Economic factors such as inflation and exchange rates will cause significant risks to the plan’s affordability. The Department told us that it has £25 billion of risks that are not included in its forecast costs because it deems these unlikely to occur, compared to £13 billion of more-likely risks that it does include in project cost forecasts.51 It will only take a relatively small change to significantly affect affordability, given that the Department currently has only a £2.6 billion surpl...

Economic factors such as inflation and exchange rates will cause significant risks to the plan’s affordability. The Department told us that it has £25 billion of risks that are not included in its forecast costs because it deems these unlikely to occur, compared to £13 billion of more-likely risks that it does include in project cost forecasts.51 It will only take a relatively small change to significantly affect affordability, given that the Department currently has only a £2.6 billion surplus on the Plan and £4.3 billion of equipment contingency over 10 years.52 Type: conclusion | Number: 19 | Response status: not_addressed Government response: 5.1 The government agrees with the Committee’s recommendation. Target implementation date: September 2023 5.2 The department continuously updates its forecast of the cost of the equipment plan and reviews its affordability through the annual financial planning process, which involves bottom-up costi