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Backing business for 50 years

30 October 2015 | By Jackie Storer

When Winston Churchill died in January 1965, many people said it marked the end of an era. For the CBI – born a month later – it was the start of a new one. We look at how the voice of British business has changed over the past 50 years

CBI member Rudi Plaut’s biggest concern in the 1960s and 1970s was keeping his conveyor-belt manufacturing firm afloat. Under the Harold Wilson government, regular power cuts saw the lights go out, the machines go off and the workforce sent home on full pay.

“The strikes and blackouts cost us a fortune,” says Plaut, recalling his time as managing director of Associated Conveyors, near Cardiff.

“It was a difficult period for business. The unions were extremely powerful and business was looked upon with suspicion. It took a while before people recognised that unless you can create some wealth, you can’t actually spend it. We desperately needed someone to speak up for our interests.”

It was against this backdrop that the CBI was formed in 1965, bringing together the Federation of British Industries, the British Employers’ Confederation and the National Association of British Manufacturers – and the predominantly SME communities they represented.

At the time, “the education of the public and the government to the vital role of industry” was the CBI’s principal objective. The organisation firmly believed that ignorance of this critical role was one of the primary causes of the economic malaise that was holding the country back.

CBI member Brien Knight says his firm Knight Strip Metals almost fell victim to the widely perceived feeling that Wilson was “anti-industry” when he applied to move to bigger premises in Potters Bar, Hertfordshire.

“I was told in no uncertain terms that my application had been turned down by Harold Wilson himself,” says Knight, whose firm supplies materials to aerospace, oil and gas industries worldwide. “Apparently he wanted me to move to South Wales to support the steel industries there that were really struggling - but that would have been a disaster for us as our staff lived locally. In the end I was told: ‘Wait a year or two and when he’s gone, make another application.’ I did and we moved into our current premises in 1971 – a year after the Wilson government fell.”

A better way forward

John Cridland, the CBI’s outgoing director-general, says the organisation could not have been formed at “a more challenging time”.

“It certainly had to hit the ground running,” he says. “Business was faced with a number of problems, including the devaluation of the pound and frustration over the numerous stoppages. We had unions having unprecedented influence with a Labour government and business felt frozen out. We desperately needed to be heard.”

Cridland, who decided he wanted to help business to present a more positive public image during the Winter of Discontent, joined the CBI as a graduate secretary in 1982.

“The country was in decline. We’d lost our conviction that we could win. Management was weak and had almost left it to the unions who were making a real mess of things,” he says. “There had to be a better way forward.”

'A business brains trust’

The election of Margaret Thatcher, Britain’s first female prime minister, heralded a turning point in the CBI’s influence. As the Iron Lady determined to break the stranglehold of the unions, the CBI decided to become less of a pressure group and more of a non-political adviser.

Despite a faltering start in the relationship – a speech by then director-general Terence Beckett in 1980 advocating a “bare-knuckle fight” to get a better deal for industry did not go down well – the CBI worked hard to become more entrepreneurial, coming up with solutions rather than problems, says Cridland.

We knew we had to position ourselves to be part of the decision making

“We knew we had to position ourselves to be part of the decision making; to be genuinely independent, but able to convince people of the quality of our ideas – to have influence rather than power,” he says.

“So we changed the organisation to a business brains trust that did cutting-edge research and in particular we produced some major reports on things like business–education links.”

Over the intervening years, the CBI’s core mission to speak-up for pro-enterprise policies and for business – while remaining apolitical – has remained the same.

And during his time at the organisation, Cridland has worked with five prime ministers. Picking his highlights, he identifies being asked by Tony Blair to sit on the Low Pay Commission that introduced the minimum wage in April 1999; working on productivity and efficiency of the economy with Gordon Brown,; and joining David Cameron on trade missions. “He’s a fantastic salesman for the UK,” he says.

Culture shift

Now the CBI represents 190,000 firms of all sizes and sectors, which together employ about one third of the private sector workforce. Cridland reflects that relations between employers and trade unions are “far more harmonious” than they were he joined the organisation.

Even during the credit crash of 2008/9 “bosses and workers were able to find ways through this,” he says.

“Car factories stopped work for three months without a strike – without a union problem – because the unions recognised it was either three months of short-time working or no job at all.

“KPMG moved to a four-day week – and at the end of the recession they had difficulty getting people back for five days.”

In June this year, Cridland also shared the stage with TUC general secretary Frances O’Grady at a CBI event – held as part of an initiative launched in 2014 to build trust in business, The Great Business Debate.

As a reflection of how things have changed, Cridland points to the CBI’s move from its headquarters at Centre Point, a 1960s office block in London’s West End, to its current modern steel and glass home above Cannon Street Station in the City.

“Fifty years ago, it was very much the knights of industry, three-piece suits, more class-based and formal. We’ve become much less stuffy,” he says. “The office is open plan, there are no silos, and we’re much more diverse. With offices in India, China and the US, our outlook is also far more global.”

Taking stock

To mark the organisation’s 50th anniversary, Cridland gave a lecture at King’s College London to an audience of business leaders, government officials and academics on the state of the economy – drawing on the kind of research that has given the CBI influence since the 1980s.

Focusing on the economic recovery of the past five years, he talked about well-balanced domestic growth, solid expansion in business investment and the increase in private sector employment. He pressed the importance of boosting exports, backing the UK’s medium-sized businesses and reforming education. And he warned that the new national living wage was a “gamble”.

But, importantly, he challenged some of the more divisive arguments common in today’s economic debates: that you can’t pitch the value of manufacturing against services, or prioritise investment in the north over the south east.

“While some commentators have been looking for a rebalance from the service sector to manufacturing, I believe this is no longer the right way to look at our economy,” he said.

Our strength in services should be a cause for celebration, not concern

Trends are “rendering the distinction between services and manufacturing less and less meaningful,” he continued, referring to manufacturing firms that are increasingly outsourcing activities ranging from HR to design, while also developing and selling their own services to gain competitive advantage.

“Our strength in services should be a cause for celebration, not concern,” he added.

And, in a similar vein, Cridland argued that “it’s not really about north versus south. Whether north or south, it’s all about local business environment… and driving centres of private sector growth across the UK.”

The challenge of our time

Cridland also focused on the issue of productivity. But he didn’t accept it was a puzzle. “The only puzzle to me is that some economists still call it a puzzle,” he said.

He pointed to global trends and regulation in enabling sectors such as transport and distribution. He also highlighted that there has been higher productivity growth in areas where there has been higher demand, where the lack of productivity has helped the jobs-rich recovery, and where investment in technology often has a longer-term impact.

He issued a warning that policymakers needed to understand that the economy is “less and less just about the quantity or widgets coming off production lines and more and more about the quality of customer interaction”.

The questions from the audience suggested the challenges ahead for businesses in the UK – and for the CBI: the question of Europe, getting the right support for innovation and exports, and the potential impact of devolution.

Cridland emphasised it was the CBI’s job to support businesses through these issues, but the final line of his speech summed up his optimism. “I believe that Britain now faces economic prosperity despite global downside risks.”

Key achievements over 50 years

1965 – CBI officially comes into being on 30 July, bringing together the British Employers’ Confederation, the Federation of British Industries and the National Association of British Manufacturers.

1968 – Full CBI membership extends to “all the main sectors of the business community”.

1970 – The government acts on two key CBI recommendations: dropping restrictions on coal imports and stopping conversion of power stations to oil.

1971 – The CBI launches its price restraint campaign. Nine out of 10 of the CBI’s largest 200 members sign an undertaking to avoid price increases where possible, or limit them to 5 per cent if unavoidable.

1977 – The CBI holds its first national conference in Brighton. Delegates from 800 firms attend the event, which attracts widespread media coverage.

1983 – Strong campaigning by the CBI leads to a reduction in the National Insurance Surcharge, saving employers £2bn a year.

1993 – In the Budget, the Chancellor responds to CBI calls for cuts in rates on business properties and for higher tax allowances on capital projects.

1994 – The CBI launches a sustained campaign for a “skills revolution” that promotes vocational qualifications and closer links between business and education.

1998 – CBI membership of the Low Pay Commission ensures a successful start for the National Minimum Wage.

2001 – The CBI designs the Emissions Trading Scheme, proving to government it’s a better way forward for the environment than the Climate Change Levy.

2002 – CBI director-general Digby Jones opens the CBI’s office in Washington DC to expand the international presence it established with its Brussels office. This is followed by new offices in China in 2005 and New Delhi, India, in 2008.

2011 – Director-general John Cridland leads the CBI’s campaign to gain support for medium-sized businesses and increase trade. It results in the £1bn Business Finance Partnership and other policies to support exports.

2014 – CBI HQ moves into modern offices in Cannon Place, London; Great Business Debate campaign launched.