Net finance costs

12 Months Ended

Dec. 31, 2023

Net finance costs

Net finance costs

7 Net finance costs

Accounting policy

Interest on borrowings is expensed as incurred. The cost of issuing borrowings is generally expensed over the period of borrowing to produce a constant periodic rate of charge.

	2021 £m	2022 £m	2023 £m
Interest on short-term bank loans, overdrafts and commercial paper	(11)	(19)	(31)
Interest on term debt	(106)	(157)	(263)
Interest on lease liabilities	(8)	(6)	(6)
Total borrowing costs	(125)	(182)	(300)
Losses on loans and derivatives not designated as hedges	(16)	(9)	(20)
Fair value losses on designated fair value hedge relationships	-	(9)	(2)
Net financing charge on defined benefit pension schemes	(9)	(5)	(1)
Finance costs	(150)	(205)	(323)
Interest on bank deposits	1	4	8
Fair value gains on designated fair value hedge relationships	7	-	-
Finance income	8	4	8
Net finance costs	(142)	(201)	(315)

Losses of £2m (2022: gains of £2m; 2021: losses of £1m) on derivatives designated as cash flow hedges were recognised in other comprehensive income and accumulated in the hedge reserve, and may be reclassified to the income statement in future periods. Losses of £1m (2022: £1m; 2021: nil) in total were transferred from the hedge reserve in the period.

The interest charge on term debt includes a charge of £26m in respect of the early redemption of bonds that were due to be repaid in August 2027.