Department for Business & Trade Opts Not to Progress Contractor Audit Reform Legislation

The draft Audit Reform and Corporate Governance Bill aimed to strengthen financial oversight and accountability for large companies, including major construction groups, while leaving audit practices for smaller firms largely unchanged. The goal was to support long-term investments in UK companies, reduce the harm that financial reporting errors can do to businesses and communities up and down the country, and help ensure quality audit for all businesses that need it.

In July 2025, Justin Madders MP wrote a letter declaring that although the draft Audit Reform and Corporate Governance Bill would not be put forward for pre-legislative scrutiny at the time of writing, his Department intends to conduct further consultation with a range of stakeholders in the coming months as it continued to refine proposals.

Since then, in a letter dated 19 January 2026, Blair McDougall MP has written to confirm that the government will not be consulting these measures, stating three reasons:

‘Firstly, our priority is to promote economic growth and reduce administrative burdens. While the planned reforms would be beneficial, some would increase costs on business, and it would not be right to prioritise those over more deregulatory measures. We intend to focus instead on the simplification and modernisation of corporate reporting. We want to make the UK’s reporting regime the most streamlined and proportionate in the world and will launch an ambitious consultation this year to co-design these changes with companies and investors.

‘Secondly, the need for major reform is less pressing than it was. A great deal of progress has been made since the collapse of Carillion in 2018. We have seen considerable improvement in the quality of audit regulation, and of audit itself, and I am committed to continued support of the measures taken by the Financial Reporting Council and the audit sector to achieve these improvements. My officials and I continue to work closely with the Financial Reporting Council to make the audit market work better, minimise the administrative burden of regulation and to support growth.

‘Thirdly, the Government is pursuing an ambitious legislative programme and parliamentary time is limited. We respect the time and resources of our stakeholders and therefore do not want to consult to seek further input on policies that are not likely to progress in the near future. I remain extremely grateful for the ongoing interest and engagement that we have had from businesses and other stakeholders, and from the Committee, in this work.

‘Nevertheless, it remains important to have effective, proportionate regulation of audit and a regulator that has the right legislative set-up to do the job. We will still look to put the Financial Reporting Council on a proper statutory footing, as soon as parliamentary time allows.’

Accountancy experts and other financial analysts spoke out against the scrapping of the reforms, according to Construction News. No certain timeline for when government might revisit the matter has been provided.