The UK Government has dropped plans to overhaul the audit market, bringing to an end an eight-year reform effort that began after the collapse of Carillion and other major corporate failures.
The Department for Business and Trade (DBT) confirmed it will not proceed with the Audit Reform Bill, citing improvements in audit quality and a desire to avoid imposing high new costs on large businesses. Ministers also argued that the legislation no longer aligned with the Government’s broader commitment to reducing regulatory burdens.
Instead, the DBT said it would focus on modernising corporate reporting requirements, aiming to cut unnecessary compliance while maintaining standards. One official said audit quality had improved sufficiently since 2018 and described the bill as a poor use of limited parliamentary time.
First promised following the failures of BHS and Carillion, the legislation was repeatedly delayed and revised across successive parliaments. Key proposals were gradually diluted or shelved, including stricter audit oversight of large private companies, measures to increase competition by forcing joint audits with smaller firms, and stronger personal accountability for company directors.
Despite multiple independent reviews, a Government white paper and extensive consultation, no bill was ever brought before parliament. During that period, further high-profile collapses – including Patisserie Valerie, Thomas Cook and Wilko – continued to raise concerns about audit quality and corporate governance.
The decision comes despite assurances as recently as September that ministers would consult again on the bill. Labour had pledged to legislate if elected and promised a draft in its first King’s Speech.
While the bill has been abandoned, the Government still intends to grant the regulator enhanced legal powers, according to sources close to the Financial Reporting Council.
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