Pension organisations have raised concerns over the government’s decision to scrap the Audit and Corporate Governance Reform Bill.

The government wrote to the Business and Trade Committee, informing it of its intention not to consult on the bill, as it felt it would increase costs on businesses, the need for major reform was less pressing than it was, and because parliamentary time was limited.

It added that a great deal of progress had been made since the collapse of Carillion in 2018 and there had been a considerable improvement in the quality of audits and audit regulation.

However, the decision to scrap the bill was met with concern from the pensions industry, with Pensions UK head of strategic policy, George Dollner, stating the association was “disappointed” the bill had been shelved.

“We view the decision as a missed opportunity to reinforce trust, confidence and resilience in UK capital markets,” he continued.

“High quality audits, clear director accountability and effective audit oversight are fundamental to protecting savers’ money and supporting long term growth.”

Dollner argued that, while modernising and streamlining corporate reporting was welcome, it cannot substitute for “widely supported” reforms on public interest entity (PIE) status, director accountability, and audit market oversight, especially as pension schemes were being encouraged to invest more in private markets.

"We urge the government to set out how it intends to address these gaps and ensure the UK’s corporate governance framework remains fit for investors, companies and everyday savers alike,” he said.

The Governance for Growth Investor Campaign (GGIC) also voiced its disappointment that the bill has been scrapped, saying that the audit reform measures in the bill were necessary and important.

“High-quality audits and sensible corporate governance standards are vital for healthy capital markets and act as a foundation for growth, confidence, and resilience in the UK economy,” commented GGIC chair, Caroline Escott.

“Although the modernisation of corporate reporting initiative is to be welcomed, streamlining corporate disclosure is no substitute for implementing sensible and widely welcomed measures on PIE status, director accountability and audit market oversight that would have helped protect people’s savings.

“We urge the government to reconsider its decision. Good governance is fundamental to the UK’s economic growth, and high audit standards enable the high-quality audit that supports value creation in the interests of companies, investors, and everyday UK savers alike.”

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