The UK’s most prominent business lobby group, the Confederation of British Industry, is to lay off a swathe of its workers as it fights for survival amid a crisis prompted by multiple sexual misconduct allegations.
The CBI needs to cut its wage bill by a third within months, staff were told at an all-hands meeting on Thursday morning, according to sources with knowledge of the discussion, with management aiming to initially use voluntary redundancies to trim costs.
A spokesperson for the lobby group, which employs 300 people, confirmed it had to make “difficult decisions” including cutting its salary base by a third, along with other “cost-saving measures”. “It will be a smaller and refocussed organisation in the future,” they said.
On Wednesday the CBI opened a confidence vote on its future and laid out a prospectus detailing plans for a reformed culture and governance. The result of the vote is expected to be released shortly after a 6 June extraordinary general meeting (EGM) with members.
“With our prospectus for a renewed CBI now published, we will work with our staff and members on our core mission to help UK business succeed,” the spokesperson said. “We believe there is a strong basis for our members to continue to back us at our EGM.”
The organisation’s new director general, Rain Newton-Smith, said on Wednesday: “I have my eyes wide open about what we need to learn.”
She added: “People need to know the code of conduct and we need to lay the foundations for a strong speak-up environment.”
The CBI faces an uncertain future after more than 50 of its most high-profile business members quit or suspended ties with the body after claims of sexual misconduct, first reported by the Guardian.
Memberships make up the bulk of the CBI’s income. Its total income was £25m in 2021, of which £22m was from membership fees.
The Confederation of British Industry (CBI) is the UK’s most prominent business lobbying organisation. It is a not-for-profit organisation founded by royal charter in 1965, after a merger of older employer bodies.
It claims “unrivalled” access to government. It also claims to have the biggest number of policy specialists outside of Whitehall, the seat of the British government, in order to support its 190,000 business members, which are the chief source of its income. Its total income was £25m in 2021, of which £22m was from membership fees.
Its membership is composed of direct members and members of other trade bodies.
Its 1,500 direct members are businesses that actively hold membership. Fees vary significantly: top-tier businesses can pay £90,000 annually, some mid-sized companies pay half this price and smaller companies pay far less.
The bulk of its membership comes via trade bodies, and it counts these memberships within its own 190,000 total.
The lobby group has access to the prime minister and cabinet, and campaigns on issues ranging from funding for childcare to tax and skills. Its relationship with the UK government was stretched severely by Brexit, with its access to No 10 much curtailed. A remark attributed to the former prime minister Boris Johnson – “fuck business” – was considered to be aimed at efforts by the CBI and others to try to influence the post-Brexit UK-EU trade agreement.
The organisation sought to rebuild ties with the government during the early stages of the coronavirus pandemic, including working alongside trade unions and No 10 on developing the furlough scheme.
The CBI is governed by a president and an executive committee, which, in normal times, is chaired by the director general. It also has a board of non-executive directors, which the director general sits on.
Anna Isaac
While staff had expected some cost-cutting after the loss of members, the pace and scale of the redundancies still came as a surprise to some.
Sources claimed staff have been left demoralised by the handling of a misconduct scandal, which has included revelations of sexual harassment, sexual assault including rape, and drug taking.
One insider said: “It’s been awful, and it feels unfair that some people’s behaviour will cost others, who have done nothing wrong, so much.”
Another said employees were trying to support one another through the aftermath of news reports and the process of applying for new jobs.
The toughest sell to regain support, according to one senior figure at a company who is still a member of the group, is for business to believe that a CBI in a new form can “win back the ear of government”.
But that would be a “leap of faith” for members as central and local government and the Labour party suspended engagement after misconduct allegations, the industry leader added. “There’s still a business herd that may need somewhere to go, and it hasn’t found a home yet.”
The CBI’s board has sought legal advice in recent weeks about a range of options to restructure its activities, including the possibility of insolvency.
A spokesperson for the CBI said: “Following a series of member resignations, we know the CBI will need to be smaller and refocused in the future. The board has sought advice on matters of restructuring as may be appropriate, as any responsible board would.”
