Business must listen to and learn from its critics, says IoD Director General

Dated: 25 April 2012

Embargoed until 00.01 Wednesday 25th April 2012

Business must listen to the concerns of “reasonable middle Britain” over how capitalism operates, and adapt to improve itself, Simon Walker – the Director General of the Institute of Directors – will say tomorrow (25th April), at the IoD’s Annual Convention. Making the case for business to “adapt and innovate if we are to survive and grow”, Mr Walker will call for a renewal in British business, which would include rooting out market failures, increasing shareholder power to address excessive executive pay in the FTSE 100 and campaigning in Westminster and Whitehall for a business-friendly Britain.

Speech extracts:

Renewing British business
“British business needs renewal.

“There will always be extreme ideological opponents of the free market. They are, for the most part, on the margins of political thinking, and of policy-making. But we need to take seriously the fact that much of reasonable middle Britain has also become concerned about how capitalism operates.
“The system has had a shock. Andrew Haldane of the Bank of England has calculated that the “net present value” of the cumulative loss in global output from the financial crisis is anything from 60 to 200 trillion dollars. That is at least twice the size of the European and American economies put together.

“The consequences of that loss of output, and the fiscal steps necessary to rein in government spending in an age of austerity, grow more obvious by the day. One doesn’t need to be a protestor on the steps of St Paul’s to know that business has real problems. If those who are committed to the free market don’t try to fix those problems, the enemies of private enterprise will do it for us.”

Dealing with market failure
“The genius of capitalism lies in competition. When competition is abandoned, we should speak up.

“If major book publishers are fixing the prices of electronic books, then the American Department of Justice is right to take them to court. If a company is run into the ground by incentive systems which discourage investment and bring a historic British business like Cable and Wireless Worldwide to its knees, we should say so.

“If some banks pay three times more in bonuses to top executives than they do in total dividends to shareholders, then I think there are questions to be asked.”

Increasing shareholder power
“There are encouraging signs that shareholders are taking an activist approach to their ownership responsibilities.

“Citigroup’s rejection of its chief executive’s pay award and Barclays’ remuneration concessions are two examples. HSBC is even aiming to distribute an equal share of profit to investors, to pay, and to investment. Capitalism is renewing and reforming itself as it should: through shareholder power, not government intervention. “

Making the case for a business-friendly Britain
“Whenever I visit an IoD branch or speak at business events around the country, I meet people who feel that Westminster and Whitehall do not understand or appreciate business. It is our job to set that right. We will be going out there on your behalf to make the case for less onerous regulation, to explain why taxes should be lower; we will be warning of the consequences of poorly thought-out intervention; and we will be urging Government to deliver the vital infrastructure which you need for essential travel, to obtain the right staff and to serve your customers. In short, we will be fighting hard to create a Britain where all of you can get on with what you do best: getting the job done.”

ENDS

Contact Points

Edwin Morgan
Media Relations Manager
Institute of Directors, 116 Pall Mall, London SW1Y 5ED
Tel: +44 (0)20 7451 3392
Mob: +44 (0)7814 386 243
Email: edwin.morgan@iod.com
Website: www.iod.com/policy

Notes to editors

  • The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 38,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
  • The IoD provides an effective voice to represent the interests of its members to key opinion-formers at the highest levels. These include Government ministers and their shadows, parliamentary committee members, senior civil servants and think-tanks. IoD policies and views are actively promoted to the national, regional and trade media. Follow us on Twitter to get the IoD’s reaction on business and public policy issues.
  • The IoD offers a wide range of business services which include business centre facilities, with ten UK centres (three in London, one each in Reading, Birmingham, Cardiff, Manchester, Nottingham, Norwich, Edinburgh, Glasgow and Belfast) and one in Paris, conferences, networking events, virtual offices, issues-led guides and literature, as well as free access to business information and advisory services. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board and director-level training and individual career mentoring programmes.
  • For further information, visit our website: www.iod.com