YoIf a big company leaves, there will be an avalanche. So said a senior business figure earlier this week about the crisis plaguing the CBI. The prediction was accurate. Aviva, a large insurer, was the first to resign from the lobbying group on Friday morning. Phoenix, another FTSE 100 insurer, quickly followed. By mid-afternoon, it was hard to keep up.
Not all of the stances took the form of a direct Aviva-style resignation “effective immediately.” Some involved a “suspension” or “pause” of activities with the CBI, leaving the door open for a return. Even within the latter category, however, one could detect a weakening of loyalty. Big four audit firm PwC said it saw value in an organization that represented UK companies and the issues that mattered most to companies as a whole, but did not specifically say the organization had to be the IWC.
That points to a debate that has been bubbling in the background for the past two weeks. If the CBI did not exist, would it be necessary to create something that would fulfill its function? And, given the deepening of the crisis, would it be better to continue the reinvention or replacement work now?
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What is the CBI and who finances it?
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The Confederation of British Industry (CBI) is the UK’s leading business lobby organisation. It is a non-profit organization founded by royal charter in 1965, following a merger of older employer bodies.
It claims “unmatched” access to the government. It also claims to have the largest number of policy specialists outside Whitehall, the seat of the British government, to support its 190,000 business members, who are its main source of income. Its total revenue was £25 million in 2021, £22 million of which came from membership fees.
Its membership is made up of direct members and members of other union organizations.
Its 1,500 direct members are companies that have active membership. Fees vary significantly – top tier companies can pay £90,000 a year, some medium-sized companies pay half this price, and smaller companies pay much less.
Most of his membership comes from trade bodies, and he counts these memberships toward his own total of 190,000.
The lobby group has access to the prime minister and cabinet, and campaigns on issues ranging from childcare funding to taxes and skills. His relationship with the UK government was severely strained by Brexit, with his access to No 10 severely restricted. A comment attributed to former Prime Minister Boris Johnson, “fuck business”, was seen as targeting efforts by the CBI and others to try to influence the post-Brexit UK-EU trade deal.
The organization sought to rebuild ties with the government during the early stages of the coronavirus pandemic, including working alongside unions and the No 10 in developing the furlough plan.
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, of which the CEO is a part.
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The majority view in big boardrooms probably remains that, yes, a pan-business lobbying body is useful. The CBI, in opposing Brexit, has had a thorny relationship with the current government, but there were signs of effectiveness before ministers called off engagement after the Guardian report. In March, Chancellor Jeremy Hunt accepted two of the CBI’s main requests (on childcare provision and capital allocations to boost investment) into his budget.
Other areas of lobbying that are considered to cover all businesses, large and small, national and international, would include tax, employment law, environmental policy, and the leveling agenda. The CBI is also a much larger organization than the Institute of Directors, the other commercial body with royal charter.
However, others are less enthusiastic. The chairmen of some of the big FTSE 100 companies often say they already have access to government in their own right and suggest they pay for CBI membership only because of their lack of accountability to the broader UK business scene. Some see their industry trade organizations as more relevant.
And some argue that the CBI, with a large membership biased towards banks and the City of London, is compromised and ineffective when the interests of financiers and the rest of the economy collide, as when the lack of bank lending was a hot topic after the 2007-09 crisis.
Here is the blunt assessment of one senior corporate affairs veteran: “The government has nothing to lose by never talking to the CBI again. And the CBI leadership is fooling itself if it thinks its members are going to rise up in support of an organization whose handling of these allegations has been clumsy.”
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CBI Chairman Brian McBride said Friday that the board would share its response to the latest report from the Fox Williams law firm, as well as other steps it was taking to “bring about the broader change” that was needed, early in the next week. The survival of the organization is at stake.
