A LOOK AT CBI: THE POWERFUL VOICE OF THE UK BUSINESS

The Confederation of the British Industry (CBI) speak for more than 240,000 companies of every size. The regional structure of the CBI is a legacy of its formation but is also common among other business lobby groups including the British Chamber of Commerce . Members are represented geographically through 12 regional councils which include Scotland, Wales and Northern Ireland. The CBI has offices in these regions and countries within the UK as well as offices in Brussels to lobby the European Union,  Washington to lobby the US Government as well as in Beijing  (China) and Delhi (India).

The CBI was created in 1965 through the amalgamation of three employers’ and industry bodies: the Federation of British Industries (FBI), the British Employers' Confederation and the National Association of British Manufacturers. .

Membership

The CBI has a hybrid membership consisting of individual companies and trade associations. Company members range from small firms to large multinationals. The CBI members make up around three quarters of the top 100 companies in the UK (the FTSE 100), although less than one quarter of the 100 largest private companies are members.

CBI membership in terms of industry coverage is patchy with a disproportionately high number of members from financial services and manufacturing relative to their representation in the UK workforce but a disproportionately low number represented in retail and distribution (the UK’s second largest sector in terms of employment) . The largest single group is consultants and then lawyers. In total, more than 500 CBI members (well over a quarter) can be classified as business services or consultancies.

The CBI membership also includes a range of professional associations, universities and other public bodies . These include several tourist boards, the British Racing Drivers Club, the Professional Cricketers Association, the Warwickshire Cricket Club, the British Library and the Birmingham Symphony Orchestra.

Trade associations make up more than half of the CBI’s company members. These trade association members range from substantial bodies, such as the Engineering Employers’ Federation (EEF) and the Chemical Industries Association (CIA), to tiny organisations, such as the Kaolin and Ball Clay Association. With trade associations the CBI has a coverage of more than 40 per cent of the UK workforce.

The difficulties in terms of formulating policy to accommodate the diverse views of its membership often result in the CBI employing the lowest common denominator or the ’business as usual’ position. The problem of fair and equal representation of individual companies within trade associations is even more difficult. How do the individual company members within trade associations defer decisions to their leadership? Can the trade associations then act as ‘block vote’, undermining the principle of ‘one member, one vote’?.

Pan-industry bodies such as the Confederation of British Industry (CBI) have the most severe issues when it comes to representing the full cross-section of their members. In the absence of formal practices for consulting their members, there is nothing to prevent the line they take being at odds with what parts of the membership really think.

It is not clear as to how the trade associations represent their members within the CBI.

Formulating and promoting policy

The ultimate governing body of the CBI is its council, comprising a broad representation of its membership. In practice, the council has delegated the majority of its decision making powers to the chairmen’s committee and the CBI board. The CBI consults and supports its members through a regional organisation. Each of these 12 regions has a regional council elected from the members and is supported by local CBI staff. There are also 10 standing committees of the CBI charged with supporting specific areas of policy or members (Construction Council, Economic Affairs Committee, Employment and Skills Board, Energy and Climate Change Board, Enterprise Forum, Financial Services Council, Infrastructure Board, Public Services Strategy Board, Taxation Committee and the Trade Association Council). Through this regional and standing committee structure the CBI is able to support its members and both consult and involve them in policy formulation.

The chairmen’s committee (which has at least 10% of its members representing SMEs) is made up of the chairmen of the 12 elected regional councils and of the 10 standing committees. It has the lead responsibility for setting the CBI’s position on all policy matters. It proposes to the annual general meeting of members a candidate for election as president of the CBI, and normally a candidate for deputy president.

The CBI board is comprised of the president and deputy president, any vice-presidents, CBI staff executive directors (which must include the director-general, the deputy director-general and the finance director) and at least an equal number of non-executive directors (restricted to a maximum of five) from the membership. Its role is to take lead responsibility for all operational and financial matters including governance.

The president chairs both the chairmen’s committee and the CBI board and is advised by a president’s committee of members. The president, with the approval of the chairmen’s committee (under its delegated powers), appoints the director-general, who is responsible for the management of the CBI.

In principle the CBI develops and approves its policy along similar lines to most membership organisations. Its members of staff are primarily responsible for drawing up policy papers, which are then put out for consultation to the regions and specialist committees. Staff members take into account any responses, and draft up amendments. But the committee members are not necessarily asked to approve the final paper.

The CBI standing committees are vital in terms of helping develop the CBI’s position in key areas of interest. More broadly, the balance of its committee membership is critical in determining its policy positions, especially on issues such as energy, which impact on different sectors to very varying degrees.

Conflicts between members.

It is obviously difficult to reconcile the views of such a diverse membership and in some cases, this is not be possible. The CBI does undertake broad consultations from time to time. But these appear to be designed to provide support for an existing position rather than to genuinely discover members’ opinions. Even where policy has emerged from the formal committee process, the public position and statement is determined by the Director General and senior communications staff, and can be at odds with the views of the committee that developed the policy position.

Influence on Government policy

The CBI is widely regarded as the main voice of the UK business world. It has a strong media presence, close connections in Whitehall, and a significant influence on Government policy. The CBI claims a high standard of legitimacy and representation by referring to itself at ‘The Voice of Business’. On its website the CBI makes no secret of its power to influence Government policy:

“The CBI is business’ most powerful lobbying force in the UK. Our lobbying in Europe and across the world is also highly effective for members with global interests… ” “Such is the strength of the CBI’s reputation that Government frequently approaches the CBI for advice and opinion… ”, “No other business organisation has such an extensive network of contacts with Government ministers, MPs, civil servants, opinion formers and the media.”

Why does the CBI have such influence?

There are obvious reasons for CBI's influence over Government policy.

• The CBI can claim to represent a broad - if unbalanced -representation of the UK business which makes it easy for the Government to go to them to get the business point of view – a kind of ‘one stop shop’ for the Government.
• There is a clear ‘alignment of values’ between the CBI and many in the Government in that they broadly agree in minimising Government intervention in the market  This in turn then translates into reluctance within Government to challenge the CBI’s claims.
• The CBI is quite successful in getting critical comments on Government policy put out through the media, which obviously attracts Government attention. This is further entrenched by many business journalists who do not robustly challenge the CBI claims and accept them as being totally representative of business.
• The CBI has been careful to cultivate good relations with senior ministers in Government including the Prime Minister and the Chancellor of the Exchequer. However, possibly the most targeted Minister is that of Trade and Industry whose brief it is to promote UK business.