Ministers have unveiled sweeping reforms to corporate reporting requirements, promising to save UK businesses more than £450 million annually by cutting excessive administrative burdens.
The Department for Business and Trade revealed that the average annual report now runs to 98,000 words, a length surpassing J.R.R. Tolkien’s The Hobbit, while FTSE 100 companies produce reports averaging 152,000 words.
Business Secretary Jonathan Reynolds said: “No-one goes into business to fill out forms.”
Reynolds added that “hardworking firms in this country have been weighed down by pen-pushing paperwork and frustrating costs, ticking boxes that do nothing to help them grow their business.”
Small and medium-sized enterprises, including local family firms, will be exempt from certain reporting forms and audits under the new measures, saving them thousands of pounds and hours of administrative work.
A survey from 2023 found that 81 per cent of executives at the UK’s biggest listed companies said onerous reporting mandates were “eating up their time” and actively preventing them from doing their actual jobs.
The government is also establishing a digital-first approach, making electronic communications to shareholders the new default and ending reliance on physical paperwork.
Reynolds said the government is “stripping back outdated bureaucracy and building a common-sense system fit for a 21st-century economy,” with officials also exploring how AI can further streamline corporate compliance.
The reforms follow Labour’s decision to scrap the long-awaited Audit Reform and Corporate Governance Bill, which had sought to replace the Financial Reporting Council with a new body called the Audit, Reporting and Governance Authority, or ARGA.
The Department for Business and Trade confirmed it had dropped that Bill in a detailed announcement buried in January, citing concerns about placing major financial burdens on businesses.
Industry bodies broadly welcomed the proposed modernisation, though several urged caution about the pace and scope of the changes being introduced.
Jordan Cummins, UK competitiveness director at the Confederation of British Industry, said: “Corporate reporting is a central piece of investor and market confidence, but it’s also a resource heavy process for many businesses.”
Cummins added that “moves to modernise our reporting regime are welcome and firms across the UK will look forward to helping government and regulators land on a futureproofed and agile framework.”
Alan Vallance, ICAEW chief executive, said: “We fully support this initiative but with such transformative change to the reporting regime promised we’d encourage the government to take time to ensure all stakeholders are listened to, and all options are fully considered.”
Dean Beale, executive director of the Centre for Public Interest Audit, said the consultation “covers some of the right things,” including bringing greater proportionality to UK corporate reporting requirements and moving away from lengthy PDF documents.
Andrew Moyser, head of audit at MHA, welcomed efforts to simplify reporting for SMEs but warned that removing statutory audit requirements could shift the burden rather than eliminate it, potentially harming long-term business growth.