Staff at the CBI are facing the prospect of job cuts within months unless the British business lobby group can head off a looming financial crunch triggered by more than 50 members either cutting or suspending ties, insiders have warned.
The organisation is facing an uncertain future following the exodus of businesses whose subscriptions provide the vast bulk of the CBI’s annual £25mn income, with top members paying in more than £100,000 a year. The UK’s premier business lobby group is teetering on the brink of collapse following allegations of rape by two women who worked there.
Clawing back and retaining subscribers will be among the most pressing challenges facing the CBI’s new director-general, Rain Newton-Smith, who started in the role on Wednesday.
Newton-Smith tweeted on Wednesday morning that there was “so much to do to win back the trust of our members, our colleagues and wider society” but she was “determined” to “rebuild and reimagine” the CBI.
“I want to recognise the courage of the women who came forward & say how profoundly sorry I am for how our organisation let you down,” she wrote.
CBI staffers raised concerns about their job prospects at an all-staff meeting this week and were offered reassurances, but two people familiar with the discussion accepted that redundancies were inevitable unless members’ confidence could be restored rapidly.
The CBI has suspended all external and membership activities ahead of an extraordinary general meeting in June at which management have promised to set out a template to its members for a “refocused” organisation.
Asked whether redundancies might be necessary even before the EGM, a senior CBI insider said: “Everything is possible in a situation like this: you have to be open minded, you’ve got to be flexible and very adaptable,” they said. “We’re going to fight to save the organisation.”
The CBI has about 300 full-time equivalent staff with a monthly wage bill of £1.25mn, which the insiders said could be covered by cash reserves, which stood at around £9.4mn in its 2021 accounts — a level broadly consistent with previous years.
A week before some of the Britain’s biggest companies, including Shell, Aviva, Asda and Jaguar Land Rover, said they were quitting or suspending membership, the CBI’s president, Brian McBride, told the Financial Times the group was “well covered” by cash reserves.
“If we continue to have the support of the members, there’s no reason to be concerned,” McBride said at the time. “And if we don’t get the support of the members, it’s because we’re not moving fast enough.”
His comments were made prior to The Guardian revealing on Friday that a second woman had alleged she was raped while working at the CBI, which triggered the exodus of members. UK chancellor Jeremy Hunt added to the organisation’s woes when he told a meeting of FTSE 100 chief executives there was “no point” in talking to the CBI until it had resolved the issues.
Members have continued to drain away this week. The City of London Corporation announced on Tuesday it was suspending ties, Premier Inn owner Whitbread, whose former chair Sir John Banham served as CBI director-general in the 1980s, also moved to distance itself from the ailing lobby group.
Dominic Paul, Whitbread’s chief executive, said that all issues with the CBI’s culture would need to be “completely resolved” before the group re-engaged. “We’ll have to see what comes out of that investigation and what the CBI proposes to do about it, but it will be hard for the CBI to come back from this,” he said.
The CBI has about 2,000 fee-paying members, according to a person with knowledge of the process, but with only a handful of the biggest companies paying the top rate over £75,000. Most companies pay their annual fees upfront. Average membership fees work out at about £12,000.
The person estimated that the CBI could survive financially if it could limit overall membership losses to around 30 of the bigger names, albeit with job losses to reflect a reduced revenue base. “We have got time,” the person said, “But [it’s] not unlimited.”
It is unclear how many members will resume payment of their subscriptions when they come up for renewal, mostly at the start of the year, or whether existing subscribers will seek rebates for the period where the CBI has not been a functioning lobby group.
Some business leaders have questioned whether the CBI will ever be able to command the six-figure sums paid by larger companies to join the so-called President’s Committee — an inner-circle made up of chief executives that advises on “issues of national importance”.
The subscription also secures an invite to what the CBI called an “exclusive dinner” at which company bosses can network in private with senior politicians. Last year’s event took place at the Bafta headquarters in London’s Piccadilly.
The head of a trade association, which is not a CBI member, said that chief executives from FTSE 100 and FTSE 250 companies were expecting subscription rates to be reduced in a reformed organisation.
“The one theme that comes through my conversations is that the days of companies coughing up £100k-plus membership fees is just over. If the CBI survives at all, it’s going to be a smaller organisation, with smaller fees,” they said.
The CBI declined to comment.