Open letter from CBI President on Fox Williams investigation
Here is the open letter just released by Brian McBride, President of the CBI, to all members.
Dear members and partners,
I wanted to talk to each of you directly and openly about the crisis that has engulfed the CBI. About how this organisation, for almost 60 years an active and proud champion of British industry, let down its own people, and deservedly lost your trust in consequence. And about what steps we are taking to give you reason to consider trusting us again.
Whether that is possible, I simply don’t know. That is, of course, for each of you to decide. Whichever decision you each make, I believe that it is still necessary and valuable to share directly with you, our members, and to industry as a whole, all that we have learned about what went wrong in our organisation, and what we could have better done to prevent these terrible incidents from ever having taken place. These findings are based both on our own analysis, and on the independent investigations conducted at the CBI board’s request by the law firm Fox Williams, when allegations were first raised to us by The Guardian newspaper.
CBI senior leaders and board members, as you can imagine, have experienced many difficult emotions since those events, the most serious of which date from some years ago, became known to us. The greatest of these emotions is a collective sense of shame, for having so badly let down the enthusiastic, ambitious and passionate people who came to work at the CBI. They rightly expected to be able to do so in a safe environment, and we failed them.
When the initial allegations emerged, this sense of shame was accompanied by one of bewilderment. Bewilderment, because we, as a board and as a senior leadership team, had believed that the corporate culture of the CBI was in fact strong, and among the very best. We had striven to create an open, supportive and modern workplace. Indeed, our staff often told us how much they enjoyed working at the CBI, while outside organisations would tell us that we had one of the best teams they’d ever experienced working alongside. Our people took pride in their work of representing the needs of industrial Britain, in for example, the vital assistance that CBI people gave to government in designing business support measures during the Covid crisis, and in so many other cases.
In retrospect, we now know that we were complacent. And we made mistakes in how we organised the business that led to terrible consequences.
The challenge of the work that we do, with its unique combination of working closely with government and at a senior level with Britain’s businesses, attracts many of the brightest, most energetic and capable people in the country. But, as we have learned, it sometimes attracts the wrong people too. Our systems of culture management, harm prevention and eradication were insufficient. Individually, some – though not all – of these organisational deficiencies may even seem small. But, together, they compounded to cause great harm to some of our own people, and then to the CBI as a whole.
We didn’t put in place sufficient preventative measures to protect our people from those seeking to cause harm and we didn’t react properly when issues arose as a result.
We failed to filter out culturally toxic people during the hiring process. We failed to conduct proper cultural onboarding of staff. Some of our managers were promoted too quickly without the necessary prior and ongoing training to protect our cultural values, and to properly react when those values were violated. In assessing performance, we paid more attention to competence than to behaviour. Our HR function was not represented at board level, which reduced escalation paths to senior levels of the company when these were most needed. And we tried to find resolution in sexual harassment cases when we should have removed those offenders from our business.
In retrospect, this last point was our most grievous error, which led to a reluctance amongst women to formalise complaints. It allowed that very small minority of staff with regressive – and, in some cases, abhorrent – attitudes towards their female colleagues to feel more assured in their behaviour, and more confident of not being detected. And it led victims of harassment or violence to believe that their only option was to take their experiences to a newspaper.
The final straw was laid when complaints about our own Director General were made by a female member of staff in January of this year, although not in any way related to the more serious allegations that have come to light from some years ago. After investigation it was found that he had made a female member of staff uncomfortable and measures were put in place. However, it was only when further allegations against him emerged and were made known to the CBI board, that we immediately suspended the Director General, and commissioned an independent investigation by Fox Williams into those allegations, on conclusion of which he was removed from the CBI.
Compounding these issues, we then communicated poorly and ineffectively with you, our members, and this has placed an undue burden upon you. We were bound by legal limitations to respect the process and progress of independent investigations, but this cannot be an excuse for our failure to communicate and act clearly. Put simply, we lost our voice, amidst the maelstrom that developed around the organisation.
In doing so, commentators concluded that the organisation was cold-hearted and toxic, and that serious allegations of rape had been covered up, when in fact they were never made known to the senior leadership or to the board of the CBI until revealed by The Guardian. I will tell you that every member of the CBI’s leadership team is devastated and appalled by the substance of these allegations. Our collective failure to completely protect vulnerable employees, to ensure that the alleged incidents could never happen in the first place, and to put in place proper mechanisms to rapidly escalate incidents of this nature to the level of senior leadership, these failings most of all drive the shame that I spoke to you about earlier.
So, we have much work to do and, as you would expect, we have already started that work. Attached to this letter is a summary of recommendations from the investigation conducted by Fox Williams. We will be implementing these in full. We are also taking the following steps:
Effective immediately, the CBI will operate a zero-tolerance approach to sexual harassment and bullying behaviour. More broadly we wish to set high standards of conduct and a number of people have been dismissed for failure to meet those standards.
As part of this policy, all CBI staff and Board members will receive compulsory training, covering bullying and harassment prevention, employee relations best-practice, mental health awareness and employment law. This training will become a permanent and continuous feature of our workplace. Our recruitment and new staff onboarding processes will be similarly revised, in line with these measures.
We have asked Rain Newton-Smith to be our Director General, and she has shown great courage in accepting this position at a very difficult time. Many of you know Rain personally, and have welcomed her return. We asked Rain to return to the CBI, not only because of her very considerable economic and policy expertise, but because the employees of the CBI deeply trust and respect her. Supported by others, Rain will lead the changes necessary at the CBI. I’m profoundly grateful to her for stepping up at this time. In this review process, Rain will be directly assisted by CBI board member Jill Ader, Senior Advisor and former Chair at Egon Zehnder.
We have already begun the process of recruiting a Chief People Officer (CPO), who will be part of the Executive Team and report directly to the Board. Prior to that appointment, an interim CPO will be put in place as soon as possible, drawn from outside the CBI. Working with Rain Newton-Smith and the CBI board, the CPO will ensure that the policies discussed here, across prevention, recruitment and zero-tolerance enforcement are deeply embedded within the culture of the CBI.
We will also further re-build the CBI board following the previously planned rotations, and we’ll make announcements about this shortly.
We have put in place a permanent, independent and confidential whistleblowing channel outside the CBI for people to come forward with past and future concerns about misconduct. To give further confidence that colleagues can come forward, we have also now engaged an HR consultancy that will also independently examine any further complaints of misconduct made by colleagues while the wider review takes place, and our internal processes are reformed.
We are progressing these changes at pace, but carefully and thoroughly. We will discuss our progress with you at the Member EGM taking place in June. In advance of that meeting, and, indeed, subsequent to it, your ongoing guidance, advice and support concerning these changes is greatly appreciated. This will ensure that we continue to have the input and insight necessary to deliver on this critical task.
The CBI and each of you, our members, have together, for decades, been one of the most effective industrial representation bodies in the world. I believe that it is enormously beneficial, both to business and to government, to have available the services that the CBI has provided in the past. I hope that we can effectively serve alongside you once more in future, albeit as a changed, and much improved CBI. Whether or not that is possible, I hope that what I have shared with you today is useful in the work you do to build great cultures in your own organisations.
Sincerely,
Brian McBride
Updated
CBI president says it failed to ‘filter out culturally toxic people’ from ranks
Britain’s most prominent business lobby group, the Confederation of British Industry, has said it failed to “filter out culturally toxic people” from its ranks including those accused of sexual harassment.
The letter, sent by the CBI president, Brian McBride, to its members, said the organisation “tried to find resolution in sexual harassment cases when we should have removed those offenders from our business”.
It comes after a series of revelations about its culture and the behaviour of its senior staff from the Guardian.
The lobby group did not have measures in place to “protect our people from those seeking to cause harm and we didn’t react properly when issues arose as a result”, the letter said.
Closing post
Time to wrap up, here are today’s main stories.
Starting with Rishi Sunak’s attempt to woo UK business leaders, as the crisis at the CBI rumbles on:
And in other news:
First Spac set up under new UK rules to close after failing to find merger target
The first company launched under Rishi Sunak’s newly relaxed rules to attract special purpose acquisition companies to London after Brexit has said it will shut down, without finding a suitable merger target.
Hambro Perks Acquisition Company said in a statement to the stock market on Monday that it had ceased all operations except for the purposes of winding up the company and returning money to shareholders.
Sir Anthony Salz, the chair of the tech investment company, blamed “challenging circumstances” for stock market listings.
Special purpose acquisition companies (Spacs) are cash shell companies that raise money to list on a stock exchange – often with celebrity sponsors – before finding a target in need of funding and merging with them. They offer an easier route for companies to list on the stock market without going through much of the difficult standard listing process.
British supermarkets report shortages of peppers as Morrisons rations sales
The spectre of food shortages is haunting UK supermarket aisles again today.
British supermarkets are running short of peppers after a cold snap in Europe, leading some to limit the number customers can purchase.
In a repeat of the shortages of salad crops in February and March, another bout of unseasonably cold weather in southern Europe has disrupted the harvest of fruit and vegetables, particularly peppers.
As a result, Morrisons is limiting purchases of peppers to two a customer. The supermarket said it hoped to be able to lift the restrictions within the next week or once supplies improved.
Shoppers have been complaining on social media about shortages of peppers, with one customer tweeting a picture of empty shelves at a Waitrose branch in Harrogate, Yorkshire.
Brexit-related food shortages, no. 196: shelves virtually empty of peppers at Waitrose, Harrogate today. 🙄#BrexitBenefits #BrexitDisaster pic.twitter.com/YfkfINZajz
— Richard Hassall #FBPE 🔶🇬🇧 🇺🇦 #FBPPR#RejoinEU (@RHHassall) April 20, 2023
More here:
In the banking sector, Credit Suisse revealed this morning that customers pulled more than 61bn Swiss francs (£55bn) worth of assets from the bank at the start of the year.
The figures laid bare the scale of the panic that contributed to its failure and emergency takeover by its rival UBS last month.
The Swiss lender said the “significant withdrawals” were partly to blame for its poor financial performance in the first quarter, with its adjusted pre-tax loss ballooning to 1.3bn Swiss francs for the first three months of the year. That compares with a profit of 300m Swiss francs during the same period in 2022.
The figures were detailed in what is likely to be the 167-year-old bank’s last set of standalone financial results, as it prepares to be subsumed by UBS in the coming months.
More here:
LVMH becomes first European company to hit $500bn market value
While Rishi Sunak was being chided by Burberry for removing VAT rebates for overseas visitors, rival luxury goods firm LVMH was hitting an impressive mark.
LVMH became the first ever European company to reach a $500bn market cap, following a rally in its shares since the reopening of China’s economy boosted its sales.
The Financial Times has the details:
Shares in the Paris-listed company, whose brands include Louis Vuitton and Dior, edged up 0.3 per cent to €903.7 to achieve a market capitalisation of €454bn, equivalent to $500.3bn as the exchange rate hit 1.1019 to the dollar. The milestone meant that the controlling stake held by Bernard Arnault and his family hit $211.8bn, up by $1.1bn on Monday alone.
The French billionaire is the world’s wealthiest man, well ahead of Tesla founder Elon Musk, whose wealth is valued at $165bn, according to Bloomberg’s billionaire index.
Updated
Here’s a video clip of Burberry’s chairman, Gerry Murhy, challenging Rishi Sunak over his “spectacular own goal” in removing a tax break for tourists:
Rishi Sunak completely collapses after Burberry CEO says that leaving the EU has had an impact on growth and trade for the UK 🤦🏼♂️pic.twitter.com/O41ce0nm03
— Best for Britain (@BestForBritain) April 24, 2023
Back in the City, Goldman Sachs has predicted that the Bank of England (BoE) will raise interest rates in May and possibly again after that as it grapples with stubbornly high inflation.
Analysts at the Wall Street bank told clients:
“Persistent inflationary pressures, continued strength in wage growth and resilient activity data suggest that a 25 basis point BoE hike at the upcoming May meeting is very likely and our analysis points towards significant risk that more tightening may be needed beyond that.”
Yesterday, former BoE chief economist Andy Haldane suggested the Bank should resist further interest rate rises, as inflation is about to fall sharply.
But the money markets suggest a quarter-point hike at the next meeting, on 5th May, is a 98% chance.
Hunt: We're very concerned about CBI allegations
Chancellor Jeremy Hunt has told journalists who attended today’s Business Connect event that government would not wait for the crisis at the CBI to abate before engaging with businesses.
Speaking after Rishi Sunak took questions from corporate leaders, Hunt said the government would not “wait for a reincarnation of the CBI or the CBI itself to get back on its feet to engage with business, we want to engage the whole time, every week, every day”.
My colleague Alex Lawson was there, and reports that the chancellor said:
“There’s no point engaging with the CBI when their own members have deserted them in droves.
So we want to engage with a body that speaks for business, it’s incredibly important for me, when I’m constructing budgets to have someone I can turn to who speaks for British business.”
Hunt said that government should not be involved in that process and that businesses would have to decide “who they want to be their principal voice”, adding:
“We’re obviously very concerned about the allegations of what’s happened at the CBI, very, very serious.
“We would like to be able to engage with business through a representative body when we can, but we’re not stopping. We’re perfectly capable of engaging business without those [bodies]. And that’s what we’ll continue to do.”
Fashion designer Anya Hindmarch has told Rishi Sunak that the government needs to ensure Britain does not lose its “edge” in the creative industries.
Speaking at the Business Connect event in London on Monday, the entrepreneur said the creative sector was one of the fastest growing parts of the economy.
She said:
“They’re the marketing arm of the UK and very much the hook: the reason to visit and invest. It would be very easy, however, to lose our edge and losing your edge – like sunburn – happens before you realise it.”
Sunak said there are a “hat full of industries that we are world class at and we should just take a moment to celebrate and the creative industries are one of those”.
He said that industries including film, TV, fashion and music offer not just “soft power” but hundreds of thousands of jobs and said the government was actively encouraging investment in those industries.
Sunak said to Hindmarch:
“Thanks for being here, what a pleasure it is to meet you... thank you for everything you’ve done for our country. Thank you also, I should say probably, for providing many great birthday and Christmas presents for my wife over the years so I appreciate that too and can say that to you in person.”
Hindmarch founded her business in London in 1987 and was made a CBE in the 2017 New Years Honours for services to fashion. The business is synonymous with its handbags, which can cost more than £1,000.
Paul Drechsler, former president of the CBI, has been defending the organisation today.
He told LBC Radio that the allegations that have emerged in recent weeks are an “absolutely awful, devastating situation” for the victims.
He added that he was priviliged and honoured to have spent time at the CBI, calling its workers “a fantastic group of people, brilliant professionals”, who were committed and purpose-driven.
Drechsler says:
In all the time that I was there, I never saw anything but highly-committed, professional people, young people whose determination to make this nation great was extraordinary.
Drechsler said he was sad and devastated by the unfolding crisis, but also optimistic – quoting president Kennedy’s saying that the Chinese word for “crisis” is made of two characters — one represents danger and one represents opportunity.
Drechsler says the danger is the reputation risk from allegations which have left people “devastated, cross and angry”, but there is an opportunity to take a deep look at what went wrong, and why, to create this “serious problem”.
Reminder: The Guardian reported on Friday morning that a woman has alleged that she was raped by two male colleagues while working at the CBI, and that a second had been stalked by a male colleague in 2018. Earlier this month, we reported that more than a dozen women claim to have been victims of various forms of sexual misconduct by senior figures at the CBI, including one who alleges she was raped at a staff party on a boat on the River Thames.
Earlier on Radio 4’s Today Programme, Drechsler said the CBI was at the “peak stress situation” in terms of reputational damage, but that its staff would be determined that it continues despite talk of “the end of the CBI’”.
This is a community of 300 people or so, most of whom are outstanding, talented, highly professional people who see this as a public service role to ensure the nation succeeds.
Drechsler added that the reports of harrassment of some CBI staff will make people think “much more deeply” about these situations. He cites John’s Gospel, and the line about how he without sin should cast the first stone.
Right across the UK, there’s no shortage of organisations that have had multiple claims of sexual harassment.
And asked whether the CBI still has a role to play in the modern economy, Drechsler cites the furlough scheme rolled out early in the pandemic, which the CBI helped develop.
Prezzo to close 46 loss-making restaurants putting 810 jobs at risk
Bad news: Italian restaurant group Prezzo is closing 46 UK restaurants, putting over 800 jobs at risk.
Prezzo said it had been hit hard by soaring costs and changes to customer habits, and that the closures, which will affect 810 workers.
It said the shake-up will impact a raft of sites where footfall is still below pre-pandemic levels and leave more restaurants in busier shopping destinations such as retail parks or tourist hot-spots.
Here is a full list of all the Prezzo restaurants due to close:
Beccles
Billericay
Bolton
Borehamwood
Boston
Bracknell
Brentwood
Buckhurst Hill
Buckingham
Chichester
Chingford
Colchester
Corby
Didcot
Eastbourne
Egham
Eltham
Ely
Epsom
Fleet
Glasgow, St Vincent Place
Hailsham
Harpenden
Livingston
Lyndhurst
Maidstone
Mere Green
Mill Hill
Oxford
Plymouth
Redditch
Redhill
Rugby
Shepperton
Shirley
Sidcup
St Neots
Stowmarket
Tenterden
Tunbridge Wells
Weybridge
Whitstable
Wickford
Wimborne
Winchester
Woodford Green
Over in Germany, the economic storm clouds appear to be lifting.
Germany’s most prominent indicator of business activity, the Ifo index, increased for the seventh consecutive month in April, edging up to 93.6 from 93.2 in March, my colleague Phillip Inman reports.
Business leaders reported that the current conditions were still historically weak after winter of soaring gas prices and a decline in trade with China, but the outlook was expected to improve dramatically during the rest of the spring and into the summer.
🇪🇺 IFO German Business Climate Index (24 Apr ‘23)
— Sophia (@SophiaKnowledge) April 24, 2023
- German business sentiment slightly improves (+0.4%) rising to 93.6 for Apr ’23 (vs 93.2 Mar ’23)
- However, business expectations in the immediate term for manufacturing, services, trade and construction worsen pic.twitter.com/gOidcZpawJ
A measure of business expectations increased from 91.0 to 92.2.
Several analysts said the rebound meant Berlin could avoid the downturn predicted earlier this month by the International Monetary Fund.
The Washington-based orgainisation said that Germany and the UK could expect to suffer mild recession, but more recent business surveys have shown activity has strengthened and a recession in both countries is unlikely.
Carsten Brzeski, global head of macroeconomics at ING said that while lower wholesale gas prices and the reopening of the Chinese economy have boosted economic confidence, “the German economy is still far away from strong growth”.
Speaking on Bloomberg TV, Ifo President Clemens Fuest, said:
“We will continue to see an economy which is neither collapsing nor growing dynamically.
“It’s a stagnating economy and the question is what could take the economy out of stagnation. Something that could achieve that would be further improvement in supply chains, and maybe a perspective for a settlement in the Ukraine war.”
The Ifo said the index average dating back to 2005 is 96.7. The index was regularly above 100 in the years from 2016 to 2018. It plunged to almost 70 in the month after the pandemic hit in February 2020 and below 80 when Russia invaded Ukraine.
European Central Bank officials have hinted that the resilient eurozone will need to undergo more interest rate rises to reduce inflation.
ECB governing council member, and Belgian central bank governor, Pierre Wunsch, told the Financial Times over the weekend that he “would not be surprised if we [the ECB] had to go to 4%,” from 3.5%.
He added:
“We are waiting for wage growth and core inflation to go down, along with headline inflation, before we can arrive at the point where we can pause.”
Morgan Stanley analyst Seth Carpenter said:
“In the euro area, we think that the ECB is also willing to accept a recession to bring inflation down.”
Brzeski added that a period of stagnation was likely to reassert itself later this year.
“Available hard data for the first two months of the year as well as recent soft indicators point to a surprising growth revival in the German economy. This growth revival is driven by a rebound in industrial activity, helped by the Chinese reopening and an easing of supply chain frictions.
“But this rebound is also very likely a short-lived one. At the same time, private consumption continues to suffer from still-high retail energy prices. Recent wage settlements, like last weekend’s agreement in the public sector, will offset the loss in purchasing power but only partly and only gradually.”
Helena Morrissey asks Sunak how the ‘horrible allegations’ about the behaviour of some CBI staff will affect efforts to improve diversity and inclusion in British industry.
Baroness Morrissey, a top City fund manager, says the allegations are the ‘elephant in the room’ today, and she is concerned that it could put women off joining industry, saying:
We need everyone to feel they’ll be respected and included if they join industry.
Sunak agrees that diversity and inclusion are really important, pointing out he has two daughters.
I want to make sure that they grow up in an economy, and a society where every opportunity is available for them
Sunak says the government asked Alison Rose (NatWest’s CEO) to conduct a review of female entrepreneurship a few years ago, which highlighted the barriers and proposed recommendations.
Sunak says the government is making progress on helping women create businesses, but isn’t there yet.
One problem (as he heard on his LinkedIn Live event) is that access to finance is harder for female entrepreneurs.
Network and mentorships are also important – not an easy thing for the government to fix, but he’s keen to work with businesses to help create networks and mentorship to support female leaders.
Sunak says:
We want to make sure that no matter what your background, no matter whether it’s whether you’re a woman or man, whether you’re from a different part of the country, whatever your socio-economic background is, that we want to spread opportunity around.
There’s so much talent in the country. And we’re missing out if we’re not giving everyone an opportunity to fulfil that potential.
Updated
Burberry chair: loss of VAT refunds for tourists was 'spectacular own goal'
Gerry Murphy, chairman of fashion group Burberry, criticises Rishi Sunak for his decision, as chancellor, to remove tax-free shopping for tourists.
Murphy begins by thanking Sunak for holding today’s event, saying it’s great to see the government is more “business friendly” than some of its predecessors.
But he then warns that the “somewhat perverse” decision to remove VAT refunds, on the day Britain left the single market, has hurt the economy.
This has made the UK “the least attractive shopping destination in Europe,” Murphy tells the PM, at today’s Business Connect event.
Virtually every other major destination in Europe offers VAT refunds, he explains, and Burberry can see that the recovery from the Covid-19 pandemic in Paris, Milan and Munich is much stronger than in the UK.
We are actively exporting business as a result of that policy.
Murphy calls it a “bad decision, made for the right reasons”, and urges Sunak and chancellor Jeremy Hunt to rethink this “spectacular own-goal”.
Murphy also warned that Brexit was acting as a “drag on growth”….
Sunak replies that the governent is “here to listen” and will take Murphy’s comments away.
[Forbes explained last year that the government decision to withdraw the VAT Retail Export Scheme made Britain the only European country not to offer tax-free shopping to non-EU tourists, which, at the time, was argued by several parties to be a counter-productive move.]
Updated
Sunak: India is a massive market opportunity
Q: India is the fastest growing economy in the world right now, so what is the government doing to strengthen the UK-India corridor?
Sunak risks a joke, saying he’s trying to take more family holidays in India (his father-in-law founded Infosys, of course).
But more seriously… he agrees India represents a massive market opportunity – its growing middle class is a fantastic opportunity to UK consumer goods companies.
Sunak says trade secretary has been “hard at work” engaging with the Indian Government to try to make more progress on trade discussions (the two sides have been trying to reach a trade deal)
Sunak say he spoke to India’s prime minister, Narendra Modi, about it “just recently”;
We’re keen to see if we can make that work because of the obvious opportunity that it poses.
There are opportunies for closer trade in services, as well as goods, Sunak adds.
“That said, trade agreements everywhere are not easy,” Sunak adds, but…
Rest assured we’re at it at all levels of government. I’m talking to Prime Minister about it.
Sunak: UK must consider AI sovereign capability
Q: What is the UK’s strategy to address the rise of large language model (LLM) artificial intelligence, which are disrupting businesses? Does the country need a national capability, especially when considering issues like defence and data security?
Sunak says the government is announcing something today on this issue.
Sunak say AI has the potential to transform every aspect of our lives. But he agrees it’s important to consider the UK’s sovereign capability in artificial intelligence, and the AI ‘stack’ (the tools, services, and processes that fit together power AI).
Sunak says it’s right to consider….
What is our sovereign capability particularly as it relates to national security, but also all elements of the stack.
Computing power is also important – the UK committed £900m to exoscale computing in the budget.
And Sunak pledges the UK will make sure it can capitalise on the opportunities of AI and protect ourselves against the risks.
We’re imminently about to say something about exactly the point that you raised because it’s a really important one. But rest assured, we’re on it.
.@Improbableio CEO Herman Narula tells PM AI has "disrupted every aspect of my business and I thought we were a deep tech company". PM says UK working on sovereign AI capabilities (more on this on the site later).
— Matt Gooding (@MattGoodingTM) April 24, 2023
Updated
Key event
Q: How can the UK government help startups accelerate their growth?
Sunak says this is a burning question – as the UK is brilliant at starting up businesses, with “phenomenal” founders, and research bases at our universities.
He says its important to have visa regime and migration regime, where the world’s best and brightest talent can come here easily – and cites the UK’s Scale-up Worker visa, for people who come to work at fast-growing UK businesses.
There’s also the new High Potential Individual (HPI) visa, which lets graduates from the world’s top 50 universities stay in the UK for at least 2 years.
Changing the culture of risk appetite is also important, Sunak adds.
Updated
Keith Anderson, chief executive of Scottish Power, takes the microphone… and challenges Sunak about UK investment.
Anderson says Scottish Power recently completed a £1.3bn investment in renewable power. (to fund 95 wind turbines at an offshore wind farm off the coast of Norfolk).
Anderson says he has another £10bn readyto go – but how do we ensure that money goes into the UK supply chain?
Sunak thanks him for the investment – saying the UK has the three largest offshore wind farms in the world.
The regulatory environment is key – Sunak cites the UK’s Contract for Difference pricing model which gives low-carbon companies a guaranteed return, and which has pushed down the cost of green energy.
The UK Infrastructure Bank can also help fill financing gaps, Sunak adds, to cut help carbon emissions in a way that creates jobs here at home.
Rishi Sunak says the UK must have a tax system that supports investment in film and TV production.
But skills matters too – Sunak says creative industries tell him they will keep investing in the UK, as long as we’re training the next generation of visual effects specialists or suchlike.
Sunak says he recently visited the London Screen Academy, a sixth-form academy in North London that’s training the next generation of workers in the film and television industries.
We need to make sure that we’re replicating institutions like that across the country.
Sunak begins meeting business chiefs
Rishi Sunak has begun speaking to UK corporate chiefs at his Business Connect event in London.
Rishi Sunak says that - talking to businesses this morning - he believes “we have turned a corner” after economic shocks of Covid and war in Ukraine pic.twitter.com/2kO11g4BP9
— Alex Lawson (@MrAlexLawson) April 24, 2023
He tells them the government is “unashamedly pro business”, and that both big and small firms should know that the government has “got their back”.
The UK is depending on businesses to create jobs and prosperity, Sunak explains.
Rishi Sunak with a boosterish - and arguably selective - message for business leaders: “optimism & confidence is returning… this is pretty much the most attractive place to invest anywhere in the world” pic.twitter.com/2f4yp9o7Lu
— Paul Kelso (@pkelso) April 24, 2023
Here in London as PM @RishiSunak attempts to woo businesses at his new Business Connect event. Says govt is "unashamedly pro business". pic.twitter.com/tORidCysZu
— Matt Gooding (@MattGoodingTM) April 24, 2023
Sunak says govt wants businesses small and large to know that the govt has "got your back". Apparently 200 business leaders in the audience today who will be quizzing the PM shortly.
— Matt Gooding (@MattGoodingTM) April 24, 2023
Updated
The crisis at the CBI is creating a scramble to fill the void, now that the group is mothballed until it holds an emergency meeting to discuss its future in June.
WPI Strategy, a public affairs and strategic communications consultancy, is setting up a new body called BizUK which – it says – could play a temporary role ahead of the next election.
Nick Faith, WPI’s founder and a former communications director of the Conservative-linked Policy Exchange thinktank, told the Today Programme that it was hard for the CBI to act as a collective voice for industry to political parties, now that Labour has joined the government in suspending ties with the group.
Faith says:
That’s why we are establishing BizUK, because there is a clear gap for a collective independent voice to be able to make the case for midsize and larger businesses with political parties of all colour, in a period which is hugely important over the next 12 months.
Faith said there was now a “trust deficit” between the CBI and its members, who will not want to be associated with a “tarnished brand”.
Asked what BizUK’s top priority is, Faith replied that businesses need a stable environment for investment.
What businesses crave for is stability.
What we’re seeing now with the two main leading political parties is actually an acceptance and understanding that they want stability.
Union leader Tony Burke, the president of the Confederation of Shipbuilding and Engineering Union, hopes business leaders will challenge Sunak about the impact of Brexit and the lack of an industrial strategy:
Sunak cobbled together hasty meetings with 'business' on LinkedIn Live Q&A at 8.30am - before hosting the first of “Business Connect” forums, with 200 CEOs. Hope they show some spine & tell him Brexit & no industrial strategy is a disaster. @dgbailey
— Tony Burke (@TonyBurke2010) April 24, 2023
(The UK’s Industrial Strategy was ‘transitioned’ into the Plan for Growth, to include a focus on existing, new and emerging industries)
Rishi Sunak was then challenged about the skills shortage on artificial intelligence – an area where OpenAI has made some remarkable progress with GPT-4.
Sunak told his Linkedin Live event that the UK must “be ready to take advantage of the opportunities of AI”.
Last month the goverment proposed a pro-innovation approach to AI regulation, in a new white paper.
Rishi Sunak asked in LinkedIn Q&A how the UK will regulate AI to stop it becoming "uncontrollable and potentially malicious".
— Hugo Gye (@HugoGye) April 24, 2023
He points to recent AI white paper and says policy is intended to "take advantage of the opportunities that are there but also put safeguards in place"
It wasn’t the most rigorous interrogation of the PM, though, as HuffPost’s Sophia Sleigh tweets:
Rishi Sunak is trying to charm business with a LinkedIn event.
— Sophia Sleigh (@SophiaSleigh) April 24, 2023
It's a total a love-in. No news lines to report. Yet. 🤣 pic.twitter.com/0Da2Svntxg
Updated
PM Rishi Sunak getting lucky in his LinkedIn Business Connect Q&A - all the questions seem to be about issues he wants to talk about! And James Caan just happened to be there to ask first question pic.twitter.com/9EXUuQap9r
— David Wilcock (@DavidTWilcock) April 24, 2023
Sunak: the economy is changing
Rishi Sunak has kicked off his first LinkedIn Live Q&A event, with a call for “innovative” routes for people to gain skills in the workplace.
The PM was asked how the UK can ensure it has the skills to be a leading destination for future investment.
He pointed out that people will need to reskill at different stages of their careers and lives, saying:
“Government’s got to keep pace with how the economy is changing.
“We don’t have this old linear model of people going from school to college, to university, to job for life. That’s not how it works anymore.
“So we need to make sure that there are lots of different routes for people to get the skills they need at any stage in their life and career.”
“We need to keep talking to businesses, identifying where the gaps are, and then finding innovative ways to fill them.”
Financial watchdog cracks down on money laundering through Post Office
A series of measures designed to reduce the risk of money laundering via the UK Post Office have just been announced.
The Financial Conduct Authority says it is “putting banks on alert”, in the fight against money laundering. It wants them to cut deposit limits, keep a closer eye out for suspicious activity, and alert the authorities faster when it posts problems.
The UK’s National Economic Crime Centre estimates that hundreds of millions are laundered each year through the cash deposit channel at the Post Office – and the FCA wants this tightened up.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said:
‘We have worked in partnership with law enforcement, industry and government to ensure people and businesses can still draw on the vital cash banking services provided by the Post Office, while addressing gaps that criminals could abuse.
The FCA has laid out new measures for banks, including:
A move towards card-based transactions and away from paying-in slips, where possible, to allow enhanced monitoring.
Upskilling staff to spot patterns of suspicious activity.
Enhancing monitoring capabilities in banks which allow them to identify suspicious activity.
Reducing cash deposit limits at the Post Office, subject to customer arrangements, to below the existing limit of £20,000 per transaction. Banks should take a data-led approach and consider whether a tailored offer is appropriate.
Reducing the time taken to submit Suspicious Activity Reports to the National Crime Agency (NCA), enabling them to take timely action.
Improving intelligence sharing so that information is passed on to other firms, law enforcement and the FCA on a regular basis.
The asking price of UK homes has inched up in the last month, by 0.2%, as calm returned to the housing market after the chaos of the mini-budget last year.
This lifted the average price-tag on UK homes to £366,s47, up £890 versus last month, according to Rightmove.
The situation is toughest for first-time buyers – the properties they typically aim for have hit a record high price, as covered here.
Victoria Scholar, head of investment at interactive investor, tells us:
The housing market appears to be showing signs of stabilisation as mortgage rates come off the highs seen in the aftermath of the mini-budget, rental prices rise making buying look increasingly attractive, and sellers cut asking prices to bolster demand for properties.
The economy is also proving to be more resilient than last year’s expectations with the UK now forecast to stave off a recession this year as inflation finally cools.”
Several UK business chiefs are backing Rishi Sunak’s new “Business Connect” forum as it kicks off today.
Debra Crew, CEO-designate of drinks giant Diageo, is pleased to see Downing Street engaging with businesses:
“Such high level engagement by the Prime Minister and other members of the Government is really welcome for Diageo. We see Business Connect as a great opportunity to promote international trade in Scotch and spirits, an export powerhouse that is bringing jobs and investment to Scotland and across the UK.”
C.S. Venkatakrishnan, group chief executive of Barclays, said:
“I am pleased to join the UK Government and business leaders in the discussion about the growth opportunities that lie ahead for the United Kingdom.
The UK continues to be a prominent financial centre that sits at the heart of global capital markets and Barclays continues to support the UK Government’s ambitious plans to drive prosperity and economic growth for people and businesses here in the UK and beyond.”
Alex Baldock, group chief executive of Currys PLC, will be attending too, and says:
“It’s important that business can make its voice heard in government at events like today’s. Given the size of the retail sector in the UK, we’re well placed to help power the UK’s growth. I’m looking forward to discussing with ministers the skills, infrastructure, regulatory and tax environment we need in order to do so.”
UK economic troubles push profit warnings back to Covid-19 levels
Profit warnings from UK-listed companies are continuing to rise, casting a shadow over Rishi Sunak’s push to win back support from corporate Britain today.
UK-listed companies issued 75 profit warnings in the first quarter of this year, new data from EY-Parthenon this morning shows. That’s the highest first quarter total since the early stages of the pandemic in 2020, and above the 10-year quarterly average.
Many of these warnings were triggered by economic uncertainty – with a third blamed on delayed, reviewed, or cancelled contracts, as clients paused or slashed their spending.
There was a surge in turmoil in the technology and telecommunications (TMT) sectors too, with warnings almost tripling year-on-year to 16 in total. They have been hit by cost-cutting, uncertain demand, and difficulties in accessing capital.
That should worry the government, given chancellor Jeremy Hunt’s goal of making the UK the “next Silicon Valley”.
Will Fisher, EY UK Strategy and Transactions TMT Leader, explains:
“Significant disruption and uncertainty, particularly in consumer facing markets, is having a knock-on effect on the TMT sector as businesses revaluate their cost bases and delay purchasing decisions.
The result is short-term revenue growth challenges for TMT companies, many of which are also trying to prioritise profitability and cash flow as they face a tighter and more expensive lending environment.
Prime Minister Rishi Sunak says today’s summit with UK corporate leaders is part of his growth push:
“Business Connect provides the next fantastic opportunity to demonstrate how we are growing the economy. We are bringing together some of the UK’s biggest companies and investors for meaningful dialogue – and I’m a Prime Minister passionate about working with business to unlock opportunity and progress.
“Since taking office, I’ve spoken to over 1000 business people - because they are the innovators and change-makers at the heart of our economy, supporting jobs, attracting investment and driving growth.
“The UK can be proud of its business credentials. Through the creation of 162 tech unicorns, smarter regulation and world-leading universities – we’ve got the right ingredients to double down on growing the economy.”
But…. the IMF fears the UK will shrink 0.3% this year, putting it at the back of the leading G7 countries….
Updated
Introduction: Sunak to woo corporate Britain with new business forum
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
UK corporate leaders will get a chance to lobby Rishi Sunak today, as the prime minister holds the first of a series of summits with business chiefs.
Sunak is launching a new conference called Business Connect which, the government says, will “champion the dynamism of UK businesses to unlock innovation and grow the economy”.
Boris Johnson had a notoriously dismissive view of business concerns about Brexit, but rather than firing off f-words, Sunak is aiming to repair the damage caused to relations in recent years – and fend of Keir Starmer’s efforts to make Labour the party of business.
Downing Street says today’s event will involve “direct and detailed discussions across key industries”, involving over 200 CEOs and other senior business leaders, and investors.
Diageo, Barclays and Currys are among the firms expected to attend, along with attendees from tech, life sciences and advanced manufacturing.
Sunak is expected to pledge to provide conditions for businesses to thrive and help drive the economy, so could get his ear bent over issues such as labour shortages, trade frictions with Europe, and the burden of high energy bills.
Britain’s lacklustre economic growth could come up too – with the IMF predicting the UK will be the worst-performing major economy this year.
But, one business lobbyist has told the Financial Times that his members were “wary” of Business Connect because it was not a cross-party initiative.
Sunak is also holding a LinkedIn Live event on Monday morning, where a group od “entrepreneurs, SMEs, innovators and young people” can quiz the PM.
Lobbying the government on behalf of businesses was a key role of the Confereration of British Industry. But on Friday night, the CBI mothballed its operations until June, after a flood of members quit or suspended operations following the Guardian’s reporting of alleged sexual misconduct by male employees at the lobbying group.
Yesterday, the Labour party revealed it had stopped working with the CBI.
Jonathan Ashworth, the shadow work and pensions secretary, told the BBC’s Sunday with Laura Kuenssberg programme that the lobby group needed “a root and branch review and reform process”.
Ashworth said:
“I just feel for the people who have been victims, and that the CBI has really got to get its house in order.”
The future of the CBI continues to hang in the balance; last weekend, one business leader warned its brand was “beyond repair”.
Andy Wood, chief executive of the Suffolk brewer Adnams, told BBC Radio 4’s Today programme on Saturday:
“I think probably the CBI brand is now beyond repair. It will have to reinvent itself root and branch.
The CBI is understood to be holding an all-staff meeting today to update employees on its plans. Some CBI staff are understood to be concerned about potential redundancies at the group, and surprised there’s been no discussion yet around job security.
The group faces a crucial week ahead. Early in the week it is expected to respond to a report by Fox Williams, an external law firm commissioned to carry out an independent investigation into allegations of harassment and sexual misconduct.
Rain Newton-Smith, the CBI’s former chief economist, is also this week expected to take over as director general, after being appointed this month.
Also coming up today:
The head of energy regulator Ofgem is expected to call for a new register of vulnerable households, to offer them better protection.
Ofgem is hosting a ‘Vulnerability Summit’ to focus on the issue.
Jonathan Brearley, Ofgem’s chief executive, is expected to tell attendees:
“We should all consider building towards a joint register, not just between water and energy, but including local and national government.
“Ideally, this register would be based around a ‘tell us once’ principle –where families who have vulnerabilities tell one agency about this and, with permission, this is shared across the others with a single, reliable source of data to anticipate, identify, and respond to the needs of those customers.”
The agenda
9am BST: Ofgem holds Vulnerability Summit 2023
9am BST: Ifo survey of Germany’s business climate
1.30pm BST: Chicago Fed index of US economic activity
Updated
