PwC’s UK partners to take 10% pay cut as profits fall

PwC’s UK partners are to take a 10 per cent cut in their pay following a move by the accountancy firm to protect jobs and bonuses for other staff during the coronavirus pandemic.

The Big Four firm said on Thursday that growth had slowed “significantly” since March, as it released headline figures for the full year. These showed that revenue rose 3 per cent to £4.38bn in the 12 months to June 30, while profit fell 8 per cent to £938m. Average distributable profit per partner dropped to £685,000, as the funding of staff salaries and bonuses was prioritised.

PwC, which is the UK’s largest accountancy firm by revenue, pledged early in the pandemic not to use government funding, via the furlough scheme or guaranteed loans.

Kevin Ellis, PwC UK chairman and senior partner, said: “As is to be expected, the pandemic had a significant impact on our financial performance in 2020. However, I am proud that we have continued to invest in our people and regional growth opportunities.”

The firm has delayed its full financial results until January to assess the effect of the pandemic. PwC’s performance in 2020 appears more resilient than that of rivals Deloitte and BDO. In September, Deloitte announced a 16 per cent fall in annual profit, and a 17 per cent cut in average partner pay, to £731,000, as the pandemic curtailed revenue but not investment. Last week, BDO also said that, with merger benefits stripped out, annual profits were down. So far, only EY has performed better, with average partner pay sliding just 1.8 per cent to be £667,000. KPMG is not due to report annual results until the new year.

PwC said its revenues had held up thanks to 5 per cent growth in audit work, despite Covid-19 restrictions that “made accessing company sites and data more challenging”. Consulting business expanded most strongly, recording 11 per cent growth even though it “suffered a weakening in the immediate Covid lockdown period”.

Since September, the firm has seen demand for services increase month by month, and it now forecasts a “deals-led recovery”, with more capital markets activity driving demand in 2021. PwC, alongside the other UK accounting groups, is planning the operational separation of its audit practice from other units to meet new regulations designed to remove conflicts of interests. It said it was “engaged with regulators” on its plan and had already created an audit oversight body to check the quality of audits.

Mr Ellis earlier this year admitted that the Covid-19 pandemic was making it “harder than ever” for auditors to judge whether companies can continue to trade and whether accounts are free from errors. PwC has resigned as auditor of hundreds of companies this year, as regulatory fines and reputational risks have made the work less attractive. Most recently, it said it would no longer audit fashion retailer Boohoo, which has faced questions over its governance and its suppliers’ business practices.