UK accountancy firms’ health is positively blooming for the second year in a row with double digit growth and combined revenues of almost £9bn, according to the most comprehensive survey of the UK profession.

Combined fee income has raced ahead to reach £8.7bn, a rise in excess of £1bn on last year’s revenues which stood at £7.62bn, which was itself a rise of 13% on 2005. Revenues rises however belie slower growth than last year, with average growth rates of 13%, compared to 15.5% in 2006.

Again the strongest growth is among the Big Four firms which this year boasts a combined income of £6.35bn, up £850m on last year’s £5.5bn.

PricewaterhouseCoopers’ income is now just shy of £2bn. But it is the smallest of the Big Four Ernst & Young that saw the fastest growth rate at 20% raising incomes to £1.1bn and significantly widening the gap between the Big Four and the next biggest firm Grant Thornton to £742.9m. This compares to last year’s difference of £660.9m, despite Grant Thornton merging with RSM Robson Rhodes to provide it with a boosted income of £387.1m, a £100m increase on last year.

The lion’s share of revenues among the Top 50 continues to come from audit and assurance with £3.3m earned. Tax work is not far behind notching up £2.3bn in combined income.

Growth outside the top 20 firms is mixed, with some standing out from the crowd such as Haslers with growth of 24%, CLB Littlejohn Fraser at 11% and Armstrong Watson at 14.4%.

For the second year running, however it is Wenham Major that really shines among the smaller firms. This year the firm made a phenomenal leap, jumping 20 places from last year’s initial entry at 43, to 23, and growing at 92%. The eight-strong partner firm earns average fees per partner of £2.4m, a figure to comfortably rival Big Four partners’ earning power, and has a better sex equality than most among the Top 50 with 87% male and 13% female partners. Once again what is fuelling their growth is primarily tax work, raking in £10.5m, while audit and assurance work provides partners with a mere £1.9m.

In stark contrast to the general push for equality between the sexes at all levels of the workplace Morley and Scott is the only firm to have a woman as chief of the firm, the rest are all led by men, once again reinforcing the image of the accountancy profession as a male, white dominated industry.

The statistic also further reinforces research from London Business School which recently found that women have more success in progressing up the entrepreneurial ladder in companies where other women are chief executives. The research found that women are unlikely to flourish in business where fewer than 30% of the senior executives are not already female.

Skin deep

On average among the Top 50 firms the percentage of female partners was 10%, while men dominated the partner ranks again at 90%. Despite the abysmal ratio, figures have improved fractionally on last year where average percentage of male partners was 91%. Interesting, however, is the fact that the average proportion of female qualified accountants dropped on last year’s results to 35%. In 2006 on average 37% of qualified accountants were female.

Representation among partners of people from ethnic minorities on first glance has improved. An average percentage of partners from ethnic minorities came in at 5.9%, meaning around one in 15 partners are from ethnic minority backgrounds. It’s a rise on 2004 where 4% were from ethnic backgrounds. This year’s figures compare favourably with the average percentage of black and ethnic minorities living and working in the UK at 7.9%.

A spokeswoman for the Commission for Racial Equality says: ‘It’s fairly good. It could of course be higher but a lot of industries are much lower.’

However the figure is propped up by most firms outside the Big Four. The combined average percentage among Britain’s biggest firms is shockingly low at only 3%, a fraction of the national average. At 2% PwC has the weakest track record in recruiting and nurturing talent to partner level from ethnic groups.

The CRE says: ‘That’s where the discrepancy is. The Big Four aren’t representative. Smaller firms are often exclusively Asian. Their high average pulls up the rest of the Top 50.’

Indeed there is evidence of this among the smaller firms in the Top 50 with DTE group, 25th in the Top 50 with 25%, Mercer & Hole (44th) with 19% and Shipleys (45th) with 10%.

The CRE suggests the reason the Big Four are unrepresentative is because they recruit mostly from the country’s top 12 universities, which also suffer from low rates of ethnic representation. There are more ethnic minorities studying at The South Bank University than in the whole of the top 12 universities combined, the CRE says.

The vast majority of firms however claim to have a diversity and/or equality policy in place but only seven firms out of 50 have a dedicated diversity director. Still, the latest research from the CRE found that employment is the leading issue among ethnic minority communities. The CRE received more than 5,000 complaints over the last six months and found that a staggering 43% of all complaints were linked to employment.

After thirty years of race relations and legislation protecting ethnic minorities at work, the CRE says it is appalled that racism in some workplaces. The most common complaints cited by ethnic minority people to the CRE are workplace bullying, lack of career progression and being unable to secure interviews.

Recruitment plans

On a more upbeat note the majority of firms remain optimistic of continued growth with most having plans to recruit this year. However this must also be seen in the context of high attrition rates, which reach as much as 30.3% among newly qualifieds and 15.9% among all staff.

Only 11 of the Top 50 firms have an official company wide policy on reducing their corporate carbon footprint, although all of the Big Four have a policy.

PwC said it reports annually on its environmental targets. Deloitte, meanwhile, counts among its measures to reduce the firm’s carbon footprint the use of renewable energy in buildings and the launch of a corporate charge card which will offset carbon emissions from travel.

KPMG, leader in implementing environmentally friendly initiatives among the Top 50, is reducing emissions through introducing alternatives to business travel, promoting video conferencing to reduce business travel and energy efficiency in buildings.

Smallest of the Big Four, E&Y has introduced measures such as reforming staff transport, carbon off-setting and energy efficient buildings. Change is afoot but if the profession wants to retain its coveted economic success it will need to look inward much more.