UK's May U-turns on plans to have workers on boards

UK Prime Minister Theresa May on Monday backtracked on her pledge to have worker representatives on the boards of companies.

In a speech to the Confederation of British Industry (CBI) annual conference, May said there were other ways of giving employees a voice on corporate matters.

She had previously said she would introduce plans to have consumers and workers represented on boards, but this had attracted criticism from the business lobby.

"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," she told the CBI.

"Some companies may find that these models work best for them – but there are other routes that use existing board structures, complemented or supplemented by advisory councils or panels, to ensure all those with a stake in the company are properly represented. It will be a question of finding the model that works."

May said the process of exiting the European Union should not be rushed, but that there were opportunities to create partnership with “old allies and new partners”.

May suggested she would seek a transitional Brexit deal to soften the impact for businesses once the UK leaves the EU. She said she would seek an arrangement to stop companies going over a “cliff edge”.

"Obviously as we look at the negotiation we want to get the arrangement that is going to work best for the UK and the arrangement that is going to work best for business in the UK," she told delegates.

"I’m conscious that there will be issues that will need to be looked at. I understand the point that Paul [Drechsler, CBI president] has made, others have made this point, that people don’t want a cliff edge, they want to know with some certainty how things are going to go forward. That will be part of the work that we do in terms of the negotiation that we are undertaking with the European Union."

"I know leaving the EU creates uncertainty for business," May added.

May added that she wanted Britain to have the lowest corporation tax rate in the G20, a direct riposte to US President-elect Donald Trump's claim he would cut the rate to 15% from 35%.

UK corporation tax is scheduled to fall to 17% from its current 20% by 2020.

“Since 2010 we have made the Research and Development Credit more generous and easier to use – and support has risen from £1bn to almost £2.5bn a year.

“Now we want to go further, and look at how we can make our support even more effective – because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also a tax system that is profoundly pro-innovation.”

May also said the business community needed to change its approach to corporate governance, executive pay, and boardroom representation.

"We all know that in recent years the reputation of business as a whole has been bruised. Trust in business runs at just 35% among those in the lowest income brackets. The behaviour of a limited few has damaged the reputation of the many. And fair or not, it is clear that something has to change," she said.

The reputation of the business community has been tarnished in recent months by scandals such as the collapse of BHS, where former owner Philip Green stands accused of paying himself large dividends the business, selling it to a serial bankrupt a leaving the pension fund with a £571m deficit.

"For when a small minority of businesses and business figures appear to game the system and work to a different set of rules, we have to recognise that the social contract between business and society fails – and the reputation of business as a whole is undermined."

"So just as government must open its mind to a new approach, so the business community must too. That is why we will shortly publish our plans to reform corporate governance, including executive pay and accountability to shareholders, and proposals to ensure the voice of employees is heard in the boardroom."