George Pitcher: Is the CBI as out of touch as the Conservative party?

Irrespective of who has emerged as its leader by the time you read this, there are many people in business who will be asking for some time to come: what exactly does the Conservative Party stand for? It appears to have a strong contingent who favour the pound over the euro – which implies that it would be tougher over the issue of asylum seekers – and it wrings its hands over the countryside.

Perhaps issues that are more tangible for business will emerge under a new leader. But it has been difficult, with the Government annexing so many middle-ground policy areas – such as education and the economy – to see what the Tories have to offer, other than the reassurance that once more the country is being run by the sort of people that Tories like.

Even this narrow vision has its limitations. During his putative leadership campaign Michael Portillo made the point that, while he had to make a leap of the imagination to understand what it was like to have children, Tony Blair had to make a similar leap to imagine what is was like to have had a state education like Portillo’s.

What Portillo unintentionally demonstrated, by trying to be commoner-than-thou, was that Labour had stolen not only Tory policies, but also its reputation for being sophisticated and posh. This leaves the likes of the aristocratic Michael Ancram blustering about the “real thing”. The satirist John Fortune had it about right the other day, when he said that we’d always need the Tory Party for dealing with snooty head waiters.

But if it’s difficult to see why we need a Conservative Party – New Labour being the party of the establishment and the Liberal Democrats offering the radical alternative to the old left – it’s virtually impossible to see why we have the Confederation of British Industry (CBI).

The CBI will rather sweetly deny it, but it has always been the bosses’ organisation – as the predominantly lefty BBC would call it – that would line up behind the Tories, while the horny-handed sons of toil in the TUC would back the Labour Party. Now, the CBI looks like the butler in a grand old house, watching the family he has served so long disperse into trade and sell its silver, while he contemplates a bungalow in Eastbourne where he can rant about the sorry state of the nation.

In truth, the CBI’s role has never really looked very onerous. What it does is call for cuts in interest rates. And, like all ancient rituals, such calls bear little relationship to the real world and its economy – witness the CBI’s seasonal call for a cut in interest rates the other day, against a background of continued consumer confidence that would undoubtedly fuel inflation were such a cut to be enacted.

So, the old gent in the wing collar at the end of the saloon bar is muttering about how, in the old days, they’d have cut the interest rate to stimulate the economy, while the young lager drinkers speculate that he used to work for lord someone-or-other. But sometimes he fires off an angry, though articulate, letter.

Last week, trade and industry secretary Patricia Hewitt received such a letter from the CBI, telling her where she was going wrong. The letter said that the DTI’s mission statement was “vague and without content” and her department paid too little attention to the private sector. It also said that the DTI lessened the “effective understanding of the competitiveness agenda” and that its judgments of the UK’s industry could be “offensive and wrong”.

In short, the letter complained that the DTI didn’t listen to what the CBI had to say. I’m sure it doesn’t stand up firmly enough to industry’s other prescriptive department, the Treasury. In that context, Peter Mandelson was a sad loss to the DTI.

But why should the DTI listen to the CBI? It would only tell it to tell the Treasury to cut interest rates. And the Treasury doesn’t even do that anymore, having vested interest-rate policy in the Bank of England. Hewitt would be well advised to buy the old boy in the saloon bar a half-pint and move on.

In any event, what the CBI effectively asks for is more Government intervention in industry. This is a bit rich, coming from the supposed champions of the free-market economy. But then who the interventionists are in politics has become confusing in recent years.

It’s not so long since Michael Heseltine was promising on behalf of the Tories to intervene in industry before breakfast, lunch and any other mealtime we would like to name while, to take the opposite extreme, Hewitt’s predecessor, Stephen Byers – admittedly not the most consistent of trade secretaries – stood helplessly by while BMW proposed closing Rover. More recently, this Government has ruled out a rescue package for Equitable Life.

Now the CBI wants more attention from the DTI. It will probably get it. But not in the way it wants. There is an intrinsic conflict of interest between regulating employment law and competition policy on the one hand, and championing business interests on the other. The Government’s instincts are regulatory.

So, while the CBI may attract the DTI’s attention, its members may not thank it for doing so. Perhaps those self-same members might themselves start asking what the CBI stands for.

George Pitcher is a partner of issues management consultancy Luther Pendragon