Margareta Pagano: grandstanding CBI and IoD are playing the wrong game

Barring a last-minute coup by Brexiteer outliers, John Allan, the chairman of Tesco and Barratt Developments, will today be sworn in as the new president of the CBI.

Allan takes over at a bloody time for the UK’s biggest business lobbying group. At the top of his weighty agenda is facing down the critics who will not forgive the CBI for taking such a partisan line campaigning for Remain at the referendum.

Often referring to itself as the UK’s “voice of business”, the CBI was nicknamed the “voice of Brussels” by the Leave campaign and has been criticised by members and politicians, including the now Home Secretary, Sajid Javid, for being so passionately involved in the campaign.

Even so, the CBI has continued to lobby for a Brexit so soft as to be skin-deep. Will the new boy be more politically astute? The omens are not good. In an interview at the weekend, Allan could not resist taking a swipe over the government’s fudge: “If the UK is to leave the EU, it’s going to have an impact on the economy. Let’s do it in the most orderly way that maximises our chances of success thereafter.”

Hardly encouraging talk. Of course business wants an orderly negotiation. Who doesn’t? Yet, as any decent businessman or woman knows, conducting negotiations of the size and the intricacy of those between the UK and the EU is a fraught, complex affair. Shouldn’t the CBI be supporting the government’s position, or at the least not be publicly critical?

Pontificating about the intricacies of Brexit is the easy bit. The greater challenge facing Allan is to help the CBI’s members cope with the concerns of a rapidly changing workplace if their employees are to flourish.

The CBI claims to speak for 190,000 businesses which employ nearly seven million people, about one third of the private sector-employed workforce. That sounds like a lot, yet most companies are members through trade associations; the CBI has only 1500 direct members, and those numbers are declining fast. So are the numbers of businesses joining all the UK’s most influential lobbying groups. The Federation of Small Business has seen membership drop from 200,000 to 165,000 today, only a tiny per cent of all the UK’s 5.7 million SMEs.

Membership of the Institute of Directors has seen the most catastrophic collapse, falling by nearly half since 1999, when it had 60,000 members, to 32,350 today. That’s a dramatic fall, one which the IoD claims dates to the financial crisis in 2008, after which numbers dropped off sharply.

The latest crisis at the IoD, which saw Lady Judge resign as chairman, with two senior directors, following allegations she made racist comments about staff, will not have helped morale.

Like the CBI, the IoD’s senior directors also took to the airwaves during the referendum, arguing strongly for Remain, a stance which is said to have angered past and present members.