The writer is a former editor of the FT and a former director-general of the CBI
Two questions are posed by the sacking this week of the CBI’s director-general and the allegations of shocking behaviour by a number of unnamed senior managers. The first is whether the organisation still serves a useful purpose, and would be missed if it imploded. If the answer to that question is “yes”, the second — much harder to answer right now — is whether the current organisation is fit for that purpose.
Individual business leaders in the UK are very reluctant to speak out on policy matters. Faced with an often aggressive media, they see little upside and plenty of potential downside in sticking their heads above the parapet. That’s the first reason for thinking the CBI would be missed: it provides a valuable bridge between business and policymakers.
The second is that the organisation is an important channel of information both for government and for its members. Its economic surveys help to inform the Bank of England’s Monetary Policy Committee on business conditions around the country. Its networks across the regions and nations raise important issues that might otherwise get missed in the Westminster bubble. And the CBI helps its members work through in detail what the latest fiscal initiative or regulatory change might mean for their companies.
Reason number three is that — when it’s on form — the organisation can help shape and change its members’ opinion in a positive way around important business issues. The environment is one example: by working together managers came to agree that inaction on their part could lead to risks of the kind that they are paid to help mitigate.
And its fourth important role is to act as a convener of business networks at a local, regional and national level, through which members can swap ideas, exchange information, and transmit their concerns to each other and more widely.
A frequent criticism is that an organisation of the CBI’s breadth can’t possibly represent the particular interests of very different areas of activity as forcefully as a sector-specific trade association. Of course that’s true. But conversely, those narrower associations don’t have the scale to address macro policy issues — for instance about tax or the law — or to develop responses to events that impact the whole of business. A good example of the latter was the CBI’s role in helping to shape the furlough scheme during the pandemic.
Moreover, scale brings with it access. Treasury ministers just don’t have the time to engage with the hundred or more trade associations that operate across the UK.
These are the reasons that industry-wide business groups are active in just about every other market economy you can think of, whether it’s the US Chamber of Commerce, Confindustria in Italy, the CII in India or the Keidanren in Japan. If the CBI were to disappear, you would have to start thinking about what might replace it.
But is the current organisation fit for purpose? The trust of its members and the respect of policymakers have both been damaged by the current allegations, which cannot simply be attributed to the behaviour of a few of its managers. Corporate culture is the responsibility of the directors as well as the executive, and a clear audit is required of how the CBI board has performed in this respect over recent years.
Is its governance structure sufficiently robust? It’s certainly rather unusual: the president also acts as chair and serves as vice-president for one year, as president for two years and stays on the board for a further year. Does that short tenure leave too much power in the hands of the director-general, making it harder to hold him or her to account?
The role of the CBI has changed completely since it was founded nearly 60 years ago. That was a time of industrial strife, when business and trade union leaders would meet in Downing Street for beer and sandwiches — companies joined the membership as an act of solidarity. It was also a world run by middle-aged white men, when speakers made dirty jokes at annual dinners. In today’s very different environment, members are looking for an efficient organisation and tangible value in return for their subscription.
So what’s required now to rebuild trust is a full account of what appears to have gone wrong in the past few years, and of the steps that are being taken to ensure a better future.
Beyond that, the CBI must focus on its core mission, which is to act as a vocal champion of responsible business both to government and across the country as a whole. And it needs to find new ways of offering value to members, particularly those midsized companies that it has long found difficult to reach. Here there are real opportunities for new initiatives, powered by new technologies. There is a broad public interest in it doing exactly that.