Theresa May (pictured at the CBI conference today) used her speech to demand they embrace ‘change’ after the Brexit vote
The Prime Minister held out an olive branch to business by suggesting she wants to stage the process of leaving to avoid a ‘cliff edge’ for key economic sectors.
But leading Vote Leave campaigners complained the move would ‘fuel uncertainty’ and leave the country in ‘limbo’ for years after the end of the Article 50 period in 2019.
In her speech to the CBI this morning, Mrs May declared her determination to slash corporation tax – and appeared to back away from a previous commitment to put workers on boards. Instead she suggested they would merely have ‘a voice’ in boardrooms.
Alongside the sweeteners the premier also delivered a tough message that business must clean up its act and get fully on board with the government’s efforts to cut ties with Brussels.
Speaking ahead of the crucial Autumn Statement this week, Mrs May warned that the behaviour of a few in business had seriously damaged public trust, and insisted the government would push through reform.
She said the referendum result in June showed that ‘change is in the air’ and everyone had to respond.
‘We all know that in recent years the reputation of business as a whole has been bruised. Trust in business runs at just 35 per cent among those in the lowest income brackets,’ Mrs May said.
‘The behaviour of a limited few has damaged the reputation of the many. And fair or not, it is clear that something has to change.
‘For when a small minority of businesses and business figures appear to game the system and work to a different set of rules, we have to recognise that the social contract between business and society fails – and the reputation of business as a whole is undermined.’
Mrs May hailed the many strengths of the UK economy, saying it was ‘world class’ in a huge variety of areas.
She also insisted there had been ‘massive votes of confidence’ in Britain since the referendum result, with businesses choosing to keep investing here.
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Mrs May was in combative mood at the CBI this morning – and at one point seemed to be doing some shadow boxing
Mrs May delivered her strongest hint yet that she will seek a ‘transitional’ deal when Brexit negotiations begin
But Mrs May said there were also ‘long term structural challenges’ that have to be addressed during the Brexit process, including a lack of focus on improving infrastructure and boosting opportunities for young people.
‘Let us join together and show that we can rise to meet this moment. Let us respond to the public’s demand for change,’ she said.
‘Let us restore their faith and prove that capitalism can deliver them a better future.’
THERESA MAY CLIMBS DOWN ON PLAN TO PUT WORKERS ON BOARDS
Theresa May signalled a dramatic watering down of her pledge to place workers on company boards today.
The Prime Minister sparked a furious backlash from business chiefs last month when she mooted the idea, with concerns raised about logistical complications and interference by unions.
In her speech to the CBI today, Mrs May played down the prospect – making clear it would not be compulsory and her objective was merely that staff had a ‘voice’ at the top table.
But the premier is sticking by a pledge to impose annual bining votes on remuneration for top directors.
Mrs May said: ‘While it is important that the voices of workers and consumers should be represented, I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on Boards.
‘Some companies may find that these models work best for them – but there are other routes that use existing Board structures, complemented or supplemented by advisory councils or panels, to ensure all those with a stake in the company are properly represented.
‘It will be a question of finding the model that works.’
In return for the climbdown, Downing Street is thought to have told companies they must accept Mrs May’s drive to curb excessive executive pay.
The PM gave her strongest indication yet that she will seek a ‘transitional’ deal with the EU, which could mean that the UK is tied to Brussels for years after we formally leave.
The City of London has been urging ministers to forge such an arrangement, which could see the UK as a whole or some sectors of the economy ‘opting in’ to the single market for a period after the completion of the Article 50 process in 2019.
‘Obviously as we look at the negotiation we want to get the arrangement that is going to work best for the UK and the arrangement that is going to work best for business in the UK,’ Mrs May said.
‘And I’m conscious that there will be issues that will need to be looked at. I understand … 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 that we are undertaking with the European Union.’
No10 clarified that Mrs May had not intended to suggest the negotiations could be extended – and was referring to arrangements that could be made for after Article 50 was complete.
She said the PM was acknowledging there were concerns about a ‘cliff-edge’ after Britain cuts ties with the EU and she was ‘recognising that people want as much certainty as possible’.
‘We will not be seeking to extend the Article 50 process,’ the Prime Minister’s spokeswoman said this afternoon.
Hardline Brexiteers warned that a delay in cutting ties fully would result in damaging ‘limbo’.
Richard Tice, Co-Chair of Leave Means Leave said: ‘A transitional deal will fuel more uncertainty and leave Britain in limbo.
‘British voters have made it clear that they want to leave the EU and the Government must deliver on this in full and at the soonest opportunity – two years after triggering Article 50, or sooner if the EU fails to negotiate.’
But the idea was broadly welcomed by top Tories.
Conservative MP Steve Baker told MailOnline: ‘An overwhelming majority of us are in favour of a good quality transitional deal.
STERLING UP AS PM HINTS AT TRANSITIONAL DEAL WITH EU
Sterling moved above the 1.25 mark against the US dollar as markets welcomed the PM’s hint at a transitional deal.
The pound pushed 1.2 per cent higher to 1.2502 against the greenback, as investors welcomed the soothing words from Theresa May.
It also appeared to benefit from her backing for lower corporation tax.
During her speech at the Confederation of British Industry’s (CBI) annual conference, Mrs May said: “People don’t want a cliff-edge; they want to know with some certainty how things are going to go.”
Sterling’s surge was also seen against the euro, rising 0.7% to 1.176 euro.
‘It’s very clear there are pathways forward to achieve certainty for financial services… by having a deal based on mutual recognition and equivalence.’
He added: ‘It’s not free trade if there is a fee for the privilege of selling something.
‘Ultimately, in such historic circumstances such as this, the Prime Minister is right to keep her options open.’
Leading Eurosceptic Bernard Jenkin said: ‘There is little she can say at this stage. She wants to make her case first to our EU partners, not to the word’s press so they read there first.
‘I think there could be advantages in a quick and simple transitional deal, which could shorten the whole Brexit process.
‘We are not the ones who want to strong this out for two unnecessary years.’
Conservative Jacob Rees-Mogg said: ‘In a negotiation it is wise to keep options open at the beginning.
‘The key is that at the end we are fully out and free to trade with the world, set our own regulations and keep our money.
‘If an interim arrangement rakes the path, that is fine.’
In his own speech to the conference tonight, Labour leader Jeremy Corbyn joked that he did not know who was more shocked at his presence – himself or the business chiefs
Mr Corbyn slammed Mrs May’s claim about the ‘just about managing’ people warning many of them were barely ‘surviving’ because of welfare cuts
Tory MP Michael Fabricant told MailOnline: ‘It is early days yet and it’s important the Prime Minister has flexibility.
‘But as she has often said, we need access to the single market, control of our borders and the ability to enter into trade treaties with the rest of the world.
‘There are many ways that particular cat can be skinned.’
The PM’s official spokeswoman said the Government’s objective was securing the ‘best outcome for the UK’.
SCRAP PENSION TRIPLE LOCK, SAYS EX-DWP SECRETARY STEPHEN CRABB
The triple-lock safeguard on state pensions should be scrapped, former Work and Pensions Secretary Stephen Crabb has said.
The Tory MP, who left the Government in the summer, called on Theresa May to scrap the guarantee because it had ‘served its purpose’ and said welfare spending should be targeted more towards working families.
The triple-lock, introduced by David Cameron in 2012, increases the state pension each year by either the rate of inflation, the rise in average earnings, or 2.5 per cent, whichever is highest.
Mr Crabb told the BBC last night: ‘I think there will be a case after 2020 to look again at that, to see if we can’t rebalance our welfare spending to ensure that more goes to working families.’
Mr Crabb becomes the latest ex-pensions minister to call for it to be abandoned, following in the footsteps of Iain Duncan Smith and Ros Altman, who said the policy is too costly.
Earlier this month the influential Commons Work and Pensions Committee called for the triple-lock safeguard to be scrapped because it was ‘inherently unsustainable’ and was ‘skewed’ towards baby boomers and against younger millennials.
She said: ‘There are a whole range of issues that are being worked through as we prepare for the negotiations, focused on how we get the best deal for the UK.
She said if necessary, the other EU states could extend the two year period for a member leaving the trading bloc.
The spokeswoman said: ‘We have set out the time frame for getting on and triggering Article 50. There is no change to that approach.
‘There is a process by which it can be extended. That doesn’t suggest it is the Government’s position to pursue that option.
‘We will pursue these negotiations to get the best possible outcome for the UK.’
Mrs May restated her commitment to the Conservative ‘core beliefs’ in ‘free markets, capitalism and business’ after some company bosses complained about a negative tone towards enterprise.
She said the government would ensure Britain has the lowest corporate tax rate in the G20 group of nations. Currently 20 per cent, it is due to fall to 17 per cent by 2020.
US president-elect Donald Trump has promised to cut the American rate to 15 per cent, meaning ministers could face pressure to slash further.
Mrs May promised an extra £2billion a year for cutting edge research and development by 2020 and announce a review of tax breaks for hi-tech firms.
‘We will review the support we give innovative firms through the tax system because my aim is not simply for the UK to have the lowest corporate tax rate in the G20 but also one that is profoundly pro-innovation,’ she said.
Mrs May urged firms to show they are ‘playing by the same rules as everyone else’ by paying tax and reining in corporate behaviour that alienates the public.
Mrs May was pictured yesterday attending church with husband Philip near her Maidenhead constituency
The Prime Minister described the June 23 Brexit vote as a ‘true national moment’ and a ‘once-in-a-generation chance to shape a new future for our nation – the chance to build a stronger, fairer country’.
She called for a ‘change the way our country works – and the people for whom it works – for ever’.
In her party conference speech this year, Mrs May said: ‘If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word “citizenship” means.’
Her remarks, and attacks on corporate greed, led to complaints about a negative attitude towards business. No 10 rejects that accusation but sources said the PM would correct the ‘misapprehension’ and seek to ‘soothe’ business fears.
In a powerful defence of free markets, Mrs May insisted they were ‘the means by which we spread opportunity and lift people out of poverty’.
She added: ‘We believe in capitalism – the means by which we drive economic growth, putting people into work to provide for their families.
‘And we believe in business – the entrepreneurs and the innovators who employ millions of people up and down this country – the basis for our prosperity.’
Chancellor Philip Hammond is delivering his Autumn Statement on Wednesday (statistics as of November 18, 2016)
Former Chancellor George Osborne urged Mrs May to press ahead with reducing corporation tax to 15 per cent
US president-elect Donald Trump has promised to cut the American corporation tax rate to 15 per cent, meaning the Government could face pressure to slash further
But she warned that both business and government must ‘adapt and change’, saying: ‘If we support free markets, value capitalism and back business – and we do – we must do everything we can to keep faith with them.
‘So we will do things differently – not carrying on with “business as usual”, but opening our minds to new ways of thinking.
‘For government, it means not just stepping back and leaving you to get on with the job, but stepping up to a new, active role that backs British business and ensures more people in all corners of the country share in the benefits of your success.
‘For business, it means doing more to spread those benefits around the country, playing by the same rules as everyone else when it comes to tax and behaviour, and investing in Britain for the long-term.’
She committed the Government to a ‘more active role’ in business and a review of tax help for cutting-edge technology firms.
Ministers are understood to be considering plans for a new ‘public interest test’ to let them stop takeovers that threaten company pension funds.
In a move that would be seen as a response to Sir Philip Green’s handling of BHS, they are also considering fines for employers who raid pension pots.
WHAT WOULD A TRANSITIONAL DEAL LOOK LIKE?
Businesses fear being left stranded in a ‘regulatory no-mans land’ after Britain leaves the EU in spring 2019.
With a permanent deal on EU-UK trade unlikely to be agreed within the two-year time-frame, there are growing calls for the Government to seek a temporary transitional deal that sets out the terms of trade for businesses for the interim period and gives UK firms a cushion against the impact of Brexit.
A transitional deal with the EU could take several forms but would almost certainly require Britain to continue contributing into the EU’s budget.
The most likely scenario would see Britain remain in the European Economic Area, which allows non-EU countries in Europe to partake in the free movement of people, goods, services and capital across the single market.
But this would require Britain to continue paying budget contributions, accept unlimited EU migration and comply with EU regulations.
And with experts warning that it could take at least five years for Britain to agree a permanent deal with the EU, it would effectively mean Brexit wouldn’t be implemented until 2024 at the earliest.
It would give businesses relief from the uncertainty of falling off a ‘cliff-edge’ but Brexiteers would accuse the Government of betraying June’s referendum vote.
If no transitional deal is reached, EU-UK trade will default to World Trade Organisation rules, which are seen as the most basic trading terms and the ones used for Russia’s trading relationship with Brussels.
Another scenario would see Britain emulate Norway by remaining a member of the single market.
Norway enjoys the benefits of membership without the same extent of interference from Brussels but must also accept freedom of movement and pay substantial contributions and without having a say on rules and future free trade agreements with other nations.
But if no transitional deal is reached, EU-UK trade will default to World Trade Organisation rules, which are seen as the most basic trading terms and the ones used for Russia’s trading relationship with Brussels.It would give businesses relief from the uncertainty of falling off a ‘cliff-edge’ but Brexiteers would accuse the Government of betraying June’s referendum vote.
This could see tariffs as high as 10 per cent slapped on goods and services traded between Britain and Europe and British firms would lose all preferential access to the single market.