Keynote Lecture. Where Are We Headed Politically and Economically

10 July 2015

Keynote Lecture. Where Are We Headed Politically and Economically

Sir Michael Rake, President of the CBI presented the Keynote Lecture at the Henley Business School in June 2015, and covered a spectrum of topics under the title ‘Where Are We Headed, Politically and Economically?’

A diverse audience filled the lecture theatre at the Henley Business School to hear the views of the CBI’s President, Sir Michael Rake.

The event was prefaced by a few words from Professor John Board, Dean of the Henley Business School, who gave a brief history of the School, which is celebrating its 70th anniversary this year, and talked about its history of developing the skills of engagement and persuasion, and the School’s collaboration with both business and government during that time.

The main speaker was then introduced by Sir David Bell, Vice-Chancellor of the University of Reading, who summarised Sir Michael’s long record of success.


Reflections on where we’ve been and where we are going

Sir Michael began by looking back at the recent past, and the socio-political landscape of the past few years, as the UK has begun to recover from the depths of recession, but cautioned that this growth has been built on low wages, relatively low productivity and investment, and with a higher fiscal deficit than that of Greece, the UK still has a number of serious issues to address.

He noted the shift in the main political parties’ approaches before and since the recent General Election, with Labour moving to the left, the Conservatives to the right, and the rise of the Scottish Nationalists, and reflected that the eventual result – like the collapse in oil prices – had come as something of a surprise, even to the most informed insiders and commentators.

And he expressed his concern that even though the overall majority enjoyed by the Tories might bring some focus and stability, the split within – and outside – the party on the subject of the EU has the potential to upset what is already a fragile recovery, especially outside the South East.

So the next big issue becomes the EU referendum which, he argued, is not a good idea, but is, he acknowledges, entirely a political issue. This is, he said, in contrast to the ‘intensely emotional’ Scottish Independence referendum, in which the majority of voters listened to – and ultimately were persuaded by – the facts of the business case.


Looking forward

Sir Michael gave a clear and unambiguous statement of the CBI’s position on Britain’s role in the European Union:

‘We want Britain to stay in the EU and play a leading role as it provides the foundation for growth of the digital economy, a reduction in centralised regulation, and a rise in youth employment.

‘In Britain, whatever you may think about the Eurozone, we’ve committed the same sins as other European countries… but 50% of our car exports, for example, go to Europe, and based on excellent CBI reports, we’ve concluded that we need to stay in a reformed EU.’

Sir Michael went on to reflect on how ‘big had become bad’ and how, in recent years, the public has lost respect for the major institutions such as banks, churches, political parties, and in their place,    have seen the rise of small and medium-sized enterprises. He said that there is a recognition that the CBI has to be seen as relevant, and it has to play its part in restoring the trust of the public in ‘business’.

‘In a recent survey, 55% of the public thought that ‘business’ doesn’t even try to do the right thing. So the CBI has to stand up and explain how business can be good for society, through raising tax, creating jobs, through corporate social responsibility and mentoring, to give but a few examples.

‘We must understand why trust has been lost and show that we can treat customers fairly. More than anything, we need to listen, and in this respect, a group called ‘The Great Business Debate’ has been set up as a listening post and the evolution of an organisation, ‘Blueprint for Better Business’.


Being more productive all round

Sir Michael then returned to an earlier theme, and addressed the issue of the UK’s relatively low productivity, which is 20% below that of most of our European counterparts.

‘More than most, and contrary to the views of some, we believe that the UK has benefitted from the freedom of movement within the EU, and the NHS and our tourism industry would collapse without the labour this provides.

‘We have to address the productivity issue, through mentoring and education; business has an important role to play in what is still a divided society – this isn’t something we can leave to the politicians.’

And Sir Michael noted that with the political divide between England and Scotland appearing to be widening, the realities of devolution are adding an additional layer of complexity, citing the example of Northern Ireland, which may be given powers to set its own tax rates in order to compete more effectively with the Republic, and asking ‘where will it end?’.

He touched, too, on the implications of our voting system, and looking back at the four million voters who yielded just one seat for UKIP, compared to the less than two million that secured 56 seats for the SNP, there is a case for a system based on proportional representation, and he told the audience that the dominant parties must be seen to have more respect for those who didn’t vote for them.

And this led on to the thorny subjects of immigration and Islamification, both of which have created resentment in many people. ‘But we need to understand those concerns, and address them to create a more integrated society.’


In conclusion, Sir Michael reiterated his belief that the UK is ‘still great, and we have a fantastic opportunity to engage and influence, even though we are a small player compared to the established and emerging superpowers in the US, China, India and West Africa.

‘We need to believe in ‘the right way’,’ he said, ‘and remain a liberal, free, tolerant society which leads the way on human rights and shows responsibility in areas such as conflict, water, food, disease control and antibiotics.

‘We need to demonstrate a sense of truth, and business schools can lead the way is showing us how to engage, act with the facts, base our decisions on morality and real evidence, and talk in a language that people understand.’


Following his talk, Sir Michael invited questions from the audience, during which he covered topics as diverse as:

How do we engage young people in the referendum?

  1. We need to be clear and positive. We must try to anticipate the unintended consequences, and find a way forward that gets rid of unnecessary regulation. But there is an education job to be done, and actually 90% of the real legislative irritants come from within the UK.

What are the main areas of reform sought by the CBI in our EU negotiations?

  1. There are several, but in general terms they fall into the following areas: the completion of single market financial and digital markets, addressing the working time directive, reducing EU over-regulation… taking advantage of the huge opportunities afforded by further trade treaties… protocols on the Eurozone and immigration… benefit tourism.

How can the CBI address geographical inequalities?                                        

  1. We need to move away from short-termism, and focus on increasing productivity. We need to pay people more, generate more tax, change the dynamic. And address the unacceptable behaviour of big companies and the problems they cause through delayed payments.

How can we square pragmatism with ideology?

  1. We need to do both. We all want the same answer, but we don’t necessarily agree how to get there. To misquote Churchill: capitalism may be a lousy system, but it’s the best we’ve got. But we need to balance fairness for customers, and between employers and employees, and educate them in the realities of business.

The Eurozone is important, but it’s in a mess; what is the prognosis?

  1. The positives are that it’s a huge marketplace, and overall it has a low deficit and high productivity, but it suffers from high levels of youth unemployment and needs to be even more competitive to succeed. The Germans have succeeded and Spain is on the road to recovery. France and Italy need to accept reforms, but the stalemate in Greece remains the real worry. More jobs must be created.

What are the implications if the EU Treaty inhibits deals with the US, China and India?

  1. We can still get out there and trade, and there are lots of opportunities. People still want to do business with us. And there are 800m people who share our standards and philosophy on democracy, justice and freedom.

How can we overcome the distain felt by many towards the European Commission?

  1. There are lots of myths, so we have to show the true picture. The total expenditure from Brussels is no more than that of Surrey Council, so we have to keep things in perspective. Transparency is going to be very important. But if the truth can be presented ahead of the referendum, we believe that the public will vote the right way. [* Answers paraphrased]

Post-event reaction

Guests at the event expressed a variety of views following the lecture; a representative sample is summarised below:

‘I really enjoyed that; he covered a huge amount in a short time, and it’s difficult to argue with his logic.’

‘I hoped he’d talk more about the issue of water, but I thought it was all extremely thought-provoking.’

‘I’m just feeling very privileged to be here, in such magnificent surroundings, listening to such a great speaker. Yes, feeling pretty inspired at the moment!’

‘The issues he covered were those I hoped he would, and whether or not one specifically agrees with the CBI line on everything, it’s good to know that there’s an organisation with a clear vision fighting the corner for business.’

‘It was very pleasing to hear him talking about morality, and doing things the right way. I feared it might just be capitalist ranting, but it was actually a very sensitive and human approach. I enjoyed it very much.’