McDonnell: Regulators not fit for purpose

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The UK’s corporate regulatory approach is «not fit for purpose» and would be overhauled under a Labour government, John McDonnell is to say.

In a elocution, the shadow chancellor will say there «will be no more Carillion ignominies on Labour’s watch».

The firm, which employed about 20,000 in the flesh in the UK, collapsed with £1.5bn of debts in January.

Two MPs’ committees said in a announce this week it showed regulators were «toothless».

They also call ined for a potential break-up of the big four audit firms, after they «signal through» the indebted construction firm’s accounts.

Speaking at a Labour things turned out in central London, Mr McDonnell will say that he has commissioned an independent periodical of the UK’s corporate auditing and accounting regime, by Prem Sikka, professor of accounting and money at Sheffield University.

His findings will then be fed into Labour tenders to reform the regulatory system.

Mr McDonnell will say the MPs’ report this week «without delay again highlighted the catastrophic failure and inadequacy of our regulatory system».

Accounting and dismisses regulators «have once more failed to do their jobs» he last will and testament say, and the lack of transparency means «nobody ever seems to be punished for their fall from graces».

He will criticise the «regulatory maze» — citing 29 regulators for the pecuniary sector alone — for creating opportunities for «waste, duplication, obfuscation and buck-passing».

«That is why it is fundamental that we have a crackdown on poor practices in the accounting and auditing activity,» he will say.

«Under the next Labour government the big six firms will not be let to continue to act like a cartel that prevents new market entrants or allude down standards.

«Otherwise it will further infect the rest of our concision and business community. «

Thousands of people lost their jobs when Carillion collapsed in January.

It curbed numerous public contracts, such as the maintenance of schools and prisons, all of which had to be brought out of sight government control, at a cost to the taxpayer.

In a damning 100-page turn up last week, the Work and Pensions and the Business, Energy and Industrial Scheme committees said:

  • The Big Four accountancy firms were a «cosy mace incapable of providing the degree of independent challenge needed»
  • Carillion’s prostration had exposed «systemic flaws» in corporate Britain and showed regulators were «toothless»
  • «Carillion could materialize again, and soon»

But Carillion’s former finance director, Richard Adam, maintained he rejected the committees’ conclusions and objected to quotes in the MPs’ report, which he disclosed had been misattributed to him.

And former chairman Philip Green said the accommodate had «always strived to act in the interests of the company and all its stakeholders».

Responding to the MPs’ report, a KPMG spokesman put it had conducted its audits of Carillion «appropriately», and Ernst & Young said it was «defeated that despite all efforts the business was not rescued».

Deloitte said it was «dejected» with the committees’ conclusions while PwC said it was helping save «thousands of chores» as the official receiver.

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