Hello and welcome to the Harvey Nash blog from the Annual CBI Conference.

We are here at the Business Design Centre in Central London with some of the most senior business leaders in the UK as well as the Prime Minister and the two leadership contenders from the Liberal Democrats.

This year's conference comes at a critical time in the relationship between government and business. There are lots of questions around private equity, taxation, skills and talent development that the conference will seek to answer. This is the event for business to get their voice heard and to debate the big issues that will affect our future success in the global economy.

Monday 26th November

The conference is filling up well, estimates suggest there are over 700 delegates and many take the time to stop by the Harvey Nash stand to say hello.

The first speaker of the day is Gordon Brown, the Prime Minister, so you can't really complain about the calibre of the speakers!

Fresh from his trip to Uganda and the commonwealth conference there is a high level of expectation that he will use his speech today to inject some positive sentiment into his Government's record.

Brown begins with a strong and upbeat statement that the vast majority of UK businesses are rising to the challenge of the global market, but that there is more his Government can do, and will do, to make UK firms global industry leaders in many sectors.

He goes on to outline his position on skilled migration and talent development, two topics that are of specific interest to Harvey Nash.

We are told that 190m people are now moving country every year in the search for better jobs and higher standards of living. The UK Government will continue to oppose those who want to abolish the opportunity for skilled migration but the Prime Minister announces a new points system similar to that seen in Australia will be introduced in the UK to limit low skilled or no skilled migration.

ID cards, the Prime Minister argues, are also positive for skills development of the UK workforce, protecting citizen’s rights and creating jobs.

Putting the war for talent into a global context Brown said that UK business needed to wake up to the battle that was emerging. Five million graduates are qualifying each year in China and India so there is really no choice for UK firms but to compete on a highly skilled and value added basis.

In response to a greater number of skilled graduates worldwide the UK Government are to announce a new approach for skills development for 16-19 year olds to raise the standard of ability across the board.

The Prime Minister concludes his speech with a bold statement that "education for skilled work is the Government's main priority going forward".

This is warmly welcomed by the audience and especially the Harvey Nash delegates who are at the sharp end of the war for talent and see first hand the value that talented people can have on their firms.

After the speech the Prime Minister remains at the podium to answer questions from the floor.

Clive Sexton, Director of Impact Executives (part of the Harvey Nash Group) asks why the Government are not planning to adopt the proposed European Blue Card scheme, despite the proposed 20m skilled professionals it would bring to the European zone (which of course includes the UK!)

In his answer, Brown states that his Government is pursuing radical change to the skilled immigration process, beginning with the introduction of a points system based on skills available.

The future will see business investing more in higher education, especially in the regions outside London if the Prime Minister has his way. He finishes by saying he wants to "unlock the talents of the next generation" and if the actions of his Government support his words we look forward to a new era of talent development and a highly skilled UK workforce.

Private Equity Debate

The role of private equity in the UK economy is the first of the big panel debates of the day.

It includes a keynote address from one of the industry's founding fathers Stephen Schwarzman, Chairman of multi billion dollar fund managers the Blackstone Group.

The panel includes another industry heavyweight, Philip Yea, CEO of 3i Group as well as Tim Parker, CEO of The AA (one of the highest profile companies to have been funded by Private Equity investment) and also Kitty Ussher MP, Economic Secretary at the Treasury.

We find out during the session that over one fifth of the private sector workforce is now employed by companies with Private Equity (PE) backing.

The numbers thrown about by commentators when covering the PE industry are astronomical, and in recent months, the industry has fallen under the media spotlight with the Chancellor’s increase in capital gains tax (CGT) designed to redirect some of those astronomical sums into the Treasury’s coffers.

We hear from Schwarzman that the PE industry should not be embarrassed by its success, and that there are many firms who are successful and profitable today that wouldn't exist if they had not received PE backing.

PE can bring with it culture of good governance and instil checks and balances in firms that are invested in. Where a small group of directors often hold the bulk, or all, of the shares and therefore the power in firms PE can bring a more open approach to decision making says the panel.

PE firms can also offer long term stability, far removed from the media portrayal of a "buy, cut and run" approach they have so often been accused of. The average PE investment is five and a half years, compared to 10 months which is the average holding for most publicly held stocks. The argument is that a long term approach reassures management and staff, allows them the freedom to innovate, and plan for success.

Investment managers (in the best firms) bring significant operational experience that benefit PE backed companies. Also, we are told that ongoing investment in R&D, talent development, operational efficiency and expansion runs at four times higher in PE backed firms than their privately held peers.

The panel finishes with a debate on the future of PE with a consensus held that the industry will only grow in importance and will continue to influence the world's macro economic trends for years to come.

The Reputation of Business

The afternoon debate is scheduled to begin soon, it is being led by Greg Dyke, former Director General of BBC and the panel includes Albert Ellis, Harvey Nash CEO, Steve Easterbrook, CEO McDonalds UK, Gary Hoffman, Group Vice Chairman of Barclays Plc and Iain Coucher, CEO of Network Rail.

The session begins with a keynote address by Greg Dyke; he opens with a strong statement that he wishes business was more like sport as far as engaging with the media is concerned. He believes that consumers are looking for straight talk and simple answers and that it is important to explain your version of the truth to your audience if you are being accused of activities that may damage your corporate reputation.

Dyke goes on to question the UK media’s treatment of successful businesspeople. He compares the treatment of some of the UK's leading entrepreneurs in the media to some of those in the US. His argument is that there is an aura of negativity around the reporting in this country, while success, profit and personal achievement are celebrated across the pond.

The debate is opened up to the panel with each member introducing their themes around reputation for business. Easterbrook, of McDonalds starts with a quote from Benjamin Franklin, one of the founding fathers of the United States, who recognised how fragile a reputation is when he said "It takes many good deeds to build a good reputation, and only one bad one to lose it."

He goes on to argue that customer expectations are central to business reputation and they must be met every time a consumer walks through the door.

As the debate continues, Gary Hoffman of Barclays states how the last couple of weeks have shown him how very fragile business reputation can be. He touched on his view that the public seems to absorb a massive amount from the media, which is often inaccurate and sometime biased or even untrue.

Harvey Nash's own chief executive Albert Ellis speaks next and his first act is to stand up for media after the comments by Hoffman. Ellis suggests that, far from being a tool of misdirection, reporting is often a force for good and helps to keep business honest.

The core argument from Ellis is that attracting the best and the brightest to become future business leaders is critical for sustainable success. However, these candidates - Generation (Y) - are highly influenced by reputation and demand a high standard of morality from current business leaders.

He proposes three simple actions that he thinks will help restore the trust of Generation Y in business.

One, recalibrate marketing messages for authenticity, No spin!

Two, embed a culture of honesty and transparency into the very fabric of your company culture.

Three, get used to having a reverse gear. All leaders make mistakes but we have to admit them and find credible solutions, not push on regardless in the pursuit of profit.

For sustainable business success there is no more important issue than hiring the right people, and Ellis concludes that the generation that cares most about corporate reputation is the talent that is so crucial to global competitive advantage, both now and in the future.

The final speaker, Iain Coucher from Network Rail, calls on personal experience of leading an organisation which struggles with its corporate reputation. He outlines some statistics that highlight how many people find the rail system to be a negative experience, but surprises the room by telling us that the most hostile views of the rail network is actually reserved for those who don’t use it!

The debate concludes with an overview from each panel member. All agree that a good reputation can add huge value to a company when managed well, that they are difficult to build and maintain, but that in the wrong hands a corporate reputation is easy to destroy.

With that, the first day of the conference comes to a close and the delegates make their way back to their hotels to prepare for the lavish Gala Dinner that is being held later tonight.

Tuesday 27th November

This morning David Cameron opened the second day of the CBI conference to an enthusiastic welcome.

After meeting delegates at the Harvey Nash stand he takes the stage and launched into his speech which was designed to show the business community that the Conservative Party is ready to run the country again and that he is going to be a more appealing occupant of No 10 than current Prime Minister Gordon Brown, who was heckled during his appearance here yesterday.

Cameron sets out his agenda by claiming there needs to be a big change in central government. Widely quoted in the media, he said, "Government has got too big, and too bossy". He states that changing the railways and infrastructures is not a hard thing, but it does take money, money that taxpayers must be willing to pay if they want these things. He tells the conference that he wants to decentralize Government. He argues that he doesn’t want to use today's technology to control the UK population like Gordon Brown and his ID card proposals, but rather help and liberate the British people.

Considering his audience Cameron makes sure he reinforces the fact that the British economy has prospered despite the longest and most complex tax code in the world rather than because of it. He asks the business leaders in the room to think about what they could achieve without an interfering Government.

The audience is also treated to some playful baiting of the embattled Chancellor, Alistair Darling, saying that even a half competent Chancellor would admit he is wrong if he had lost the personal data of half the population!

Cameron gives his slant on the skills debate that Gordon Brown spent so much time the previous day speaking about. A Conservative Government, he says, would encourage more private enterprises to invest in schools and higher education institutions to ensure the next generation workforce are prepared for a role in the global economy.

Extending his session with the audience he opened the floor for questions, but unlike the Prime Minister (who only fielded questions in batches of three that were selected by the conference chairman) Cameron engaged directly with each delegate with a question.

In a relaxed and good natured session he took questions on a range of topics including one from Harvey Nash Director Nigel Parslow, who asked how a Conservative Government would persuade the US and China - the world’s two biggest polluters - to sign up to the new climate change framework that is the basis of the upcoming Bali environmental conference.

Climate Change Debate

The CBI launched a major report on the role business should play in tackling climate change immediately before this year's CBI conference and it has generated huge media interest. Click here to see the related press release.
The next session of the conference debates the report and the business solutions to climate change. Ben Verwaayen, Chief Executive of BT and chairman of the CBI climate change taskforce opens the session with a keynote address.

He argues that the rate of progress UK business is making on tackling climate change issues is not good enough and that the UK will miss its 2020 emissions targets. He stresses that teamwork will be critical - the business community, Government and the consumer - all have to play their part.

Talking of the report, Verwaayen says that 50% of the proposed charges are easily implementable and can make an immediate impact; however 50% is longer term and requires more investment. He admits that the proposals translate into a cost burden on the UK consumer of about £100 per household per year, but, that the cost of doing nothing will be far higher. He echoes the report title by saying that business "will do what it takes to achieve success.

He is joined on stage by other members of the climate change taskforce: Hilary Benn MP, Secretary of State for DEFRA, Sir Terry Leahy, Chief Executive of Tesco, Robert Napier, Chairman of The Met Office and Philippe Varin, Chief Executive of Corus.

The audience is told that business should adopt the same approach to climate change as it has to health and safety standards. The panel also argue that climate change offers a one trillion pound business opportunity, in addition to the moral necessity to ensure the next generation is equipped to deal with changing weather conditions. UK business can lead the world by developing the new technologies and the new approaches that will be needed to tackle climate change.

Sir Terry Leahy points out that consumers are a vital component in the climate change solution. As a group they are responsible for 60% of the UK’s emissions and that getting them to change their habits will have a major impact in the UK's ability to reach global environmental targets. He tells the conference that perception is changing and that sales of energy efficient light bulbs have increased by 400% in the last six months at Tesco as consumers continue to become more environmentally conscious. He also points out that Tesco customers have saved one billion plastic bags this year with the incentive of club card points for recycling old carriers.

The Environment Minister, Hilary Benn, applauds the conference for seriously debating the issue for the first time and says that Government will also "do what it takes" when they are at the global environmental conference in Bali with other Governments from around the world. Benn says they will be drafting (and hopefully signing!) the successor to Kyoto treaty.

Another sound bite from the panel is "you have to be green to grow" which reflects the business opportunity argued from the stage. But one speaker, Robert Napier, Chairman of The Met Office, also has a stern warning - for all the positive words it may already be too late to reverse the advancement of climate change - and that businesses should prepare for the cost of increasingly adverse weather and higher insurance costs for floods and storm damage.

The panel closes with another call to action that, despite having some of the best scientific technology in the world, there is still huge opportunity for advancement. The economic, scientific and environmental conditions are now aligned for UK businesses to make money and save the planet, but the clock is ticking!

Alistair Darling, Chancellor of the Exchequer

The last keynote speaker of the conference is the embattled Chancellor of the Exchequer, Alistair Darling. He speaks on the same day as yet another question is raised about the judgement of his colleagues in Government with the embarrassing disclosure that Labour has been accepting major finance contributions from less than reputable sources.

However, here at the CBI the Chancellor is upbeat about the economic achievements of the last decade of Labour government. He reinforces his point by stating “Britain has a strong economy. We have highly successful competitive businesses, many here today. We have seen over ten years of uninterrupted growth.”

Comparing UK growth to that seen in the rest of the World he states “over the past ten years Britain has been the only major economy to enjoy continuous growth.” All very positive statements but the audience know there are a number of very public crises that the Chancellor has been at the centre of during the previous months and there is widespread expectancy that he will use the platform at the CBI to defend his record.

We do not have to wait long!

Darling says he wants to “tackle head on” those in the media and business community who say the Treasury should not have provided financial support for Northern Rock. His view is that the Government could have let the bank collapse, but that they intervened for the long term benefit of other UK financial institutions because confidence would inevitably have been shaken in Britain’s financial industry should the bank have fallen.

His recent position to raise capital gains tax (CGT) from 10% to 18% is another topic for defence with this business audience, and he strikes a conciliatory tone when he says he recognises that the move has not been popular and that his department is listening to what the business community is saying, he states they will “publish final proposals in the next three weeks”.

We at Harvey Nash are encouraged to see that there is a strong message for investment in education and skills, mirroring his boss’s statement from yesterday, although the Chancellor provides no details on his spending commitments for education projects.

At the end of his speech Darling remains on stage to answer questions from the audience, of which there are many. All in all he has delivered a stoic defence of his department’s track record and hinted at positive announcements to come, but he leaves to a less than rousing round of applause.

Conclusion

And so the 2007 CBI Conference comes to an end!

We have enjoyed lively debate on some of the most pressing issues for UK business, including protecting business reputation and the role of business in the global reaction to climate change.

We have heard from the leaders of the three main political parties who outlined their economic credentials.

Harvey Nash has again taken a leading role in shaping the debate and has maintained a high profile position within the senior business community at this year’s conference.

If the majority of commentators and futurists are proved right we are facing a more uncertain economic period in 2008, which makes the support of organisations like the CBI all the more important.

However, despite reports of economic pessimism and business faith in Government competency at an all time low, delegates at this year’s CBI Conference remain upbeat. Many of those who visited the Harvey Nash stand expressed genuine excitement by the opportunities presented by the constantly evolving global marketplace.

So while the issues will certainly evolve over the next 12 months, and some trading conditions may deteriorate, it is vital for UK firms and business leaders to promote their ability extensively on the international stage.

UK plc still has a plethora of talent available to help ensure Britain’s success story continues.

See you all in 2008!