5 takeaways from Theresa May’s speech to business leaders
Theresa May addresses delegates at the annual Confederation of British Industry (CBI) conference in central London, on November 21, 2016 | Justin Tallis/AFP via Getty Images | Justin Tallis/AFP via Getty Images
LONDON — The yearly Confederation of British Industry speech should be one of the easier gigs for a Conservative prime minister.
But Theresa May, despite leading the traditional party of business and capital, is viewed with more suspicion by the sector than perhaps any Tory premier in living memory.
Not only is she presiding over an exit from the European Union that many business leaders view as unnecessary, and most see as potentially extremely damaging, but she also declared war on corporate Britain in a party conference speech last month that infamously condemned some multinational business leaders as “citizens of nowhere.”
She came to the CBI’s conference in London Monday morning to clear the air, reassuring delegates that she and her government “believe in capitalism” and “believe in business.”
Here are five things we learned:
1. May can’t afford a fight with business right now
Since her first speech as prime minister, outside the door of 10 Downing Street, May has pledged to govern for those left behind by modern capitalism – the “just about managing” — or Jams, as Whitehall officials now call them.
Part of her agenda was reforms of corporate governance — including measures to rein in executive pay, protect workers’ rights and, most notably, to install workers on company boards; all measures that had British companies worried about an alleged anti-business agenda.
In her speech Monday, May didn’t back down from the overall direction of travel — again reminding business leaders that some of their number had sought to “game the system and work to a different set of rules.” But she watered down her workers-on-company-boards pledge. The plan was “categorically…not about mandating works councils, or the direct appointment of workers or trade union representatives on boards,” she said.
It was a peace offering to business today — but the wider reform agenda comes later.
2. A transitional arrangement with the EU looks more likely
CBI President Paul Drechsler was clear in his conference speech about the nightmare scenario for Brexit. “Businesses are inevitably considering the cliff edge scenario — a sudden and overnight transformation in trading conditions,” he said, warning of the “impossible” challenge companies would face if May fails to secure a trade deal with the EU within the two-year Article 50 timeframe; plunging the country out of the single market on World Trade Organization rules.
Asked whether she accepted the need for an interim arrangement with the EU — one that might, for example, keep the country in the single market for a number of years after Brexit to allow time for new trading arrangements to be determined — May sounded open to the idea.
“I understand the point that Paul has made, others have made this point, that people don’t want a cliff edge, they want to know with some certainty how things are going to go forward. That will be part of the work that we do in terms of the negotiation,” she said.
3. May might not be revealing her Brexit plan because she doesn’t have one yet
The former deputy prime minister Nick Clegg, who spent five years sitting around the same cabinet table as Theresa May, declared last week that he knew, with absolute confidence, that the reason May’s government was being so cryptic about its plan for Brexit was because it did not have one yet.
May stuck to her now formulaic script in the Q&A after her speech: she’s “not giving a running commentary,” or “revealing her negotiating hand.” But she also seemed to suggest, in the wording of her speech, that Clegg might just have been right.
“The right approach is not to rush ahead without doing the ground work, but to take the time to get our negotiating position clear before we proceed,” she said, implying, intentionally or not, that she and her cabinet are still, five months after the referendum, in the process of figuring out quite what that negotiating position is going to be.
4. Cutting corporation tax gives Labour a new attack line
May recommitted her government to a pledge made by the David Cameron regime, to ensure Britain’s corporation tax rates are the lowest of any G20 country. Currently set at 20 percent, corporation tax is already set to drop to 17 percent by 2020.
But since that policy was first drawn up, President-elect Donald Trump has made a campaign pledge to slash U.S. federal business tax rate to 15 percent. It is not clear whether Downing Street had Trump’s pledge in mind when they restated the policy, but the commitment is on paper now, and the Labour party has already jumped on it as evidence that May’s claim to stand up for the “just about managing” is only skin-deep. If Chancellor Philip Hammond’s autumn budget statement on Wednesday doesn’t reverse the Conservatives’ cuts to welfare, it could prove an effective attack line.
“Theresa May’s announcement that big business will be receiving yet another tax break whilst 2 million working people face losing £2,100 a year in Universal Credit cuts just shows that the Tories are still the party of the out-of-touch elite,” Labour’s Shadow Chief Secretary to the Treasury Rebecca Long-Bailey responded, setting the tone for what’s to come.
5. Someone in May’s office has been reading Mariana Mazzucato
One respect in which May is no traditional Conservative is her willingness to see the state step in to help business succeed. Her first speech as prime minister was critiqued by the Italian-American economist Mariana Mazzucato, who called on her to drop austerity economics and set up a state investment bank to fund innovations coming from industry.
While she won’t go that far, May’s direction of travel looks different, with a pledge to review what the government can do to give researchers in small businesses “their first break.”
“Strategic use of government procurement not only spurs innovation in the public sector, it gives new firms a foot in the door. In fact, many of the technologies in your smartphone, from touch-screens to voice recognition, were originally commissioned, not by Apple or Microsoft, but by the U.S. government,” May told the CBI.
The line appears to be plucked directly from Mazzucato’s 2013 book “The Entrepreneurial State,” which says: “Nearly every state-of-the-art technology found in the iPod, iPhone and iPad is an often overlooked and ignored achievement of the research efforts and funding support of the government and military.”