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The CBI chair played down the potential impact on businesses of rising national insurance premiums in the budget, according to annual accounts which showed the lobby group suffered a financial loss of £8m last year due to a governance crisis.
Chairman Rupert Soames said a rise in employers’ national insurance premiums would not be a bad outcome for businesses as long as other pro-business measures ‘mitigate’ the impact.
Prime Minister Rachel Reeves on Monday gave her strongest signal yet that the government would increase business taxes, but Soames said businesses would look beyond the impact of individual measures.
“When companies review their budgets, they will be looking at this throughout the round,” he told the Financial Times.
Businesses do not want higher national insurance on top of rising living wages and higher employment costs, Soames said. But he added there could be a number of things that could be done to soften and balance the tax increases.
Examples include business rates reform and “appropriate reform of the apprenticeship system”, including moving “from the current tax to a real system that actually incentivizes training”, he added.
CBI boss Rain Newton-Smith warned on Tuesday that certain sectors, including hotels and pubs, will be particularly hard hit by the National Insurance rise on October 30.
Soames’ comments come as the CBI told members it had suffered losses of £8.3 million following a governance crisis last year and the group almost collapsed after allegations of serious sexual misconduct against some staff led members to flee. no see.
Revenue fell 12.4% to £20.6 million as the self-described “voice of business” in the UK suffered a loss of subscription and commercial revenue after suspending events and other operations for several months.
The CBI has spent £3m on costs directly related to the crisis, including lawyers and consultants called in to respond to allegations and overhaul culture and governance, according to the financial year ending December 2023 sent to members on Tuesday. .
The company spent £729,000 on severance pay as it cut staff to stave off collapse. The average number of employees in 2022 was 255, but Soames said that number is now around 160.
Soames, a former Serco chief executive who joined the CBI in February, said the group could have stemmed losses sooner by making more economics and policy experts redundant, but decided it would be less useful to corporate members without them.
This allowed it to continue lobbying ministers on budgets, employment law reform, pensions and schemes, Soames said. He said the group was now more focused than before on issues that cut across all sectors, rather than issues that individual trade associations could deal with.
The group lost about a third of its members during the crisis, but Soames said some members were starting to return, including nine FTSE 100 groups. Soames said BT, National Grid, GSK, AstraZeneca, Schroders, Phoenix Group, KPMG, NatWest, Anglo-American and Centrica had all rejoined this year.
The accounts contain the auditor’s caveats about CBI’s ability to continue as a going concern. Although it still relies on banks to fund its operations, Soames said lenders are aware of financial modeling.
He added that revenue would decline further in 2024 because many members had already paid their 2023 subscriptions before leaving the group. That means the financial impact will only be felt in 2024, he added. These further reductions will be offset by lower legal, consulting and redundancy costs in 2024, he said.
He predicted that CBI would be close to breakeven in 2025 and return to surplus in 2026.
Asked whether he was confident the organization would survive in the long term, Soames said: “I am.”
