In today’s CBI speech, Theresa May backtracked on her pledge for workers on company boards, but announced a new review covering employee voice, executive pay and shareholder accountability.
Source: CBI via the Creative Commons
Prime minister Theresa May has scaled back plans promoted in her July leadership campaign to appoint worker representatives to company boards
Speaking at the Confederation of British Industry’s
annual conference in London today, Mrs May reiterated her view that current times mean the UK is poised to capitalise on global opportunity. She also said it must embrace a new approach if everyone is to share in the benefits of economic growth.
Watch a video of Prime Minister Theresa May's keynote speech at the 2016 CBI annual conference
Yet plans Mrs May set out to achieve this are “not about mandating works councils, or the direct appointment of workers or trade union representatives on boards,” she told delegates at the business organisation’s annual conference.
Businesses' response to employee voice
While the announcement on the controversial plans met with some relief, TUC
general secretary, Frances O’Grady, expressed disappointment: “This is not the way to show that you want to govern for ordinary working people.
“Theresa May made a clear promise to have workers represented on company boards. The proposals in her speech do not deliver on this."
Also responding, the CBI’s director-general, Carolyn Fairbairn, suggested a less prescriptive approach would be more effective. “On employee engagement, different approaches will work for different businesses, but a starting point is firms being able to outline and explain what approach they are taking – whether that's employees on boards, employee committees, dedicated representatives, or other models that genuinely address the issue.”
Green paper on corporate governance
Further outlining to CBI delegates how she plans to make capitalism work for everyone and deliver the change people want, Mrs May acknowledged that the present opportunity at this “great national moment” comes with responsibility. For government, this is “stepping up,” not “stepping back and letting businesses get on with it,” said Mrs May.
Alongside launching a new £2 billion-a-year fund for scientific R&D to put the UK at the "cutting edge" of technology in the post-Brexit world
, Mrs May announced plans to publish a green paper later this year, designed to “help improve the reputation of business” after the actions of “a small minority of businesses and business leaders.”
Businesses and the social contract
“Just as government needs to change its approach, so business also needs to change,” Mrs May told delegates. “We all know that in recent years, the reputation of business as a whole has been bruised. Trust in business
runs at just 35 per cent among those in the lowest income brackets.
“For when a small minority of businesses and business figures appear to game the system and work to a different set of rules, we have to recognise that the social contract between businesses and society fails, and the reputation of business as a whole is undermined.
“So just as government must open its mind to a new approach, so the business community must too. That’s why we will shortly publish our plans to reform corporate governance, including executive pay and accountability to shareholders, and proposals to ensure the voice of employees is heard in the boardroom.”
Followed by a white paper early in 2017, the green paper will kick-start what Mrs May calls “a genuine consultation.” “We want to work with the grain of business and to draw from what works,” she said. “But it will also be a consultation that will deliver results,” she continued, inviting businesses to demonstrate leadership, restore trust in businesses and its reputation.
Will green paper be enough to address cracks in public confidence in business?
“UK corporate governance is admired across the world,” said the CBI’s Carolyn Fairbairn in response to the announcement. “Our businesses know that brilliant employee engagement, openness with customers and support for local communities are essential to success. But firms recognise public concerns.
“The challenge now is to take the great practice that we see in so many places and apply it everywhere, eradicating the unacceptable transgressions that some companies do make.”
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