Yesterday’s letter from the CBI was a general cry from the heart that they might not enjoy the influence and access to government they think they ought to have. I suspect they will find with the new government much as they have with other past governments that they will have access to put legitimate points about the business interest to the Ministers and Ministries that tax and regulate them. It should be a professional relationship, not a special friendship.
The CBI has often provided pro EEC/EU advice that has turned out to be very damaging to the UK economy and business interests they claim to represent. I took the large industrial quoted company I led in the 1980s out of the CBI because it insisted on campaigning vocally for the UK to join the European Exchange Rate Mechanism. I was one of the few critics of the scheme. I pointed out the UK would get a high inflation or a nasty recession from membership. I lost the argument to keep us out, and we ended up getting both the inflation and the recession. That deeply damaging economic policy closed many factories, bankrupted businesses and meant the Conservative party spent 13 years out of office and 18 years without a majority. The government should remember the downside of some CBI advice.
I remember having an open door to the CBI and to their member firms when I was the UK’s single market Minister. I had the task of “completing” the single market in the early 1990s, when we had to put through a huge legislative programme of almost 300 new business laws to carry out what the EU thinks is a single market. Many businesses came to lobby me. Practically every time they came, they either wanted me to delay or dilute the proposed measures. Often they would have preferred me to veto it, but I had to remind them we no longer had that power under the terms of the Treaties we had signed with their encouragement.
One of the worst examples of a bad proposed EU measure was the one that would have made the London Stock Exchange’s method of trading illegal. The Directive had been drafted based on continental methods of trading. I went to great lengths to get that proposal changed, including going to Brussels to attend the working meeting of officials myself as well as to the Ministerial meeting. I managed to get the draft changed. Having no veto made this difficult.
Now I advise the CBI to recognise that the biggest threat to London’s financial business is the proposed takeover of the London Stock Exchange by German shareholders. Whilst they will offer short term reassurances that business will still be conducted in London, there will be nothing to stop them shifting large quantities of business to Frankfurt later on. Why isn’t the CBI highlighting this and lobbying to block the merger on competition grounds, as it will clearly reduce competition in European financial transactions.
It is curious that many of the laws that are what they call the single market were thought to be damaging to business at the time they went in, but are now apparently thought to be crucial to business. I would like to reassure the CBI that if they like all these laws now, we could always decide to keep them once we are out. The good news is that once out we can keep them, repeal them or improve them as we please. Where the laws are narrow matters of standards and requirements for the continental market then of course exporters will still need to meet the customer demands, just as they have to meet the different ones for US or Asian exports.