The CBI is pushing Labour to soften potentially onerous laws on worker rights pledged by Sir Keir Starmer, the new president of the employers’ lobby group told the Financial Times.
Rupert Soames, who last week took over as president of the business lobby group, said the UK needed to avoid a “European model” of employment rights, and resist excessive regulation that undermines productivity, in order to rediscover its competitiveness.
He added that the CBI was providing “private feedback” to Labour on its policy plans. The lobby group wanted to help the opposition party, which has a strong lead in the polls ahead of the general election expected this year, avoid the “unintended consequences” of its plans to reform employment law, he said.
Soames said the “European model” of stronger worker rights was “really good for people who are employed but really bad for people who are unemployed because companies are terrified to take them on”.
Labour has pledged “day-one” employment rights, and a ban on zero-hours contracts and “fire and rehire” practices — policies that have alarmed some businesses.
At a Labour event for businesses last week, Starmer said: “We are going to level up workers’ rights in a way that has not been attempted for decades. And that might not please everyone in the room or the wider business community.”
But the CBI president said he saw room for compromise. “I see every indication that provided we understand their objectives, we can maybe help on areas of unintended consequence,” Soames said.
The declarations are an attempt to put the CBI back on the front foot after last year’s sexual misconduct scandal, legal wrangles with a former director-general and an existential crisis triggered by hundreds of companies suspending their membership of the group.
But Soames’ pitch to restore the CBI’s own relevance relies in part on playing up the ties that the organisation has built with Labour, which will be crucial if Starmer becomes prime minister later this year.
Some business leaders have privately questioned the need for the CBI because of the level of good access they themselves now enjoy to Conservative ministers and, in particular, shadow ministers in the opposition Labour party.
Both parties are keen to woo companies but businesses “should not kid ourselves” that this would be the norm under a Labour government, Soames said.
Some companies may feel that “Keir’s on [their] speed dial” because the opposition was currently being very open with businesses, he said.
Soames warned that this would change if Labour was elected because “parties campaign in poetry, but they govern in prose”.
“The WhatsApp group that you’re running with various members of the Labour party — if you think that’s going to survive ministerial power, let me tell you [it won’t],” he added.
Soames, grandson of Winston Churchill, said the CBI’s aim was to make sure policies worked as well as possible “within the context of what [politicians] want to achieve”.
“The Labour party have been ahead of anybody else in publishing their thoughts and manifestos on this. So, not unnaturally, they’re the first one that get the benefit of CBI commentary on it,” he said.
A Labour spokesperson said the party’s “New Deal for Working People” would “make work pay, by boosting security at work, ensuring fair wages and modernising UK labour market regulations”, and was part of a broader plan to boost economic growth and end low productivity.
“As a pro-worker and pro-business party, we engage with numerous organisations — who should be in no doubt that our New Deal for Working People will be a core part of our offer to the country,” the spokesperson added.
During the CBI’s crisis last year, a merger with manufacturers’ group Make UK was mooted but then shelved.
Soames said there could yet be a consolidation of the UK’s largest business lobby groups, which include the CBI itself, the British Chambers of Commerce, the Institute of Directors, Make UK and the Federation of Small Businesses.
“I would think it odd if, in five years’ time, there are still five,” he said.
The former chief executive of outsourcing group Serco, and current chair of healthcare business Smith & Nephew, said the CBI still had an important role as a conduit between business and politicians.
“You need to have someone providing Google translate between business and government,” he said.
While the CBI should influence ministers, it must also tell members what is not possible as “there’s no point having a bare knuckle fight with government”, he added.
“I think we have to be very respectful of the fact that we live in a democracy [but that] the club that the government has is [that it can say] ‘We’re the government, you’re not. We’ve been elected, you’re not — piss off,’” said Soames.
After an exodus of members last year, Soames received a boost last week when PwC said it had renewed its membership.
Soames has been courting other companies to return to the fold after about one-third quit or put a pause on engagement last year.
The number of companies returning was still uncertain, said Soames, but he said about 80-90 per cent of businesses he spoke to were positive about rejoining.
The exodus has harmed the CBI’s finances, forcing it to shut overseas offices and make about one-third of its staff redundant.
Soames said the CBI had burnt through £9mn of reserves, and was now running on an overdraft facility, though that was unsustainable.
“The banks came together,” he said, without specifying what measures the organisation would need to implement to restore its financial health.
“We are an SME, so we have to match our costs to meet our income,” he said, adding that its mostly empty office in the City of London “is not a great asset to have”.
Soames said he was confident the organisation would pull through but admitted: “Either we convince people to come back, or we have to cut costs. But there will come a point where [if not enough members rejoin] we can’t do what we need to do.”
Soames said he was happy with the CBI’s existing leadership, including chief executive Rain Newton-Smith who “deserves a medal” for her “bravery” in returning to lead the organisation last year as members fled.
He said the CBI had carried out “textbook” changes to its culture and governance in the wake of the scandal, implementing the recommendations of multiple external reviews.
Additional reporting by Jim Pickard