The Times: The CBI has failed taxpayers on every issue that matters
31st August 2011
What is the point of the CBI? On paper the answer is obvious. The CBI is a not-for-profit organisation incorporated by royal charter. It is, in its own words, the premier lobbying organisation for UK business. Policy is decided by its members, who include senior professionals from all sectors and sizes of business. It has offices across the UK and in Brussels, Washington, Delhi and Beijing. It claims to speak for about 240,000 businesses, covering a third of the UK private sector workforce. It has 230 employees, a £24 million turnover and pays its new Director-General twice as much as the Prime Minister.
But what has it actually achieved? Its recent record on key issues such as bank reform, the private finance initiative and executive pay is lamentable. On all three it has consistently taken the side of big business against the interests of its smaller members and the taxpayer, and has done so in defiance of the facts.
Take bank reform. It should be an acute embarrassment to all concerned that there has been no comprehensive public investigation into the failures of the banking system, bank governance and the regulators. These failures cost British business hundreds of billions of pounds. Yet where has the CBI been?
Or take the PFI. It has cost us £20 billion more to fund projects through PFI than it would have done through the Treasury — a ludicrously high premium for transferring risk to the private sector. There has just been a devastating report into the PFI by the Treasury Select Committee, of which I am a member. Some £200 billion of new infrastructure is up for funding. Thousands of businesses could benefit from a leaner, less finance-driven and more flexible approach. Yet the CBI consistently defends the PFI.
Finally, take executive pay. Twenty years ago the average chief executive of a FTSE 100 company earned 17 times the average employee’s pay; now it is more than 75 times. Most of this is not merit-related, and excessive pay is a matter of serious and legitimate public concern, quite as much to smaller businesses as to the taxpayer. Yet again the CBI has gone Awol.
On all these issues the CBI talks small business and acts finance. It could be a huge force for good, fighting crony capitalism and promoting real, competitive, risky, entrepreneurial day’s-work-for-a-day’s-pay capitalism — the sort that will eventually get us out of this mess. Yet at the moment the CBI seems to prefer the interests of a few big companies and banks to those of the hundreds of thousands of ordinary businesses that make up its membership. Time for an overhaul.