40 years of beating the drum for business

The CBI has a reputation for making a noise on behalf of employers. But many of its achievements have brought benefits to employees as well, says Johann Tasker.

When 700 entrepreneurs sit down for a black-tie dinner at the Confederation of British Industry’s (CBI) annual conference next week, the employers’ organisation, which bills itself as the UK’s leading business group, will be celebrating its 40th anniversary.

It promises to be a glittering occasion, but the CBI is keen to shake off its reputation as the preserve of the country’s elite captains of industry – a powerful lobbying body looking after the interests of employers at the expense of employees.

Its HR director Susan Anderson is quick to dismiss suggestions that the organisation lobbies on behalf of big business to the detriment of millions of employees. Giving an insight into what it is like to work for the CBI, she says many of its achievements over the past four decades have brought benefits to employers and employees alike.

“If there’s one thing I’m particularly proud of, it’s what we have done in terms of boosting literacy and numeracy among school leavers,” she says. “Too many teenagers leave school without adequate English and maths skills, and the fact that we are keeping the heat on the government is a real test of its commitment to raising skills.”

Productivity, prices and incomes

Formed in 1965, the CBI brought together the three key lobby groups – the British Employers’ Confederation, the Federation of British Industries and the National Association of British Manufacturers.

A major topic that year was the government’s productivity, prices and incomes policy. This, and improving strained labour relations, continued to be a concern for the CBI into the strike-ridden 1970s.

Today, the organisation speaks for about 240,000 businesses that together employ around one-third of the private sector workforce.

Operating out of 13 UK regional offices and three international offices, its member companies, which decide all policy positions, include 80 of the FTSE 100 firms, about 200,000 small and medium-size businesses, more than 20,000 manufacturers and more than 150 sector associations.

The CBI’s power – and its ability to bend the ears of politicians – is illustrated by the fact that its conference attracts high-profile speakers. This year, delegates can expect to brush shoulders with the chancellor of the exchequer Gordon Brown, transport secretary Alistair Darling, and London mayor Ken Livingstone.

Such success is ultimately reflected in the strength of support the CBI receives from the businesses that are its members. But when it comes to HR, the organisation is increasingly working in partnership with employee representatives, says Anderson. In terms of HR practice, for instance, one recent joint initiative between the CBI, TUC and the DTI – Managing Change – highlighted practical ways of reducing long working hours and reforming working practices.

“These were company case studies that really demonstrated the benefits to be obtained by moving towards more flexible working arrangements and the issues that need to be overcome so that such policies can be implemented,” says Anderson. “The fact that we did this with the TUC is a good sign that we are not just talking to businesses. We are talking to the unions and influencing HR practice by giving our members good practice guides.”

Another key issue this year has been age discrimination.

“We’ve accepted the idea that legislation is the right way to go, but what we’ve been seeking to do is to make sure it is workable – for employees and employers,” says Anderson.

Clashes over thorny issues

It has not all been plain sailing, however. Despite working closely on many issues, the CBI and the TUC have clashed over thorny issues such as the minimum wage, employment tribunals and pension provision.

This year, CBI lobbying ensured an increase in the National Minimum Wage stayed below average earnings, at 4.1% to £5.05. The move was achieved against a backdrop of calls from the TUC for a 10.3% increase to £5.35. According to CBI figures a 10.3% increase would have imposed an additional overall cost on business of £320m. But that claim brought howls of protest from TUC leaders, who accused business leaders of “bleating”.

“As ever, with each minimum wage increase comes the predictable wave of protest from business saying that it cannot afford another rise,” says TUC general secretary Brendan Barber. “Every year, miserly bosses say any wage boost will be at the expense of jobs, but every year their predictions of doom and gloom fail to materialise.”

Pensions are also a hot topic, especially with the recent appointment of John Hutton to the post of work and pensions secretary following the resignation of David Blunkett. Then there is the imminent publication of Adair Turner’s pensions report, which is due to be published this week.

The CBI has already ensured the early introduction of a risk-based levy for the government’s Pensions Protection Fund (PPF), so businesses representing the highest risk will be asked to pay more.

It also successfully fought for firms to be allowed to include contingent assets in their funds, winning agreement that additional contributions will be taken into account when the levy is calculated.

A CBI victory

Anderson paints this as a CBI victory. “People often think that employers have a bottomless pit when it comes to pensions, but they are now realising that there is some real pain here and employers cannot keep shelling out vast sums of money.

“Pensions are at the heart of the debate and we have put employers there. It’s not just a debate about having a system that gives people a generous provision, it’s also about avoiding unreasonable costs on employers,” she says.

Ian Brinkley, head of economic and social policy at the TUC, concedes that employers and employees have similar views about some aspects of pension provision, although they disagree entirely on others.

“There is a shared view that you can’t have one rule for the boardroom and another for the rest of the workforce,” says Brinkley. “But the big area where we simply don’t agree is public sector pensions.”

In October, for example, the TUC and the government agreed a deal covering the future of several public service pension schemes. The government dropped its suggestion that existing public sector employees should retire later at 65. In return, the TUC accepted that a higher retirement age would be phased in for new staff.

The news infuriated business leaders. CBI director general, Sir Digby Jones, condemned it as a bad deal for taxpayers, accusing the government of capitulating to the threat of public sector strikes.

But Brinkley says: “There has been a lot of press coverage portraying this as a huge sell-out to the unions, but it is a completely misleading presentation. Both sides have actually achieved some of their key objectives and the government has got exactly the same overall cost savings.”

Yet Brinkley agrees that a closer working relationship between the CBI and TUC has brought benefits. “We have had quite a lot of common ground on some of the issues surrounding productivity. We found we had common analysis and recommendations in areas like investment, innovation, skills and best practice in the workplace. A common agenda is developing.”

Literacy and numeracy boost

This includes the drive to boost literacy and numeracy among school leavers that Anderson is so proud of. Brinkley adds: “The CBI and TUC have both made the whole area of skills a key priority. Very often we are talking with one voice and trying to push ahead the agenda around developing skills and getting a better-educated workforce.”

But as well as the ongoing saga about pensions and the annual battle over the minimum wage, the next two years are likely to bring fresh challenges for the CBI – and further clashes are likely. Future issues include the UK’s ageing labour market, competing within the European single market and the challenge of globalisation.

Asked what she thought conference delegates would be talking about, Anderson replied: “Whenever you get a gathering of employers, they will talk about the litigation culture and the rise in vexatious claims. We need to do more to cut down on the number of weak cases still going through. We still have unfinished business.”

View from the CIPD

The CBI’s biggest achievement was probably its recognition of the scale of the challenges posed by the growth of global competition, believes Geoff Armstrong, director general of the Chartered Institute of Personnel and Development and former chairman of the CBI’s employment policy committee.

“[The CBI] rightly saw that this demanded a more flexible economy, and responded by developing beyond the collectivist tradition and centralised economic structures that shaped the CBI’s early years.

“In those days negotiations between the government, the CBI and organised labour at the centre secured the CBI a powerful role, but the outcomes were all too frequently undermined by what was actually happening in workplaces.

“The need for flexibility is a continuing priority for us all. It will be interesting to see how the CBI’s role and profile change over the next 40 years, as the memories of the collectivist tradition fade further into history.”

Armstrong believes pensions will probably be the CBI’s biggest challenge.

“[The CBI] has a major role to play in influencing the debate to ensure that everyone has access to decent, properly funded occupational pension schemes, but also that business responds to an ageing population by ensuring there are appropriate opportunities available for older workers who choose to keep working beyond existing retirement ages.

“It will also, no doubt, continue to draw attention to the huge costs associated with allowing public sector workers to retire earlier than their private sector counterparts, and the disparities that this creates in the workforce as a whole.”

View from small business

The CBI’s biggest achievement in the past 40 years has been reminding government that the business sector is crucial to raising revenue through taxes to pay for public services, says Stephen Alambritis, head of parliamentary affairs at the Federation of Small Businesses.

“In the old days the CBI was part of the tripartite way of governing this country,” he says. “There was the TUC which represented the workers, the CBI which represented the bosses, and the government.”

That, Alambritis suggests, has changed. “The CBI has been magnanimous in recognising that it is important that small businesses are also part of the debate and it has been helpful in raising our profile and deferring to us when it comes to representing the ‘minnows’.”

Alambritis believes the CBI’s biggest challenge is to put the case for a more equitable approach to pensions policy between the public and private sectors, achieving a balance between social justice and economic prosperity.

“The public sector seems to have won the latest round in this debate, because the government is allowing 3.5 million public sector employees to retire at 60. The battle for the CBI is to ensure that the government doesn’t give in too much to trade unions.”

Comments are closed.