CBI grapples with twin threats to its long-term survival

CBI bosses breathed a sigh of relief after members backed their plans for an overhaul of the business lobby group following a misconduct scandal that has brought the organisation to the brink of collapse. 

CBI member companies supported the group by a margin of 93 per cent to 7 per cent in a vote of confidence on Tuesday, and despite a low turnout, the result gave the group a chance of long-term survival.

The CBI now faces twin threats to achieving that aim: a cautious Rishi Sunak who has not signalled any imminent government rapprochement with the group, and the risk of the group’s membership dwindling as subscriptions come due for renewal over the coming year.

Ministers introduced a boycott of the CBI in April after claims of serious sexual misconduct including allegations of rape were published by the Guardian, and many of the group’s members responded by quitting or suspending relations with the group.

The CBI halted virtually all activities, as the police confirmed they were investigating the two rape allegations.

Politicians and businesses will watch closely next week when new CBI director-general Rain Newton-Smith faces MPs on the House of Commons business committee.

She is expected to be grilled on the organisation’s plans to overhaul its governance, culture and lobbying activities.

The CBI hopes the government will ultimately re-engage with the group so it can persuade members to stay on board.

But officials and advisers at the business department have been instructed that relations with the CBI are still in the deep freeze for now.

On Wednesday Gareth Davies, permanent secretary at the Department for Business and Trade, wrote to all his civil servants to tell them that the government was “avoiding senior-level contact and ministerial contact”, according to people familiar with the situation.

Only junior officials will continue to be authorised to hold meetings with CBI figures, which has been the case since the crisis first erupted. 

The CBI’s often fractious relations with recent Conservative governments — they clashed repeatedly because of the group’s opposition to Brexit — mean some ministers may see no incentive to help save the organisation, said one City of London grandee. 

But one senior government figure said: “The feeling has always been that we would re-engage with the organisation if that’s what the [CBI] members want.

“Of course the allegations were horrific but for now they are still allegations. Do we want to live in a world where entire organisations get shut down on the basis of unproven claims?”

Politicians inside the Conservative and Labour parties believe the CBI’s future will be decided by the autumn conference season — when the group usually enjoys close access to ministers and their opposition shadows. 

The CBI’s business event at the Labour conference has been cancelled this year, but one party figure said there was an expectation of increased contact by the autumn.

“We want the CBI to exist,” they added. “Given the seriousness of the allegations . . . we are still figuring out what any future relationship is going to look like.

“If it looks like they believe everything is instantly sorted, crisis over, that would be problematic. But there needs to be a route back for them.” 

The CBI said the vote of confidence gave it a “strong mandate” but the wide margin of victory could not mask the low turnout. 

Only 371 CBI members cast a ballot in the vote. The group was widely reported to have had more than 1,000 members before the crisis but has never disclosed the official number. 

Two people at rival business lobby groups and a person at one CBI member said the result was “not a ringing endorsement”. 

Some members that backed the CBI in the confidence vote have still not ended their suspension of relations with the organisation. 

Meanwhile BP, Drax, KPMG, and Tesco have joined the ranks of big companies to have quit the body in recent weeks.

The CBI has said only a minority of members had severed ties but the loss of large companies deprives it of some of its biggest funders. The group has told staff it needs to slash its wage bill by one-third, with redundancies inevitable. 

Bosses at the CBI will now try to use the result of the confidence vote as a base from which to rebuild.

FTSE 100 blue-chips HSBC, Diageo, Shell and SSE all voted to back the group’s plans to fix its governance and workplace culture in response to the misconduct claims. 

But even these companies’ support is not guaranteed. Shell said it would review its position before renewing its subscription later this year.

And the CBI must overhaul itself while the British Chambers of Commerce presses ahead with a newly launched business council, whose founding members include BP and Heathrow. 

BCC president Martha Lane Fox said the organisation was “not trying to pit ourselves against the CBI”.

Companies began approaching the BCC after the CBI crisis blew up and her organisation “wanted to help them, especially in light of the political climate and imminent [general] election”, she added. 

Lane Fox said more companies were expected to join the BCC business council “imminently”. Her organisation is planning to appoint high-profile business figures to chair five committees for the council. 

A person at one CBI member contacted about joining the BCC’s council said the new body was “unproven” and it would be difficult to persuade companies to part with £65,000 a year to subscribe even if it was lower than the highest level of fees at Newton-Smith’s organisation.

This person added that the CBI, after winning the confidence vote, now had a “short window to demonstrate their worth”. “That 93 per cent figure is a powerful figure that shows they do have some residual support . . . but it could still go either way longer term.”

Newton-Smith and her CBI colleagues will hope to have their group fully operational again before the BCC council can gain momentum. 

Additional reporting by Akila Quinio and Madeleine Speed