The government has been blasted for “dragging its feet” on corporate reforms following Thomas Cook’s collapse last September.
The Business, Energy and Industrial Strategy (BEIS) committee held an inquiry into the failure last October, with the government’s response published yesterday.
In the original findings from its inquiry, the BEIS committee expressed disappointment the government had not pressed ahead with audit reforms and brought forward legislation to replace the Financial Reporting Council with the Audit, Reporting and Governance Authority (Arga).
On a timetable for action on Arga, the government’s response says, “…to create the new Audit, Reporting and Governance Authority will follow as soon as parliamentary time allows.”
Darren Jones, chair of the BEIS committee said: “Recent audit scandals highlight the need for the government to tackle this issue as a matter of urgency.
“At a time when businesses are facing tough trading conditions and when their balance sheets are under significant pressure, it’s important investors and other stakeholders can have confidence in audits.”
He said the secretary of state’s evidence to the BEIS committee last week failed to give a date for when primary legislation would come forward on audit reform.
“While the government has a series of priorities at the moment, given the importance of audit and the fact the department already has a raft of practical audit measures sitting on its desk gathering dust, we should expect the business department to show far more urgency to help drive through the reforms needed on audit and on corporate governance,” continued Jones.
Manuel Cortes, TSSA union general secretary, said: “The BEIS select committee is right to say that the government is dragging its feet on corporate reforms.
“Action has been urgently needed in this area for years. Warm words from government on clawback of directors’ remuneration and bonuses, the need for better diversity of board members, and support for a new regulator, is welcome, but they are not prioritising it. This is foolish given how many other companies could be facing administration in the coming months.
“At the end of the day, the government failed Thomas Cook, its staff and customers. By acting too slowly, the government allowed a great British company to go to the wall, when it would have been cheaper to take ownership of it.
“Thousands of Thomas Cook workers lost their jobs and tens of thousands of holidaymakers were left stranded or without holidays to go on.
“The lacklustre response of the then business secretary was woeful, the compensation bill huge and overall lack of care for the company and its staff was scandalous. It must never be allowed to happen again.”