Plans to reduce costly and time-consuming regulatory burdens on
business have been revealed by the Government today [Wednesday 24
May].
A wide range of UK companies, investors and industry experts have
been invited to give their views on non-financial reporting
regimes, in a new call for evidence that aims to find ways to
reduce reporting regulation burdens on businesses so that they
can focus on growth.
Non-financial reporting provides valuable information to
investors and is a way for companies to tell their ‘story’ beyond
financial information. This includes future strategy, and detail
on how a wide range of factors may affect the company’s
performance, providing insight into the business and culture of
the company.
However, companies and investors have been calling for the
simplification of these requirements in the wake of the
deregulatory opportunities offered by Brexit. Annual reports now
run at an average of 200 pages for the largest companies in the
UK, creating unnecessary burden for businesses. With this review,
the Government will aim to:
- Save businesses time and money with a more streamlined and
focused corporate reporting regime
- Ensure company annual reports contain clearer, more useful
information, by asking investors what really matters to them
- Make the UK an even more competitive place to do business by
placing growth and investment at the heart of reporting
requirements
Business Minister said:
We want to shred unnecessary paperwork so businesses can focus on
what’s important to them – growing and making profit.
By seizing on the opportunities of Brexit to streamline our
non-financial reporting regime, we’ll make the UK an easier and
more competitive place to do business, while delivering on our
priority to grow the economy.
As part of this, we will also review the size thresholds that
determine some of the information a company needs to produce in
their annual report, in particular the definition of
micro-enterprises. This threshold, a relic of an EU directive,
could be forcing too many of Britain’s smallest businesses to
spend time and money preparing information to a level of detail
only needed for larger companies, distracting them from focusing
on growth and creating jobs.
The call for evidence will end on 16 August. The Government will
then use the information collected to develop detailed proposals
for public consultation next year.
Subject to the views shared, the Government will then look to
legislate for any changes.
This builds on the “Smarter regulation to grow
the economy” policy paper (10 May 2023) which set out how the
government would improve regulation across the board to reduce
burdens and drive economic growth now that the UK has left the
European Union.
Our departure from the EU allows us to shape rules and processes
so that they work for the UK’s specific circumstances and
businesses, including for non-financial reporting, while
upholding our strong record on workers’ rights.
Notes to editors:
- The Call for Evidence has been published on
GOV.UK: https://www.gov.uk/government/consultations/smarter-regulation-non-financial-reporting-review-call-for-evidence
- The intention to conduct this review was announced as part of
the response to the Restoring Trust in Audit and Corporate
Governance white paper: https://www.gov.uk/government/news/audit-regime-overhaul-to-help-restore-trust-in-big-business
- The non-financial reporting review will primarily focus on
the Companies Act and the disclosure requirements contained
within it. Views on wider reporting requirements that sit outside
of the Annual Report are also being collected covering gender pay
gap and modern slavery reporting.
- This call for evidence is not seeking views on the policy
intention of modern slavery and gender gap reporting, but rather
how these reporting requirements fit within wider non-financial
reporting frameworks.
