Do boards have a duty to speak out over political turmoil?

I used to remark at The Sunday Times that a group noun for a gathering of chairs and chief executives should be a grumble of grandees. The mood around dinner tables has been particularly gloomy recently, and not without reason.

Many business leaders, even typical Conservative supporters, welcomed Labour as a stabilising prospect at the election after eight years of post-Brexit-vote political churn. Labour’s rapid descent almost to a similar level of instability as the late-stage Tories has been depressing and worrying. The sour taste left by last October’s £40bn tax-raising budget, the exits of Angela Rayner, Peter Mandelson and Downing Street aide Paul Ovenden, and the long wait until the budget in November – when chancellor Rachel Reeves may have to fill a fiscal hole of £30bn – have revived a sense that Westminster is an unreliable partner for private enterprise.

I attended a dinner this month where one FTSE 100 chairman, waxing erudite, referred to Edward Gibbon’s Decline and Fall of the Roman Empire and Gibbon's observation that it rotted partly because Rome’s elites withdrew from civic duties and retreated into their private lives – concentrating on their estates, families and private luxuries. Gibbon described this “languid indifference” as a “slow and secret poison”.

This chairman’s point was, in effect, a challenge to the room. Were business leaders guilty of having withdrawn from debate over the UK’s economic future – perhaps having been cowed since the Brexit wars? Did they have a responsibility to intervene?

By coincidence, Paul Johnson, former director of the Institute for Fiscal Studies, argued yes in an article for the Financial Times shortly after that dinner. Addressing the probable messy fix looming in the budget as the chancellor tries again to boost revenues without raising the three main taxes, he said that “powerful groups in business and wider civil society” needed to make the case for a rational tax system. “We need constant pressure for a strategy that accepts both fiscal and political realities,” Johnson wrote.

But few chief executives have the authority of Lord (Simon) Wolfson, who used Next’s half-year results to warn of “declining job opportunities, new regulation that erodes competitiveness, government spending commitments that are beyond its means and a rising tax burden that undermines national productivity”. It is difficult for individual bosses to make general critiques of government, hence the importance of the CBI’s revival under Rupert Soames and Rain Newton-Smith. When they work, business lobbies provide a shield behind which companies can advance. That is why most developed economies have one – the US Chamber of Commerce, Medef in France, BDI in Germany, Confidustria in Italy and Keidanren in Japan.

It is usually ineffective and/or unwise for boards to take broad-brush political stances on their own. Where they should be bold in making their voices heard is in areas where they have expertise and interests.

Hospitality operators were justified in complaining that higher national insurance contributions for employers were harmful, coming as they did the trials of Covid lockdowns and a period of high inflation. Pharmaceuticals companies are entitled to push for higher drug pricing and bemoan the UK’s approach to life sciences. Ahead of the budget, bank bosses such as CS Venkatakrishnan, chief executive of Barclays, are understandably urging Reeves not to raid the sector for more taxes to help plug the fiscal hole.

Trying to influence politics is a fraught affair for businesses. There is a strong likelihood of being ignored. There is an equally strong likelihood of causing offence. The rules for engagement must be: behave proportionately – don't exagerrate the scale of the problem or use inflammatory language; speak with expertise; and be prepared to explain how a policy will cause positive or negative impact beyond your own interests.

A mass retreat into indifference would be a sad thing for corporate UK. But interventions in the public sphere have to be made with tact and care.

The views expressed in this article are those of the author.