As she assumed her position as the Confederation of British Industry’s new director-general, Rain Newton-Smith addressed the women at the center of the sex scandal by saying, “I hope to reward your bravery by finding a better path forward.”
To those let down by the scandal-plagued trade lobbying organization, which is currently fighting for its life, Newton-Smith stated “how profoundly sorry” she was.
The astounding surge of alleged sexual misbehavior and rape at the organization caused a public exodus of many of its top officials, and the new CBI leader now assumes her position. The CBI board decided to cease day-to-day activities until June, when it will conduct a meeting to decide on its highly uncertain future, due to the enormous exodus that has stoked fears of an impending cash flow crisis.
The CBI may be beyond repair, despite the 47-year-old Newton-Smith’s insistence that she is “determined to rebuild” the organization she currently leads.
First off, there is doubt about Newton-Smith’s suitability for carrying out the “far reaching change” that the organization’s board has asked. Numerous CBI members are shocked that the organization has rehired an insider to sort through the mess, as The Hound previously reported, when a new face – and someone who has no prior connections to its employees – is desperately needed. Former CBI Chief Economist Newton-Smith spent eight and a half years working for the organization, taking a month out to start a new job at Barclays, and then coming back to clean up the enormous mess.
She already knows how the organization works, which would make it easier for her to implement changes quickly, while others say that quick reform is required if the body is to have any chance of survival.
But in many ways, the discussion about the new director-general of the CBI’s suitability ignores a more important problem.
Even if the CBI was able to address what female employees called a very “toxic and macho culture,” the sex scandal has raised questions about the motivations—or rather, lack thereof—of a group that calls itself the voice of British business.
The controversy has only strengthened the perception that the CBI is ineffective and out-of-date.\
The 1965 catalyst that caused the CBI to emerge no longer exists. Businessmen established the trade organization to act as a check on the influence of private sector unions at a period when those unions had the authority to shut down businesses. This moment is over. Since then, the public sector has gained more power, with only a few million individuals remaining in the private sector unions. As a result, the CBI’s function as a staunch negotiating unit has been eliminated.
The body has been having a hard time finding a new voice ever since.
In defense of the CBI, Chancellor Jeremy Hunt acknowledged two of its key demands in his March budget, including capital allowances to encourage investment and childcare provision. However, the majority of its work has been tangential, aside from its vocal – and ultimately unsuccessful – campaigning against Brexit (such as saying that businesses should adhere to net zero targets and promoting more diversity on their boards).
Some have also expressed concern that the CBI is compromised and ineffective when the interests of financiers and the rest of the economy conflict because its membership is heavily skewed toward banks and the City of London. For instance, following the crisis of 2007–2009, when a significant problem was the absence of bank financing.
Additionally, membership is pricey. An annual membership price for larger organizations is around £90,000. Even before the sex scandal, more and more companies were coming to the conclusion that it wasn’t worth the cost: Over the past ten years, the membership has decreased from about 250,000 to 190,000.
It is also noteworthy that it doesn’t seem like a single businessperson has put themselves in danger to stand up for the lobbying group. The CBI is doomed, say industrialists who represent large, medium-sized, and small businesses to pundits on the left, center, and right.