent salaries in 2021-22 of £15-20k}

Alan Graham, Robert Hunt, Samantha Durrant, and Gary Kildare all had full year equivalent salaries in 2021-22 of £10-15k.</sub>

None of the Non-Executive Board members received any benefits in kind.

There are no company directorships and other significant interests held by members of the management board which may conflict with their management responsibilities.

Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has four sections: three providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between ten years and 13 years and five months from their normal pension age on 1 April 2012 switch into alpha sometime between 1 June 2015 and 1 February 2022. Because the government plans to remove discrimination identified by the courts in the way that the 2015 pension reforms were introduced for some members, it is expected that, in due course, eligible members with relevant service between 1 April 2015 and 31 March 2022 may be entitled to different pension benefits in relation to that period (and this may affect the Cash Equivalent Transfer Values shown in this report – see below). All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a defined contribution (money purchase) pension with an employer contribution (partnership pension account).

Employee contributions are salary-related and range between 4.6% and 8.05% for members of classic, premium, classic plus, nuvos and alpha. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on his pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate in 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is an occupational defined contribution pension arrangement which is part of the Legal & General Mastertrust. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member). The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes but note that part of that pension may be payable from different ages.)

Further details about the Civil Service pension arrangements can be found at the website www.civilservicepensionscheme.org.uk

Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Compensation for loss of office

As per 2020-21, no senior managers have received compensation for loss of office in 2021-22.

Pension benefits (audited)

Officials	Accrued pension at pension age as at 31/3/22 £’000	Real increase in pension £’000	CETV at 31/3/22 £’000	CETV at 31/3/21 £’000	Real increase in CETV£’000
	Alec PybusChief Operating Officer	10-15	0-2.5	163	130	22
	Angela CrossleyStrategy & Change Director	35-40plus lump sum of80-85	0-2.5plus lump sum of0	769	720	5
	Daniel GoadPeople & Capability Director	15-20	0-2.5	191	163	17
	Christopher PleassFinance & Commercial Director	30-35	0-2.5	487	446	14
	Dean BealeChief Executive	45-50	0-2.5	733	686	5

Staff Report

Senior Staff by pay-band

The table below provides the number of Senior Civil Servants or equivalent by pay-band:

	As at 31 March 2022	As at 31 March 2021
SCS Pay-band 2	1	1
SCS Pay-band 1	10	7

Staff composition

	Employees No	Employees %	SCS (incl. ISB Members) No	SCS (incl. ISB Members %	ISB Members All Staff No	ISB Member All Staff %	All Staff No	All Staff %
As at 31 March 2022
Female	983	57.52%	2	18.18%	1	20.00%	985	57.27%
Male	726	42.48%	9	81.82%	4	80.00%	735	42.73%
	1,709		11		5		1,720
As at 31 March 2021
Female	1025	55.83%	1	12.50%	1	20.00%	1026	55.63%
Male	777	44.17%	7	87.50%	4	80.00%	784	44.37%
	1,802		8		5		1,810

Staff Costs (audited)

	2021-22 Permanently employed £’000	2021-22 Others £’000	2021-22 Total £’000	2020-21 Permanently employed £’000	2020-21 Others £’000	2020-21 Total £’000
Wages and salaries	56,588	4,519	61,107	56,178	3,048	59,226
Social security costs	5,723	-	5,723	5,608	-	5,608
Other pension costs	14,950	-	14,950	14,592	-	14,592
Voluntary exit scheme	-	-	-	40	-	40
Subtotal	77,261	4,519	81,780	76,418	3,048	79,466
Add cost / (Less recoveries) in respect of outward secondments	(181)	-	(181)	81	-	81
Total net costs	77,080	4,519	81,599	76,499	3,048	79,547

Sickness absence data

During the year, the number of average annual working days lost per employee was 6.6 days (2020-21: 5.6 days).

Staff Turnover percentage

During the year, the staff turnover percentage for the Agency was 11.9% (2020-21, 7.8%).

Staff policies applied during the year

The Insolvency Service is committed to employing disabled people and we have regained the Disability Confident Employer (level two) whilst we finalise work towards the higher more challenging level of Disability Confident Leader.

Where an applicant has indicated they have a disability and have demonstrated the minimum essential criteria for the post, we have chosen to continue to guarantee to progress to the next stage of the selection process. To reduce potential bias:

• a new ‘Success Profiles’ recruitment approach has now been introduced. Success Profiles see the evolution of our predominantly competence-based approach; adding four elements that combine to deliver a powerful and flexible recruitment framework. The Success Profiles Framework is part of the Civil Service Workforce Plan
• when shortlisting applications, all application forms are anonymised
• it is expected that all selection panel members should have an understanding of the new Success Profiles recruitment and at least one member who has completed the recruitment and selection and inclusion in the Civil Service training. Inclusion training is being developed by the Cabinet Office Inclusion and Behavioural Science Leads.

Additionally, all disabled applicants may request reasonable adjustments at any stage of the recruitment process without disclosing the nature of their disability.

We ensure we support our disabled employees and workers, including those who have recently become disabled by:

• ensuring all our employees are aware of and apply our Diversity and Equality and Dignity at Work policies, the key provisions of which are to ensure that there is equality of opportunity for all and no discrimination against people on the grounds of any protected characteristics (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation) including colleagues from low socio economic backgrounds, so that colleagues can achieve their full potential and need not fear unfair treatment, bullying or harassment. People who do not adhere to these policies may be subject to disciplinary action
• providing reasonable adjustments when required and ensuring managers are equipped to support disabled employees with specific guidance on this topic
• ensuring access to training materials, learning events and career development opportunities for disabled employees through accessible versions of materials or by making reasonable adjustments
• by using the recruitment processes shown above when considering applications from disabled employees for promotion

Other employee matters

Other employee matters including information on health and safety and diversity can be found in the Performance Report and Governance Statement.

Off-payroll engagements

	2021-22	2020-21
Cost of off-payroll engagements	£3.397m	£2.485m
Average number of staff	109	108
Of these:
Number paid more than £245 per day	34	9
Number that lasted less than 6 months	14	5
Number lasted longer than 6 months but less than a year	11	0
Number paid more than £245 per day with a contract lasting more than 1 year but less than 2 years	8	3
Number where contract lasted longer than 2 years	1	1

Between 1 April 2021 and 31 March 2022 there were 34 off-payroll engagements or those that reached six months in duration, for more than £245 per day. 25 of these were assessed as being caught by IR35. None of these were engaged directly (via PSC contracted to BEIS) and on BEIS payroll. All 34 were reassessed for consistency/assurance purposes during the year, and there were three changes to IR35 status following this consistency review.

Consultancy

Spend on consultancy was £856k (2020-21: £712k). This included specialist resources required to develop the Agency’s Data Strategy, to support the Spending Review and Strategic Business Plan development.

Staff Exit packages (audited)

Reporting of Civil Service and other compensation schemes - exit packages (prior year comparator in brackets)

Exit package by cost band	Number of compulsory redundancies	Number of other departures agreed	Total number of exit packages by cost band
£25,001 - £50,000	0 (0)	0 (1)	0 (1)
Total number of exit packages	0 (0)	0 (1)	0 (1)
Total Resource cost / £’000s	0 (0)	0 (39)	0 (39)

Redundancy and other departure costs have been paid in accordance with the provision of the Civil Service Compensation Scheme (CSCS), a statutory scheme made under the Superannuation Act 1972. Exit costs are accounted for in full in the year of departure. Where the department (BEIS) has agreed early retirement, the additional costs are met by the department and not by the Civil Service Pension Scheme. Ill-health retirement costs are met by the pension scheme and are not included in the table.

There were no redundancies agreed as at the end of 2021-22 (2020-21: one person). There were no compulsory redundancy terms agreed as at 31 March 2022 (2020-21: no people).

Pension scheme details

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS) – known as ‘alpha’ – are unfunded multi-employer defined benefit schemes, but the Agency is unable to identify its share of the underlying assets and liabilities.

The scheme actuary valued the PCSPS as at 31 March 2016. You can find details in the resource accounts of the Cabinet Office: Civil Superannuation.

For 2021-22, employers’ contributions of £14.8m were payable to the PCSPS (2020-21: £14.5m) at one of four rates in the range 26.6% to 30.3% (2020-21: 26.6% to 30.3%t) of pensionable pay, based on salary bands. The scheme’s Actuary reviews employer contributions periodically following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2021-22 to be paid when the members retire and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, which is a stakeholder pension with an employer contribution. Employers’ contributions of £91k (2020-21: £91k) were paid to 1 appointed stakeholder pension provider. Employer contributions are age-related and range from 8% to 14.75% (2020-21: 8%t to 14.75%) of pensionable pay. Employers also match employee contributions up to 3% of pensionable pay. In addition, employer contributions of £3,113 (2020-21: £3,109), 0.5 per cent of pensionable pay, were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service and ill health retirement of these employees.

One employee (2020-21: one employee) retired early on ill-health grounds, incurring an additional £0.3k accrued pension liability (2020-21: £5.7k).

Average number of persons employed (audited)

The average number of whole-time equivalent persons employed during the year was as follows:

Number	2021-22	2020-21
Directly Employed	1,675	1,637
Other	47	70
Total	1,722	1,707

Parliamentary Accountability and Audit Report

Parliamentary Accountability Disclosures

Regularity of expenditure

Additional details can be found in the Governance Statement within the Corporate Governance Report, and the financial performance section within the Performance Report.

Remote contingent liabilities (audited)

The Agency had no remote contingent liabilities as at 31 March 2022. For details of contingent liabilities see Note 15 in the Accounts.

Losses and Special Payments (audited)

During the year, the Agency made the following payments. In all cases, the Agency sought formal approval for its proposals and actions with regards to these matters from either HM Treasury directly or indirectly through BEIS.

Loss category	2021-22 £’000	2020-21 £’000
RPS receivable loss	261,765	447,473
RPS fraud loss	0	540
Claims abandoned	672	496
Special Payments	24	39
Fruitless Payments	44	14

Expected loss on Redundancy Payments Service (audited)

Most of the redundancy payments made from the National Insurance Fund (NIF) are in respect of employees of insolvent companies. Repayment of debt is recovered from the sale of the assets of the insolvent company, and as such most of the debt is irrecoverable. HMRC accounts for the loss of the RPS receivable in NIF accounts. The estimated RPS receivable loss for 2021-22 was £261 million (2020-21: £447 million).

Dividends from insolvencies can take many years to come to fruition, hence it is difficult to evaluate individual debtor losses within a given financial year. However, work is being performed to enable the value of all those debts which reached final loss stage to be estimated in the future.

RPS fraud loss (audited)

During 2020-21, the RPS, funded by the NIF, received a number of claims which were subsequently discovered to be fraudulent. £500k was paid out for these claims, but HMRC, as the body responsible for the NIF, is taking forward the investigation into the fraud. This was reported to the Information Commissioner’s Office. There was no such fraud during 2021-22.

Claims abandoned (audited)

Costs are awarded to the Secretary of State when disqualification orders have been made or undertakings given after proceedings have been issued. Such costs would ordinarily cover legal costs. In some cases it is not possible to collect the debts and the Agency has to write-off some or all the amounts awarded. During 2021-22 there were 112 write-offs totalling £672k (2020-21: 58 write-offs totalling £496k).

Special Payments (audited)

Special payments include ex-gratia payments, covering principally payments made to the public as result of complaints about service and compensation to employees. During 2021-22, the Agency made 89 special payments totalling £24k (2020-21: 78 special payments totalling £39k).

Of these, there were 88 payments totalling £10k (2020-21: 78 cases totalling £39k) for compensation following complaints and miscellaneous errors. There was one special payment made for an employment tribunal claim £14k (2020-21: no claims costing £0k).

Fruitless payments (audited)

Fruitless payments are those losses that relate to acts or omissions in insolvency cases where the loss would otherwise result in the non-recovery of insolvency fees or be suffered by creditors or third parties.

During 2021-22, the Agency made 29 fruitless payments totalling £44k (2020-21: five payments totalling £14k). All these cases involved failure to deal with an asset correctly costing the Agency £44k (2020-21: four cases costing £14k).

Fees and charges income (audited)

The Agency charges fees for work carried out by the Official Receivers (OR). These fees are set through legislation and are managed by the Agency in accordance with the principles of ‘Managing Public Money’, whereby fees are set to recover full costs including the cost of capital. More detail can be found in the Notes to the Financial Statements (Notes 1(j), 1(k), 1(l), 1(n), 2(a), 2(b), 1(c), 4 and 9) which detail the accounting policies and the values of fee income received and receivable (i.e. not yet recognised in the Accounts). The Insolvency Proceedings (Fees) Order 2016 also provides further details of the fees chargeable.

The objective of the fees is to cover the cost of the work carried out by the OR teams. During 2021-22 this objective was not achieved, as the income recognised was insufficient to cover the cost of the OR service:

• The cost of the OR service to which fees were applicable was £47 million (2020-21: £59 million)
• The total income received from fees and recognised as income in the year was £41 million (2020-21: £97 million)
• No monies (2020-21: £10 million) are due to be repaid to the Consolidated Fund. Fees received are surrendered to the Consolidated Fund when they exceed the amount we are able to retain.

The Certificate and Report of the Comptroller and Auditor General to the House of Commons

Opinion on financial statements

I certify that I have audited the financial statements of the Insolvency Service for the year ended 31 March 2022 under the Government Resources and Accounts Act 2000.

The financial statements comprise: the Insolvency Service’s:

• Statement of Financial Position as at 31 March 2022;
• Statement of Comprehensive Net Expenditure, Statement of Cash Flows and Statement of Changes in Taxpayers’ Equity for the year then ended; and
• the related notes including the significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and UK adopted international accounting standards.

In my opinion, the financial statements:

• give a true and fair view of the state of the Insolvency Service’s affairs as at 31 March 2022 and its net operating 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 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 opinions

I conducted my audit in accordance with International Standards on Auditing (UK) (ISAs UK), applicable law and Practice Note 10 Audit of Financial Statements of Public Sector Entities in the United Kingdom. My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I have also elected to apply the ethical standards relevant to listed entities. I am independent of the Insolvency Service in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Insolvency Service’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Insolvency Service’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Accounting Officer with respect to going concern are described in the relevant sections of this certificate.

The going concern basis of accounting for the Insolvency Service is adopted in consideration of the requirements set out in HM Treasury’s Government Financial Reporting Manual, which require entities to adopt the going concern basis of accounting in the preparation of the financial statements where it anticipated that the services which they provide will continue into the future.

Other Information

The other information comprises information included in the Annual Report, but does not include the financial statements nor my auditor’s certificate. The Accounting Officer is responsible for the other information.

My opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated.

If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters

In my opinion the part of the Remuneration and Staff Report to be audited has been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000:

In my opinion, based on the work undertaken in the course of the audit:

• the parts of the Accountability Report subject to audit have been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000;
• the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements and is in accordance with the applicable legal requirements.

Matters on which I report by exception

In the light of the knowledge and understanding of the Insolvency Service and its environment obtained in the course of the audit, I have not identified material misstatements in the Performance and Accountability Report.

I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• I have not received all of the information and explanations I require for my audit; or
• adequate accounting records have not been kept by the Insolvency Service or returns adequate for my audit have not been received from branches not visited by my staff; or
• the financial statements and the parts of the Accountability Report subject to audit are not in agreement with the accounting records and returns; or
• certain disclosures of remuneration specified by HM Treasury’s Government Financial Reporting Manual have not been made or parts of the Remuneration and Staff Report to be audited is not in agreement with the accounting records and returns; or
• the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Responsibilities of the Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Chief Executive as Accounting Officer is responsible for:

• maintaining proper accounting records;

• the preparation of the financial statements and Annual Report in accordance with the applicable financial reporting framework and for being satisfied that they give a true and fair view;
• ensuring that the Annual Report and accounts as a whole is fair, balanced and understandable;
• internal controls as the Chief Executive as Accounting Officer determines is necessary to enable the preparation of financial statement to be free from material misstatement, whether due to fraud or error; and
• assessing the Insolvency Service’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Chief Executive as Accounting Officer anticipates that the services provided by the Insolvency Service will not continue to be provided in the future.

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Government Resources and Accounts Act 2000.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was considered capable of detecting non-compliance with laws and regulations including fraud

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulations, including fraud. The extent to which my procedures are capable of detecting non-compliance with laws and regulations, including fraud is detailed below.

Identifying and assessing potential risks related to non-compliance with laws and regulations, including fraud

In identifying and assessing risks of material misstatement in respect of non-compliance with laws and regulations, including fraud, we considered the following:

• the nature of the sector, control environment and operational performance including the design of the Insolvency Service’s accounting policies;
• Inquiring of management, the Insolvency Service’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Insolvency Service’s policies and procedures relating to:
  • identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
  • detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
  • the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Insolvency Service’s controls relating to the Insolvency Service’s compliance with the Government Resources and Accounts Act 2000 and Managing Public Money;
• discussing among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, I considered the opportunities and incentives that may exist within the Insolvency Service for fraud and identified the greatest potential for fraud in the following areas: revenue recognition, posting of unusual journals, complex transactions, bias in management estimates and payments made by the Redundancy Payments Service. In common with all audits under ISAs (UK), I am also required to perform specific procedures to respond to the risk of management override of controls.

I also obtained an understanding of the Insolvency Service’s framework of authority as well as other legal and regulatory frameworks in which the Insolvency Service operates, focusing on those laws and regulations that had a direct effect on material amounts and disclosures in the financial statements or that had a fundamental effect on the operations of the Insolvency Service. The key laws and regulations I considered in this context included the Insolvency Act 1986, the Employment Rights Act 1996, the Government Resources and Accounts Act 2000, Managing Public Money, employment law and tax Legislation.

Audit response to identified risk

As a result of performing the above, the procedures I implemented to respond to identified risks included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described above as having direct effect on the financial statements;
• enquiring of management, the Audit and Risk Assurance Committee and in-house legal counsel concerning actual and potential litigation and claims;
• reading and reviewing minutes of meetings of those charged with governance and the Board and internal audit reports;
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business; and
• in response to non-compliance with laws and regulations identified with respect to deducting national insurance from payments made by the Redundancy Payments Service:
  • verifying the impact on the financial statements by evaluating the completeness and accuracy of the input data driving the Insolvency Service’s models that calculated the impact;
  • reviewing the regularity implications of the identified non-compliance; and
  • reviewing the associated disclosures made in the Accountability Report.

I also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of my certificate.

Other auditor’s responsibilities

I am required to obtain evidence sufficient to give reasonable assurance that the income and expenditure reported in the financial statements have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Report

I have no observations to make on these financial statements.

Gareth Davies 25 October 2022

Comptroller and Auditor General

National Audit Office

157-197 Buckingham Palace Road

Victoria

London

SW1W 9SP