[A-List] UK state: Confederation of British Industry

["Keaney Michael" <Michael.Keaney@xxxxxx>]

Sir John picks a fight with New Labour
Business Profile: CBI will be more sceptical about the euro under the
leadership of its new president
By Michael Harrison Business Editor
The Independent, 20 May 2002

Sir John Egan is not worried about the "curse of the CBI", the mystery
illness, which appears to strike down any company whose chairman, agrees
to serve as president of the CBI.

His three predecessors in the job - BT's Sir Iain Vallance, Sir Clive
Thompson at Rentokil and Lord Marshall of British Airways - all
developed acute strains of the disease, as did the share prices of their
respective companies. But Sir John says Inchcape, the car distributor
where he is chairman, has nothing to fear.

"Before I accepted this job, I made sure I had the time to do it," he
says.

He remains chairman of two other public companies, Harrison Lovegrove
and Asite. But he resigned as chairman of the Ministry of Defence's
commercial research arm Qinetiq. "The gap between me and the MoD was
huge ... I just didn't understand the culture of the business, I didn't
add a lot of value and I didn't enjoy the role," he says.

Sir John, who made his name running first the car company Jaguar and
then the airports operator BAA, also points out that, unlike his
predecessors, he is very much a non-executive chairman. "If I had tried
to do the CBI job when I was chief executive of BAA I could not have
done it," he says, adding that company directors, whether executive or
non-executive, should not to spread themselves too thinly.

So what does he think of the Higgs review into the role of non-executive
directors launched by the Government in the wake of the Enron and
Marconi scandals? "What review?" he asks, before being reminded of the
inquiry being led by Derek Higgs, the former Warburg corporate financier
and now chairman of Partnerships UK, the organisation co-ordinating the
Government's PFI strategy.

Sir John's view is not quite "if it ain't broke don't fix it" but he
clearly feels content with the UK's standards of corporate governance.
"When you look at the other systems on offer - the supervisory system in
Europe or the board system in the US where the chairman and chief
executive is a total dictator I don't think they are good systems of
governance," he says. "I believe we have come up with a pragmatic,
quality solution. OK, you could improve it to some extent and maybe some
people do take on too many roles. But of the systems on offer, the one
we have seems to be the best."

The one practice he does disapprove of - Sir Iain and Lord Marshall
please take note - is that of the company chief executive becoming
chairman. Sir John says the two roles need to kept clear and distinct.

Since retiring from full-time executive responsibilities at BAA in 1999,
Sir John has taken to working four days a week, eight months a year. His
new role at the CBI will occupy perhaps one of those days. Now aged 62,
he cuts a slightly more hunched and thoughtful figure than the dashing
executive who restored the fortunes of Jaguar in the 1980s and then
persuaded Ford to pay the crazy sum of £1.6bn to take over the
business.

Sir John still finds time to indulge his love of skiing. He and his wife
spend the first three months of the year at their chalet in the Swiss
Alps.

Back in London at the Centre Point headquarters of the CBI, the more
serious project is to make sure the voice of business is heard loud and
clear in Government circles. Here, the alarm bells have begun to ring.

"Tony Blair and Gordon Brown are approachable people and I hope there
will be dialogue," says Sir John. "But I now think we are running risks
with this economy. They had an impeccable experience with running the
macro economy until the last Budget. They have really strayed into
difficult territory. I think they are planning to spend too much of the
GDP of this country. As soon as Governments start to spend too much they
all seem to end up getting into trouble. I think the outputs the
Government is seeking from the National Health Service are dubious and
it will almost certainly be inflationary."

He contrasts the Government's tax and spend approach to the NHS with
France where the key to delivering a "world class" health service has
been the much bigger contribution of the private sector. Even Italy has
a better record in combating illnesses such as cancer, he says. "They
send them to places where they cure them, not where they kill them."

Sir John believes that Labour has "disrupted" the relationship it has
cultivated with business over the last five years. He cites, for
instance, the decision to raise employers' national insurance
contributions, the increase in North Sea taxes and Stephen Byers'
maladroit handling of the railways. "I don't think it helped to go and
savage the shareholders. Everyone thought governments were predictable
people to deal with. Railtrack demonstrated that needn't be so. It will
just cost money.

Sir John's priority during his two-year stint is, he says, to persuade
the CBI's members to take their social and environmental
responsibilities more seriously. A worthy goal but one which is likely
to be overshadowed by the organisation's stance on the biggest issue of
the day - whether Britain will join the euro. Here Sir John strikes a
much more sceptical note than either his immediate predecessor, Sir
Iain, or the majority of big companies among the CBI's membership.

Sir John says the euro has been bad for Europe's biggest economy,
Germany, inferring that Britain too could suffer in a similar way. "They
[the Germans] weren't in the doldrums for as long as this when they were
running the economy themselves so we must assume the euro is not acting
in their best interests," he says.

He also recites a long list of issues that must be addressed before
Britain can think about embracing the single currency, ranging from the
exchange rate, at which the pound might enter to the impact on the City
and inward investment. "Are we all going to go into this blindfold with
paper bags over our heads or are we actually going to know something
about how predictable the results are going to be," he asks.

Hardly the kind of europhoric stuff we have been used to hearing from
the CBI. Then again, you sense that the CBI will be different in quite a
few ways during Sir John's reign.

SIR JOHN THE NEW VOICE OF BUSINESS

Career History

Chief executive, Jaguar 1980-1989, CEO BAA 1990-1999, presently
president of CBI and chairman of Inchcape.

Interests

Includes sport, theatre and music

Salary

£128,000 at Inchcape.

Business influence

"Being involved in the collapse of British Leyland and its sale to the
Government. It taught me never to run out of cash and it made a very
cautious businessman out of me."