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The Reform of Business Representation in Britain 1970-1997

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The Reform of Business Representation in Britain 1970-1997 The Reform of Business Representation in Britain 1970- 1997 by Justin Matthew Greaves A thesis submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Politics and International Studies University of Warwick, Department of Politics and International Studies, July 2005 1 Table of Contents Acknowledgements vi Abstract vii Abbreviations viii 1: Introduction 1 How is business represented in Britain? 2 A critique of business representation in Britain 5 Recent improvements 12 The importance of reform 14 Methodology 18 Structure 28 2: Theoretical Perspectives: Pluralism, Corporatism and Business as a 30 Privileged Interest Pluralism 30 Corporatism 42 Business as a privileged interest 54 2 3: A Review of the Literature: Devlin, Government and Obstacles to 60 Reform. Literature on Devlin 60 The obstacles to reform 67 The role of government 72 Business opinion: Boswell and Peters 88 Hypotheses 90 4: The Devlin Commission in Context 94 A brief history of business representation in Britain (1783-1971) 94 Previous studies on industrial and commercial representation 98 The modernisation of institutions 100 Why was the Devlin Commission set up? 104 Devlin’s terms of reference 108 Membership of the Commission 113 The approach of the Commission 117 Conclusion 122 5: The Devlin Commission in Action: Evidence, Working Papers, and 124 Minutes The CBI 125 The chambers 135 3 Trade associations and employers organizations 139 The DTI 145 The minutes of the commission 148 ‘Catalysts for Reform’ 152 ‘Issues for Consideration’ 153 Conclusions 159 6: The Devlin Report: Recommendations and Argument 162 The report and its recommendations 162 The argument of the report 167 Conclusions 192 7: The Response to and Implementation of Devlin 195 Reception of the Report 195 Implementation of Devlin 209 Business association reform 1974-1992 217 8: The Heseltine Initiatives 222 Speeches, white papers and TA agenda 224 The best practice guide for the model trade association 230 Benchmarking 233 The chambers of commerce 235 4 Continuity and change 240 Evaluation of the Heseltine initiatives 243 Competitiveness and productivity 246 Conclusions 253 9: Conclusions 256 The hypotheses 256 Business Associations and Corporatism 269 Globalisation and Governance 273 Partnership and Business Power 280 Latest Developments 285 Future Research 294 Bibliography 297 5 ACKNOWLEDGEMENTS I would like to thank Wyn Grant, Sam Howarth, David Botterill, friends and family, and all who have helped me on my way. 6 Abstract Britain has a fragmented, overlapping and under-resourced system of business representation. Attempts at reform, however, have proved difficult and largely unsuccessful. The thesis investigates the reasons for this failure, with an emphasis throughout upon the rationalisation of association structures and the political and economic significance of reform. A coherent and logical system of business representation is relevant, both in terms of an effective dialogue between government and business, and the promotion of competitiveness and productivity. Dialogue will prove difficult whilst there is a confused system of associations. Evidence suggests, moreover, that better organised and resourced associations would assist the competitiveness of British industry. The main focus of the thesis is the Devlin Commission on Industrial and Commercial Representation. This was set up in January 1971 by the Confederation of British Industry (CBI) and the Association of British Chambers of Commerce (ABCC) and was an attempt to both modernise and rationalise Britain’s system of business representation. It reported in November 1972 but its recommendations would prove controversial with business and no significant changes would result. Devlin, therefore, was both a disappointment and a lost opportunity. The thesis also looks at how the debate regarding effective business representation has continued from both a business and government perspective. The Heseltine initiatives of the 1990’s would, for example, bring fresh impetus to the subject and produce, among other measures, a series of benchmarking exercises leading to the establishment of the Trade Association Forum (TAF). The twin challenges of globalisation and new technologies are providing a new stimulus to change, leading to the renewed prospect of progress towards a more effective system of business representation. It is, therefore, an appropriate time to review the efforts made thirty years ago, learn lessons from them, and link the earlier debate to more recent efforts to secure reform. 7 ABBREVIATIONS ABCC Association of British Chambers of Commerce ABI Association of British Insurers APS Assistant Personal Secretary BCC British Chambers of Commerce BEAMA British Electrical and Allied Manufacturers Association BEC British Employers Confederation BICEMA British Internal Combustion Engine Manufacturers Association BDA Bundesvereinigung Der Deutschen Arbeitgeberverbande (Confederation of German Employers’ Associations). BDI Bundesverband Der Deutschen Industrie (Federation of German Industries). BRIMEC British Mechanical Engineering Confederation CAP Collective Action Problem CBB Confederation of British Business CBI Confederation of British Industry DTI Department of Trade and Industry EDC Economic Development Committees EEC European Economic Community EEF Engineering Employers Federation EO Employers Organisation EU European Union FBI Federation of British Industries FT Financial Times 8 GMB General Municipal and Boilerworkers Union (*now referred to as ‘Britain’s General Union) GOR’s Government Offices of the Regions IOD Institute of Directors ILO International Labour Organisation KIF Knitting Industries Federation LSE London School of Economics MAFF Ministry of Agriculture, Fisheries and Food MHEA Material Handling Engineers Association MRC Modern Records Centre MSC Manpower Services Commission MTTA Machine Tool Trades Association NA National Archives NABM National Association of British Manufacturers NEDC National Economic Development Council NEDO National Economic Development Office NFU National Farmers Union NSTO’s Non-Statutory Training Organisations OECD Organisation for Economic Co-operation and Development PCA Parliamentary Commissioner for Administration PEP Political and Economic Planning PRO Public Records Office RDA’s Regional Development Agencies RTZ Rio Tinto Zinc TA Trade Association TAF Trade Association Forum TEC’s Training and Enterprise Councils 9 TGWU Transport and General Workers Union TUC Trades Union Congress UCATT Union of Construction, Allied Trades and Technicians USDAW Union of Shop, distributive and Allied Workers 10 CHAPTER 1: Introduction If one sought to improve the British system of business associations, one would have to consider not only basic principles, but the complex set of interests and institutional arrangements embedded in the existing system, and how government initiative might stimulate effective change without resentment (Grant, 1993a, p. 195) A substantial body of literature, including the Report of the Devlin Commission on Industrial and Commercial Representation, has identified fundamental problems with the structure of business representation in Britain. The Devlin Inquiry, representing a largely unsuccessful attempt to modernise Britain's system of business representation, is the main focus of the thesis. However, there is also an analysis of the Heseltine initiatives of the 1990s and more recent pressures for change arising from globalisation and new technologies. All these developments are discussed in terms of why it has been so difficult to rationalise the system of business representation in Britain and the wider consequences of this failure for business/government relations. This opening chapter: • Looks at how business is represented in Britain, and defines some key terms. • Provides a critique of Britain’s system of business representation, and outlines some recent improvements. • Considers why reform is so important • Outlines and evaluates the methodology of the research • Outlines the structure of the thesis 11 How is Business Represented in Britain? British business is represented at different levels in different ways. Some firms, especially large companies, may deal with Government direct. Alternatively, firms may use consultants. 1 However, they will often work through business associations. These include national representative bodies such as: • The Confederation of British Industry (CBI), the central representative body for businesses in Britain. • The British Chambers of Commerce (BCC), the central representative body for the chambers of commerce 2 • The Engineering Employers’ Federation (EEF), the membership of which comprises companies in the manufacturing sector • The Institute of Directors (IOD), the individual membership organisation for directors of companies • The Federation of Small Businesses, which represents small businesses • The Forum of Private Businesses, again represents small businesses Business is also represented by ‘trade associations’. Boleat, who has written a great deal on this subject, writes: 1 There has been an increase in recent years in the number of political consultants offering services to firms and business associations. The term refers to “someone who is professionally employed to lobby on behalf of clients or who advises clients on how to lobby on their own behalf” (Select Committee on Members Interests, 1991, p. v). Why would firms or associations wish to use a consultancy? For a medium
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