Rupert Soames address to CBI Annual Conference 2025

Ladies and Gentlemen, I would like to do two things in this, my swan-song, or, perhaps, my Last Will and Testament.  

The first is to reflect that, back in 2023, the idea that we might bein this hall in 2025 was not a given, or an inevitability.  Indeed, the odds were against it. 

But your Confederation of British Industry is here in a state of rude health, with finances, membership and influence restored, and I would like to recognise some people and institutions who have made that possible.

First of all, thank you to our members who stuck with the CBI in the dark days; my respect for your steadfastness and courage is immense; and to those who left, but subsequently came back into membership, thank you for being open to the possibility of redemption and transformation. And to those new to the CBI, thank you for your faith and enthusiasm.

And within the CBI itself, my predecessor as Chair, Brian McBride and his Board reformed the Governance of the Confederation and worked tirelessly to keep the organisation functioning.  

And finally, Rain Newton-Smith who, like Cincinnatus, agreed to come back from a senior role at Barclays to lead an organisation she loved; and the Executive Team – Tracy Black, John Foster, Asha Musoni, Ben Bailey, and Louise Hellem, all of whom could have found less risky jobs elsewhere, but instead stuck with, or in some cases, joined, the CBI.  

And to all the other colleagues from across the country – Northern Ireland, Wales, Scotland and North, South East and West England, who serve our members and make sure that we are able to represent the interests of business to Government.

The CBI today is living evidence of the truth of the immortal words of Kelly Clarkson: “what does not kill you makes you stronger”.   

And we are now stronger than ever.

And more needed than ever.

Because business now has to operate in a world that is changing at a rate that I have not seen in my lifetime. 

Britain on a murky Monday morning in November may feel the same in 2025 as it did in 2024, but it is not; the 12 months since the last CBI Annual Conference must rank amongst the most consequential in decades.  Step back for a moment and consider what has happened since last November.

In the last year, geo-politics has been up-ended and an entirely new way of conducting business between nations has been invented.  Last November, we could go to bed each night secure in two certainties: that all the countries that mattered believed in rules-based, free trade, and negotiations conducted through institutions.  

Second, that Western Europe could rely on the United States to defend it.  

And these certainties have brought us, and the world, great benefits.

Since 1970, over 1.2 billion people, including 300 million Chinese, have been lifted from poverty by free trade.  And, for the first time in millennia, Western Europe has been undisturbed by war for over 80 years.  

But 307 days ago the inauguration of President Trump took away those certainties.  He showed us that we had been living in, shall I say, a China shop, in more than one sense of the phrase.   

And so, in what seems like a moment, in the blinking of an eye, the ground rules of world trade, and the balance of world trading power, has fundamentally changed.  

The greatest importer in the world, the United States, has imposed tariffs averaging 10% on most goods, and much higher on some.  And in retaliation, the greatest exporter in the world, China, has restricted exports of vital minerals in a way which has made even President Trump blink. 

And stuck in between the two, the EU, which is the world’s most powerful trading block, created with the intention of being able to go toe-to-toe on trade with the United States, finds itself in the worst of both worlds.  It has been forced to accept US tariffs, and seen its vital industries having a gun pointed to their head by China. 

These are huge changes, which would normally evolve over decades.  And we should not think that the world order will revert to previous comfortable certainties after the mid-terms or next US election.  Whoever is the next President of the United States, we cannot unsee what we have seen, nor unhear what we have heard.  

The second seismic change of the last 12 months has been the pace and impact of growth in AI.  It took 16 years for the internet to grow to its first 1 billion users; it has taken three years for AI to achieve the same number of users.  Since the last CBI Conference, ChatGPT alone has added 500 million users.

It is clear that businesses powered by AI are going to vastly out-run the ability of governments to develop policy, manage the economy and regulate markets.  In the face of this, Trades Unions are relentlessly focused on going back to the workplace arrangements of the past, and resurrecting old models of employer / employee relations at a time when AI and robotics are busily rewriting the operating model for businesses and workers alike.  

The third change over the last year is the position of the Government.  

A year ago, it was basking in the glow of a huge victory of a few months before.  It had a Parliamentary majority of 169, supportive bond markets and the confidence of a Government that sees five years of untrammelled power ahead of it. 

What a difference a year makes.  

On the domestic front few would have predicted how far and how fast the Government has lost its confidence and room for manoeuvre.  It is said that political parties campaign in poetry and govern in prose.  Having basked in the poetry of a campaign in which they promised not to touch the most powerful levers of fiscal policy – income tax and VAT – they are now having to govern in the prose of the limitations those promises impose upon them.  

Add to that an ill-judged budget last November which, as we predicted at the time, has hit both growth and employment.  And Government has found that despite a majority of 169, it is on some issues a flaky majority.  It is almost unprecedented that a Government with a majority of that size cannot deliver key parts of its programme.  

The political reality is that 131 of its MPs have constituency majorities of less than 5,000, and that this makes it hard to maintain the discipline needed to implement policies which are necessary, but unpalatable, such as welfare reform requires.  

At the same time, inflation, though falling, is persisting, and 10-year gilt yields are the highest in the G7, adding to the crushing cost of our national debt interest, which since 2023 has gone from being half the defence budget, to double the defence budget in 2025.  

As a consequence, this is not the same Government we saw 12 months ago.  This is a Government whose first contact with the enemy of events at home has left it bruised and with little room for manoeuvre, and one which is seriously constrained by both politics and economics.   

But it is not all doom and gloom.  Domestic weakness is in stark contrast to the success Government has had in navigating complex trade and international geo-politics to the country’s advantage.  The Prime Minister and his team have transformed the credibility of our country on the international stage, and deserve every credit for that.

And the core focus of the Government’s strategy – to reduce the crippling future cost of our debt – through growth and investment is surely the right one.  And it is right to prioritise reducing regulation; getting a meaningful number of the 9 million people of working age not in work back onto payrolls; facilitating infrastructure investments and establishing a corporate tax roadmap.  And we should not forget the very real progress which has been made unblocking critical infrastructure such as reservoirs, train lines and grid improvements which for far too long have been blocked by local interests.

But at its heart, there is an incoherence in Government strategy.  They want, rightly, to get people, particularly young people, into work.  They point, rightly, at the 1 million – yes 1 million – young people between the ages of 16 and 24 who are not in education, employment or training.  

There is no better way of improving the state of the nation’s finances, or the health and welfare of millions of people, than getting them to move from being benefits claimants to becoming taxpayers through employment.  And Government say they recognise the drag burdensome regulations place on business, and say they are committed to reducing it.  

So in the face of these two objectives, what have they done?  They have significantly increased the cost of employing people, particularly the young, and they are in the process of passing the Employment Rights Bill which will massively increase the regulatory burden and risk of employing people, and yes, introduce a whole new regulator.  The actions do not match the intentions or the words.

The Government also has an objective of reducing government expenditure.  So you might think, might you not, that the number of people employed in the public sector since the Government got in might have reduced, or at least not increased.  But in utter contradiction to their strategy to control costs, the number of people employed in central Government has increased, and not by a thousand or two, but by 95,000 since June 2024.  Average pay in the public sector has increased by 6% as against 4% in the private sector.  Once again, the actions do not match the intentions or the words.

So what do we, as business, do about this?  No right-thinking person wants this Government to fail; this is our country, where we live and bring up our children and want to retire.  We want to live in a country that is vibrant, energetic, with high quality public services and creating wealth for all.  And to do that we need the economy to grow and the productivity of all our workers – be they employed by the public or private sectors – to increase.

As Rain said at the start of the day, if the economy is going to grow, it will be business that will deliver it, and for that to happen, business needs a stable fiscal environment and policies around employment and regulation that are coherent, work together, and do not fight each other.  We need government to control its costs; a government that that can deliver policies, rather than talk about them.  In Texan speak, a government that is less hat and more cattle.

And as the song of the parting swan, I will repeat what I said a year ago on this same platform about how Governments think of business, quoting Winston Churchill:

“There are some who regard private enterprise as a predatory tiger, to be shot 
Some who regard it as a cow, to be milked 
A few regard it for what it is: the strong horse that pulls the whole cart”

We in business are that strong horse; we are happy to take the task of pulling the whole cart; but we need hay, we need water and we need a cart-driver who understands how to get us to be our best.  And when we shake our heads and stamp our hooves, a wise cart-driver will pay careful attention.  For a wise carter knows that without a strong horse, they can deliver nothing.

With that, my personal thanks to all of you for your support over the last two years; and now, lets trot off for drinks and fun.