Sunday, 19 July 2015

Who represents business?

Wyn Grant asks 'who represents business' in the context of the forthcoming EU referendum.

As the referendum on exit from the EU approaches, there is increasing controversy about who can speak as the representative voice of British business.   In his first address to the CBI since taking up his post, business secretary Sajid Javid rebuked the organisation for its enthusiasm for EU membership.   Robin Oxley, the campaign director of Business for Britain, the anti-EU lobby, has argued that groups like the CBI decide what members should think rather than letting opinion filter up.  

Table 1 provides some basic data on the main cross-sectoral business organisations in the UK.

1965 (from merger of three organisations)
Several thousand companies. 103 universities, 140 associations
£24.6m (2013)
Institute of Directors
37,000 individuals
British Chambers of Commerce
52 chambers of commerce
Federation of Small Businesses

What is striking is that the Institute of Directors has a larger budget and almost as many employees as the CBI, although probably a higher proportion of the CBI’s staff are engaged on policy work.   In the late 1960s, the CBI had around four hundred staff.   Its budget in the early 1970s was £2.4m[i]According to the Bank of England inflation calculator, this would be a broadly comparable to £22.3m today.  The shrinkage in staff numbers may largely represent support staff no longer needed given information technology.

The CBI has a rather complex structure, as it represents trade associations as well as companies and public sector bodies, but it is generally considered that big business is the most powerful influence on its policies.

The Institute of Directors gained influence under the Thatcher Government when the CBI was seen as too associated with no longer fashionable corporatist policies.   However, its membership has fallen from a peak of 55,000 in 2001.

The British Chambers of Commerce is the oldest of the organisations, but has the smallest staff and budget.  It seeks to maximise its influence by focusing on particular issues such as taxation.

The Blackpool-based Federation of Small Businesses has had a static membership since 2006 and represents just 4 per cent of the UK’s 5 million small businesses.   It has a reputation for organising older businesses in established industries led by mature white men, but 18 per cent of its member companies are owned by women only.

The Europhile Sir Mike Rake, who was a member of the advisory council of the pro-business lobby Business for New Europe, is being replaced as CBI president by Paul Dreschler from a family company in Liverpool.  It is thought that he will be better able to represent medium-sized businesses than the chairman of BT.     In January, Mr Drechsler was one of 55 business leaders who signed a letter to the Times which called for a “new relationship” with the EU, completion of the single market and for the “culture of red tape” to be quashed.

New CBI director-general Carolyn Fairbairn will need all the skills she acquired working in the media during her career to help the CBI deal with the challenges it will face in the run up to the EU referendum.

Wyn Grant is a political scientist at the University of Warwick, and has published widely on the subject of political studies. He also held the Presidency of the Political Studies Association.

[i] Wyn Grant and David Marsh (1977), The CBI,  London: Hodder and Stoughton, p. 37.


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