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If one big company quits, there’ll be an avalanche. So said one senior business figure at the start of this week about the crisis engulfing the CBI. The prediction was accurate. Aviva, a big insurer, was first to resign from the lobby group on Friday morning. Phoenix, a fellow FTSE 100 insurer, quickly followed. By mid-afternoon, it was hard to keep up.
Not all stances took the form of a straightforward Aviva-style resignation “with immediate effect”. Some involved a “suspension” or “pausing” of activities with the CBI, leaving the door open for a return. Even within the latter category, however, one could detect weakening loyalty. The big four auditing firm PwC said it saw value in an organisation that represented UK business, and the issues that mattered most to business as a whole – but did not say specifically that the organisation had to be the CBI.
That points to a debate that has been bubbling in the background over the past fortnight. If the CBI did not exist, would it be necessary to create something that performed its role? And, given the deepening crisis, would it be better to get on with the job of reinvention or replacement now?
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What is the CBI and who funds it?
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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
The majority view in big boardrooms is probably still that, yes, a pan-business lobbying body is useful. The CBI, having opposed Brexit, has had a prickly relationship with the current government, but there were signs of effectiveness before ministers suspended engagement after the Guardian’s reporting. In March, two of the CBI’s main requests – on childcare provision and capital allowances to boost investment – were embraced by the chancellor, Jeremy Hunt, in his budget.
Other lobbying areas that are seen as covering all companies – large and small, domestic and international – would include tax, employment law, environmental policies and the levelling up agenda. The CBI is also a far bigger organisation than the Institute of Directors, the other business body with a royal charter.
Yet others are less enthused. The chairs of some large FTSE 100 companies often say they already have access to government in their own right, and suggest they pay for CBI membership only out of loose responsibility to the wider UK business scene. Some see their industry trade organisations as more relevant.
And some argue that the CBI, with its heavy membership skew towards banks and the City of London, is compromised and ineffectual when the interests of financiers and the rest of the economy collide – such as when the lack of bank lending was a burning issue after the crisis of 2007-09.
Here’s the blunt assessment of one senior corporate affairs veteran: “The government has nothing to lose if it never speaks to the CBI ever again. And the CBI leadership is deluding itself if it thinks its members are going to rise in support of an organisation whose handling of these allegations has been cack-handed.”
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The CBI president, Brian McBride, said on Friday the board would communicate its response to the latest report from the law firm Fox Williams, as well other steps it was taking to “bring about the wider change” that was needed, early next week. The organisation’s survival is on the line.
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