Business is under attack – the CBI must get political to defend it

The Confederation of British Industry CBI needs to stand up for business, says Matthew Lynn. And if that means being political, then so be it.


Paul Walsh: too Tory for the CBI?

A former chief executive of one of the UK's most successful companies. An adviser to the prime minister. A non-executive at a series of global multinationals. Articulate and more than able to put across a persuasive point of view. Paul Walsh's qualifications to be president of the Confederation of British Industry (CBI) look exemplary.

But there was a problem. It was reported last week that he'd been dropped as a potential candidate because he is seen as too much of a Tory. Yet surely that is crazy. While it is understandable that the CBI doesn't want to be too closely associated with one party, it is failing to grasp how the world has changed.

When all the major parties were broadly pro-business, as they have been for the past two decades, neutrality made sense. But now that Labour, the Greens, and the Scottish Nationalists are all clearly anti-business, it is not good enough. The CBI needs to come out fighting and that means becoming more, not less, political.

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Neutrality once made sense

Walsh was first mooted as a successor to Sir Michael Rake in February. He ran drinks conglomerate Diageo for many years and was widely seen as the front-runner for what remains one of the most prestigious posts in British business. But then his closeness to the Conservative Party became ever more apparent.

He signed one of those 'a hundred men in suits support the Conservatives' letters that The Daily Telegraph publishesevery few days. He also turned out tobe a party donor, and had appeared with David Cameron in Davos. To the CBI, that made him an out-and-out Tory."The CBIis a politically neutral organisation and its senior post holders will always act impartially," a spokesman was reported as saying.

I suspect that to most people the idea of the CBI's head being a Tory would be about as shocking as discovering that Jos Mourinho thinks he is the greatest thing since Jesus, or that Nigel Farage is partial to a couple of bottles of decent claret for lunch not very surprising at all. No one really expects major businesses to be anything other than right-of-centre. It is hard to imagine anyone tearing up their CBI membership cards in protest.

Of course, you can see how it might have made sense for the CBI to stay out of party politics in recent history. Since Tony Blair became Labour leader, all the main parties have operated within a broadly pro-business consensus. They might have differed a bit on how high taxes should be, and what the government should spend on, but they all wanted a dynamic, competitive private sector.

Even the Labour party of the 1960s and 1970s wanted businesses to succeed, even if it had a very statist vision of how that could be achieved, pumping money into projects such as Concorde to build new industries.

but not anymore

But that is no longer true. A large part of the political establishment is not just indifferent to business, or mildly baffled by it. It is actively hostile. The Greens are the most obvious. The party wants the economy to be smaller. It casually endorses policies such as radically reducing copyright terms, and allowing file-sharing, which would wipe out major British businesses. The idea that companies create wealth seems to have completely passed the party by.

The SNP is not much better. If Nicola Sturgeon has ever said anything to suggest that the private sector might be good for anything other than paying higher taxes, it must have escaped everyone's attention. The party seems to exist in a parallel universe where only higher public spending generates wealth, deficits can be run forever, and endless money can be raised by clamping down on "avoidance".

Labour is going the same way. Businessmen who come out in favour of the coalition are dismissed as "tax dodgers". Price controls are proposed on energy and rents as a way to improve living standards but when companies can't set prices, the free market has effectively ceased to exist. Businesses are portrayed as the "predatory" enemies of ordinary working people. Proposals for new regulations pour out of the party as if there was nothing that could not be fixed with a few new rules dreamt up in Whitehall.

Business must fight back

There is nothing neutral about any of this rhetoric. It does not have a "slightly different take" on what makes the market work. It is clearly opposed to private companies operating in a free market, and a consensus is starting to emerge in which enterprise is vilified.

Business needs to fight back and more forcefully than in the past. It needs to explain that innovation and free markets, not regulations, benefit consumers. It needs to remind people that only the private sector creates wealth, and the public sector spends it the two are not quite the same thing.

It needs to point out that there is a fiercely competitive global economy out there, and Britain is not in such great shape that it can completely forget about how competitive it is. If that means being "political", so be it. Business needs to be defended, and if the CBI is not interested in doing that, it is hard to see the point of it.

Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.