Tim Martin, chairman of JD Wetherspoon, said: “There’s scant indication in the proposals that whoever’s drawn them up is keen on promoting an attractive enterprise culture. Directors should of course be honest, but more corporate bureaucracy won’t achieve that.”
Defending the plan as targeting only the biggest companies and most serious transgressions, a Whitehall source said: “It’s not as though you forget to add a zero in your accounts and get a fine.”
In his 232-page paper, Mr Kwarteng also revealed plans to make auditors inspect companies for carbon emissions as the UK seeks to meet a legal obligation to eliminate its contribution to climate change by 2050.
The consultation also confirms that Big Four auditors KPMG, EY, Deloitte and PwC must ringfence their audit and advisory arms to reduce conflicts of interest and could face a cap on their market share of FTSE 350 audits if competition in the sector does not improve.
The changes will be overseen by the UK’s new beefed-up audit watchdog, the Audit, Reporting and Governance Authority, which will replace the Financial Reporting Council and could have power over large unlisted companies as well as those on the stock market.
Mr Kwarteng argued that rebuilding confidence in business is crucial to repairing the economy and building it back from the pandemic.
“When big companies go bust, the effects are felt far and wide with job losses and the British taxpayer picking up the tab,” he said.