Home Business Scandal-hit CBI sweats on crunch vote that will determine if it has a future

Scandal-hit CBI sweats on crunch vote that will determine if it has a future

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The embattled business lobby group’s efforts to address governance failings amid its misconduct scandal may come to nothing if its plans fail to win enough support among members.
Business correspondent
Tuesday 6 June 2023 01:14, UK
The CBI director general Rain Newton-Smith will appeal for members to approve reforms ahead of a finely balanced vote that could decide the future of the scandalised business lobby group.
The 59-year-old body, traditionally the voice of big business, faces a potentially existential referendum at an extraordinary general meeting in London, where members will be asked to vote in favour of a package of changes to its structure, governance, and culture.
The package of reforms, compiled during a month of consultation, was prompted by media reports of misconduct, including two allegations of rape, and of a toxic culture, a claim a CBI-commissioned analysis found to be unfounded.
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The storm saw Ms Newton-Smith’s predecessor, Tony Danker, sacked.
It also triggered an ongoing investigation by the City of London Police, led government and the opposition to suspend engagement with the CBI and prompted an exodus of leading companies who make up its membership.
At an extraordinary general meeting at its headquarters in London, Ms Newton-Smith will ask the remaining members to approve the changes, telling them: „I’m confident and determined this will be a turning point for us. The start of a new chapter, for a renewed CBI.
„This is a difficult but important journey. We’ve made great strides forward, but it will take real dedication. I am resolutely committed to leading that change and restoring the CBI to health.
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„I know what this organisation can do when it is at its best. I’ve seen what we can achieve, and how powerful we can be in driving change. Even our competitor groups have admitted they can’t match all that.
„We’re ready to deliver a better CBI. We just need one thing now – your vote.”
Members will be asked to vote on the motion: „Do the changes we have made − and the commitments we have set out − to reform our governance, culture, and purpose give you the confidence you need to support the CBI?”
A simple majority of votes is required for the motion to be carried with the result, overseen by an independent body, expected to be announced after 4pm.
Victory would give Ms Newton Smith a mandate to institute changes to the board and the establishment of a people and culture sub-committee, and begin the task of restoring credibility among sceptical former members and rebuilding relations in Westminster.
Defeat however would leave the CBI’s future in question.
With income already hit by the fall in membership payments and a redundancy programme announced to staff last week, the directors have already taken advice on winding up procedures if the organisation is no longer viable.
Sources involved in discussions with the CBI over the last month say the vote is hard to call, despite there being widespread agreement that business needs a strong representative multi-sector voice.
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Other business groups have moved to fill the void in a battle for influence, with the British Chambers of Commerce announcing a new Business Council on the eve of the vote, a move dismissed by the CBI as „opportunist”.
Supporters of the CBI’s reform programme say it has economy-wide expertise and experience that other groups cannot match that is worth preserving if concerns over culture can be addressed.
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Siemens, Microsoft and Esso are among a number of large companies that have backed Newton Smith’s reforms in recent days, signing a letter of support along with more than a dozen CBI members.
„At a time when the UK economy is facing strong economic headwinds and anaemic growth and with a general election expected before the end of next year, it is vital that there is a credible voice representing all sectors and sizes of UK business.
„The CBI can do this. In their Prospectus we believe that the CBI has recognised its failings and has a robust action plan in place to be delivered by a new leadership,” they wrote.
Among major companies that ended their membership in the spring however there is no rush to return. BP, NatWest, Aviva, BT, Lloyds, John Lewis and Tesco all withdrew from the group when rape allegations emerged.

One large international company told Sky News they were „keeping an open mind”, but said their interests were well served by an industry-specific trade body, as well as benefiting from scale that enabled them to deal directly with government and ministers.
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Leading firms that suspended engagement following the most serious allegations told Sky News that they were reviewing the prospectus for change and waiting for the outcome of the vote. PwC is expected to not vote despite retaining membership.
Some may be waiting to see whether the reforms are enough to persuade government to resume engagement, a final decision on which is expected to be made by Downing Street.
That gives the prime minister significant leverage over an organisation that has been a thorn in the side of successive administrations since it declared its opposition to Brexit.
Should the CBI leadership receive backing from its members, a further examination will come from MPs when the business select committee holds an evidence session on its future in parliament.
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