CBI’s future to be decided in crunch vote today; UK housebuilding slumps – business live

Just in: UK housebuilding contracted at the steepest rate since May 2020 last month.

Data provider S&P Global reports that house building remained by far the weakest-performing part of the UK construction sector in May, with output declining at the steepest pace for three years (back to when building sites locked down due to Covid-19).

S&P Global’s monthly poll of purchasing managers at building firms found that housebuilding activity was dampened by worries about the impact of higher interest rates and subdued market conditions.

Aside from the pandemic-related downturn, housebuilding shrank at the fastest rate in just over 14 years.

That will add to concerns that England’s faces a huge shortfall of new homes, due to a slowdown in supply of new housing.

Tim Moore, economics director at S&P Global Market Intelligence, says cutbacks to new residential building projects drove down housing activity.

This meant that residential work underperformed the rest of the construction sector by the greatest margin since October 2008.

Survey respondents also commented on concerns about the broader UK economic outlook, which contributed to an overall drop in output growth projections to the lowest for four months.

But overall, construction output gained momentum amid the strongest rise in new orders since April 2022, which lifted commercial building work and civil engineering.

Here’s the details, from Noble Francis, economics director at the Construction Products Association.

Q: Do you accept that any programme the CBI runs right now, on workplace culture, is not credible, Today asks.

Rain Newton-Smith does not recognise that is true. She tells Today:

If we have the support of our members, then we can go out and talk about the issues of the day.

Those issues include economic challenges including the cost of living crisis, the UK’s “anaemic growth”, and the huge challenge around how business tackles cimate change.

She doesn’t see another organisation which can speak across sectors and regions with credibility and depth.

Q: The British Chambers of Commerce have just launched a brand new one….

Newton-Smith claims that the timing of the BCC’s new Business Council has “raised a few eyebrows among businesses”.

She hopes the CBI can go back to working very closely with the BCC, billing them very much as a junior partner which is “very good” in its local chambers.

But they don’t have depth of experience around economic surveys, and they can’t cost policies such as childcare reform, she insists.

Q: They can talk to the government today, though, and you can’t.

Newton-Smith challenges the government, and the opposition, to reconsider their current veto, assuming the CBI wins today’s vote.

If we can show we have the support of our members, with 3.5m private sector jobs represented by our direct membership, and a huge, million jobs also represented through our trade association networks, why won’t you speak to us?

We need to have a moment when we can move forward.

Newton-Smith adds that the CBI is determined to learn from its crisis, and share the learnings with ‘wider society’.

We’re being open about the journey we’re on, and I think that is what establishes trust from business, from government and from policymakers.

Q: But you’re asking for members support, without having fixed your probems and competing the programme of change?

How can you conduct work such as ‘best practice in business’ when you acknowledge your own culture hasn’t been fixed?

CBI director-general Rain Newton-Smith replies that the CBI has been “really open” about the changes it needs to make.

She says:

I would challenge any organisation in this country to look deeply within their organisation and make sure they’ve got the right culture and values.

Q: So why is your president saying you need to fix the culture longterm? [writing in the Financial Times].

Rain Newton-Smith insists the CBI has set out “clear milestones” of what it needs to do, and show it has done.

We have done a series of investigations that have come out with a set of recommendations, and we’ve implemented almost three-quarters of them.

The ones left include insuring there is “full trust and confidence across all areas of our business” that the change programme has been implemented fully.

Newton-Smith adds that she has come back into the CBI as a female leader because she believes in the power of inclusive workplaces.

We clearly have work to do to improve our governance.

That includes making it easier for people to speak up, and supporting them, she says.

[Reminder: Newton-Smith left the CBI to join Barclays earlier this year before returning to become director-general after allegations of misconduct were reported].

CBI director-general Rain Newton-Smith is discussing today’s EGM on the Radio 4’s Today programme now.

Q: Will a basic majority in today’s vote give you a mandate to continue?

Yes, Newton-Smith replies, but the CBI wants to see as much support as possible today.

She says the “vast majority of CBI members” have stayed with then throughout the crisis, giving help, support and advice about the programme of change needed.

Those members want the CBI to be the collective voice of business, talking to government about important issues, she adds.

Q: You can’t do that work without being able to talk to the government, though…

Newton-Smith says it’s very important that to open the door to government.

Today’s about getting a vote of support, to show the CBI has its members behind it.

She says the CBI has been producing economic surveys showing what’s happening in the economy for over 60 years, and has policy experts across sectors and a “wealth of experience”, so it can be the collective voice of business.

It’s about our members and those networks of trade associations, from farmers to technology, to education.

We can and will be their collective voice.

Larry Elliott

In the cost of living crisis, hard-pressed consumers feel they are becoming the victims of food industry “shrinkflation”.

The latest snapshot of consumer activity from Barclays found households are increasingly concerned that manufacturers were reducing the size of products such as chocolate bars and packets of crisps.

Two-thirds of shoppers had noticed products shrinking in size while the price had remained the same or even increased. In response, 20% of consumers said they were switching from products that had been downsized by manufacturers to instead buy in bulk.

Esme Harwood, director at Barclays, said:

“Consumers are still paying close attention to their everyday spending, and we are seeing growing concerns around “shrinkflation” in the weekly shop.

“Many are having to forgo discretionary purchases to offset rising food prices, with clothing and restaurants most impacted.

“However, the growth witnessed at pubs, airlines and entertainment venues shows that Brits are still finding room in the budget to enjoy nights out and holidays.”

While in theory a simple majority would be enough to carry the confidence vote for the CBI, the Financial Times says a larger majority will be needed if the organisation is to build momentum towards restoring its credibility.

Lord Karan Bilimoria, vice-president of the CBI, told the FT:

“It has to be just over 50 per cent to carry but I’m confident it will be much higher than that.”

CBI bosses are hoping a victory will convince ministers to end their embargo on engaging with it. That might not be an immediate change, though.

As Neil Carberry, chief executive of the Recruitment & Employment Confederation, a trade association that is a CBI member, put it:

“Tomorrow is about opening up a path back rather than switching on a light switch.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The Confederation of British Industry will learn today if it has a future as the business lobby group’s members vote on a package of reforms, following sexual misconduct allegations revealed by the Guardian.

The CBI is holding an Extraordinary General Meeting in London today, where a referendum on proposed changes to its structure, governance, and culture is being held.

Voting on the CBI’s future closes today, having started last week, with one vote per member, regardless of size, after it put forward proposals to overhaul its culture and recruit a new president.

Members have been asked to vote on the following resolution:

“Do the changes we have made − and the commitments we have set out − to reform our governance, culture, and purpose give you the confidence you need to support the CBI?”

But, companies that have quit the CBI since allegations of rape and sexual harassment at the business lobbying group will not be able to attend and vote today.

New director general Rain Newton-Smith will call the meeting the “start of a new chapter”.

She will tell CBI members:

“I’m confident and determined this will be a turning point for us.

“It’s so important to me, and for those who raised their voices, to put our people, our culture and our values front and centre.

“This is a difficult but important journey. We’ve made great strides forward, but it will take real dedication. I am resolutely committed to leading that change and restoring the CBI to health.”CB

CBI president Brian McBride has said today’s vote is a chance for the group to “regain our voice on the serious economic challenges the UK faces”. Writing in the Financial Times, McBride said the outcome of Tuesday’s vote “isn’t a given”, and the CBI needs its members support.

How the meeting will work….

The EGM event will be held from 12:00 with 90 minutes for presentations and Q&A. It will be followed by a lunch and the opportunity for more private questions for those attending in person.

The result of the vote and next steps will be shared this afternoon once the vote has been verified, the CBI says.

My colleague Anna Isaac reports that the backing of trade bodies could be crucial in the CBI’s future:

Winning the backing of trade bodies, which span from farming to haulage, is seen as key to rebuilding ties with the government and the Labour party, according to CBI insiders. These bodies – rather than individual member companies – make up the vast bulk of the 190,000 firms the business lobby group has claimed to represent.

Trade associations regarded as critical to the CBI’s survival include the National Farmers’ Union, which has about 50,000 members, and hauliers’ body Logistics UK, which has 20,000. Each trade association has one vote.

But rival tanks may be eying up the CBI’s lawn.

Yesterday, a new business lobby group backed by big companies including BP and Drax was launched by the British Chambers of Commerce (BCC).

The BCC’s Business Council aims to bring together business leaders “who are looking for a different kind of representation”….

The agenda

• 7am BST: German factory orders for April

• 8.30am BST: Eurozone construction PMI for May

• 9.30am BST: UK construction PMI for May

• Noon BST: The CBI’s Extraordinary General Meeting begins

• 2.30pm BST: World Bank releases its half-yearly update on the world economy

• 4pm-5pm BST: Result of vote on CBI’s future expected