The CBI’s boss must battle not just its culture, but the competition too

Rain Newton-Smith hopes to reanimate the scandal-plagued British lobby group this week: but is it still even a necessary voice?

The CBI’s new boss, Rain Newton-Smith, faces a make-or-break moment on Tuesday, as the scandal-hit lobbying group’s members meet to decide its fate.

She published a 30-page recovery plan last week, promising “a renewed CBI,” as she battles to bring the confederation back from the brink of extinction. Its 300 staff were warned last week that would mean job cuts, as the wage bill is reduced by a third.

Corporate members have already begun voting on the proposals, with the result due to be announced shortly after an extraordinary general meeting on Tuesday.

The CBI has been mired in an existential crisis since the Guardian reported claims by more than a dozen women about alleged behaviour including rape, sexual harassment and drug-taking.

Members demanded answers – or in some cases simply withdrew support – while the organisation ordered an independent investigation of the allegations and worked to overhaul its culture and governance.

The chancellor, Jeremy Hunt, said there was “no point” in engaging with the CBI for the time being.

Aside from the terrible human cost to the women involved, the chaos engulfing the UK’s biggest business organisation underlines the reputational price of failing to tackle bad behaviour.

In her foreword to the rescue plan, Newton-Smith says the organisation has been learning from “global experts on ethics, corporate governance and tackling sexual harassment”.

The Confederation of British Industry (CBI) is the UK’s most prominent business lobbying organisation. It is a not-for-profit organisation founded by royal charter in 1965, after a merger of older employer bodies.  

It claims “unrivalled” access to government. It also claims to have the biggest number of policy specialists outside of Whitehall, the seat of the British government, in order to support its 190,000 business members, which are the chief source of its income. Its total income was £25m in 2021, of which £22m was from membership fees.

Its membership is composed of direct members and members of other trade bodies.

Its 1,500 direct members are businesses that actively hold membership. Fees vary significantly: top-tier businesses can pay £90,000 annually, some mid-sized companies pay half this price and smaller companies pay far less.

The bulk of its membership comes via trade bodies, and it counts these memberships within its own 190,000 total.

The lobby group has access to the prime minister and cabinet, and campaigns on issues ranging from funding for childcare to tax and skills. Its relationship with the UK government was stretched severely by Brexit, with its access to No 10 much curtailed. A remark attributed to the former prime minister Boris Johnson – “fuck business” – was considered to be aimed at efforts by the CBI and others to try to influence the post-Brexit UK-EU trade agreement.

The organisation sought to rebuild ties with the government during the early stages of the coronavirus pandemic, including working alongside trade unions and No 10 on developing the furlough scheme. 

The CBI is governed by a president and an executive committee, which, in normal times, is chaired by the director general. It also has a board of non-executive directors, which the director general sits on.

Anna Isaac   

She goes on to say that the work of all these lawyers and consultants has confirmed that “the CBI does not have a toxic culture”.

This may be reassuring to CBI bosses, but seems hard to reconcile with the testimony of the women who made allegations to the Guardian about colleagues’ behaviour. A police investigation continues.

Newton-Smith’s plan includes improving reporting processes, setting up a “culture advisory committee” and recruiting a new president.

Guided by recommendations from the consultancy Principia, the CBI will also “develop a strong values foundation, codified into clear conduct expectations and behavioural norms” – though it seems profoundly depressing that “don’t take drugs and sexually harass colleagues” should need to be written down.

The CBI drew up the plans after consultations with more than 1,000 business leaders in recent weeks. Some may well have been asking themselves, long before the present crisis, what the CBI is for – however much they enjoyed its glitzy black tie dinners.

The lobbying group had been working hard to rebuild its influence with government in recent years, after parting ways with the Tories over Brexit. Vote Leave protesters disrupted a speech by David Cameron to the CBI in 2015, holding up a banner that read “CBI=Voice of Brussels”, anticipating the group’s decision to come out strongly for remain during the divisive referendum campaign.

Boris Johnson, who made no secret of his disdain for big business’s views on leaving the EU, had little interest in liaising with the CBI – and a lobby group without the ear of government is worth a lot less to its members.

Rishi Sunak helped bring it back in from the cold when he consulted the then director general, Carolyn Fairbairn – alongside unions – on the groundbreaking furlough scheme.

Fairbairn’s successor, Tony Danker, had continued to build bridges with the more corporate-friendly Sunak before Danker was dismissed in April over separate complaints about his conduct in the workplace. He has apologised in relation to some of the complaints about him and contested others, saying he felt he had been “the fall guy” for allegations unrelated to his own conduct.

Yet while the CBI has been out of action, business views have hardly been absent from public debate. The British Chambers of Commerce (BCC), under new president Martha Lane-Fox, has been increasingly vocal about the impact of Brexit on businesses, for example.

The fact that Newton-Smith’s recovery plan was drawn up after widespread consultation suggests it may well be given the nod on Tuesday, and many staff will breathe a sigh of relief. But if it has lost members’ confidence and is forced to fold, other voices are ready to speak up for British business.


Heather Stewart

The GuardianTramp

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