Taking action on audit at a corporate and local level – together with pledges on sustainability, an industrial strategy and a review of business rates – would kickstart economic growth, boost investor confidence and make the UK the best place to start and run a business.
As a priority, the new government should enact the long-delayed reforms to the UK’s audit and corporate governance regime, including establishing the new statutory regulator ARGA and giving it powers to take effective enforcement action against directors of UK public interest entities, ICAEW said. Taking early action in this area will reduce the risk of unexpected business failure and deliver on existing commitments to reinforce the UK as a trusted destination for investment.
The new government must also take urgent action to fix the crisis in local audit by bringing forward legislation to set the backstop date for outstanding audited accounts. Three-quarters of councils in England are at least a year behind in publishing their financial statements, and backstop legislation will ensure that auditors and councils can stick to the agreed plan, which is essential for accountability, transparency, governance and assurance.
Economic growth
ICAEW said that the new government has an opportunity to boost investment through reforms to business rates, as pledged in the Labour manifesto. To start it could harness data and technology to update and improve the system, to ensure it is efficient and incentivises productive business activity.
The government should set out a timeline to deliver the industrial strategy it has promised, which will provide a new basis for cooperation between the public and private sectors, unlocking growth potential. ICAEW said that should include a clear plan for supporting SMEs, who are the lifeblood of the UK economy, including action to tackle late payments.
Meanwhile, as a longer-term priority, the new government must follow through on its manifesto promise to make the UK a leader in sustainability and the green finance capital of the world. This includes commitments to endorse International Sustainability Standards Board (ISSB) reporting standards, introduce a green taxonomy, and work with the business community to restore and protect the natural world and tackle greenwashing.
John Boulton, ICAEW Director of Policy, said:
“As Sir Keir Starmer’s government takes office, it must act decisively to instil stability and resilience into the economy.
“It’s the right time for audit and corporate governance reform to be prioritised. Reliable, trusted reporting by companies is not ancillary to economic stability, but fundamental. By legislating for the creation of the new regulator and equipping it with statutory powers to take action against company directors, the government will ensure the UK remains a trusted location for investment and will reduce the risk that a major institution fails unexpectedly.
“Action on the local audit backstop is an essential first step to rebuilding confidence in local authority finances, and we call on the new government to consider it as an urgent priority.
“We hope the government will move rapidly to establish the UK as the green finance capital of the world. There’s great potential to build on the country’s strengths in this area, and an early commitment to endorsing the ISSB’s standards would be a strong starting point.
“Additionally, we think a comprehensive review of the business rates system could help unlock economic growth and invigorate our high streets.”
“We look forward to working with the new government to help them deliver on their manifesto promise to unlock stronger economic growth.”
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Notes to editors:
CONTACT: ICAEW media office tom.mackintosh@icaew.com or 07866 853841