UK's May courts business
seeking to avoid Brexit exodus
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[November 21, 2016]
By William James
(Reuters) - Prime Minister Theresa May set out plans to get big business
behind her Brexit strategy on Monday, toning down plans to put workers
on company boards and promising to spend billions of pounds on science,
technology and research.
In return, May told business leaders at a conference hosted by the
Confederation of British Industry, that they needed to keep up their own
investment, embrace corporate governance reforms and help spread
prosperity across the country.
The strength of Britain's $2.3 trillion economy was thrown into doubt
following the shock vote to leave the European Union, handing May the
tasks of winning back an electorate fed up with the status quo and
persuading businesses not to move abroad.
Courting the support of business leaders who have bridled at her
sometimes combative approach on issues such as tax avoidance and
executive pay, May said that Britain's workers had demanded change by
voting to leave the EU.
"The reputation of business as a whole has been bruised," May said,
citing research showing only 35 percent of low income workers trust
business. "The behavior of a limited few has damaged the reputation of
the many. And fair or not, it is clear that something has to change."
May said a decision by Facebook <FB.O> to expand its UK presence by
hiring 500 new workers, on the heels of a decision by Google <GOOGL.O>
to build a new hub in London, was a vote of confidence, but said
businesses still had to do more to prove a skeptical public that
capitalism worked for them.
Despite her tough tone, May watered down one of the central proposals of
her campaign to take over from the former prime minister, David Cameron,
in July: a plan to put employees on company boards.
"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," May said.
She said the government was committed to worker representation but open
to different ways of doing it, easing fears among some business leaders
and lobbyists that the government could legislate to enforce mandatory
The CBI and other business groups welcomed the signal but trade unions
reacted with dismay.
"Theresa May made a clear promise to have workers represented on company
boards. The proposals in her speech today do not deliver on this," said
Frances O’Grady, head of unions' body the TUC. "This is not the way to
show that you want to govern for ordinary working people."
SCIENCE AND INNOVATION
Seeking to reassure businesses, May pledged to address concerns that
Britain could fall off a "cliff edge" into uncertain trading conditions
after leaving the European Union as part of her Brexit negotiations.
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Nicola Mendelsohn, Facebook Vice President EMEA addresses the
Confederation of British Industry's (CBI) annual conference in
London, November 21, 2016. REUTERS/Stefan Wermuth
May reiterated her commitment to having the lowest corporation tax among
the world's 20 largest economies, having previously said she would
reduce the headline rate from the current 20 percent to 17 percent by
Asked about the possibility that the United States could cut rates as
low as 15 percent and whether Britain would match that, May's
spokeswoman said any such talk was "speculative".
She also set out the first stage of her much-anticipated industrial
strategy, promising to invest an extra 2 billion pounds ($2.5 billion)
per year by 2020 in research and development, including a new Industrial
Strategy Challenge Fund to back technologies such as robotics and
The phrase "industrial strategy" is politically loaded in Britain, where
to some critics it calls to mind the efforts of governments in the 1970s
to keep struggling firms like carmaker British Leyland on life support,
ultimately in vain.
But, May has revived the concept, seeing it as a solution to the
economy's persistent problem with low productivity and a way to win over
working class voters who feel left behind by a decades-long shift to a
"Members will be significantly reassured by this speech," said, Simon
Walker, director general of the Institute of Directors business group.
However, the scale of the investment got a lukewarm reception from some.
Ed Corbett, an assignment manager at pharma strategy specialists
Novasecta, said it was only a "small step" toward calming Brexit nerves
in the industry.
"It is, for instance, significantly smaller than the 26 billion pounds
the U.S. government invests in the National Institutes of Health every
year, and therefore may not make the UK as competitive as hoped," he
(Additional reporting by Elizabeth Piper, Ben Hirschler and Kate Holton;
Editing by Alison Williams)
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