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The CBI’s new president has criticised the government’s strategy of taking direct stakes in businesses, saying she doubts whether it attracts private capital.
Cressida Hogg, who is also chair of defence group BAE and senior independent director of the London Stock Exchange Group, told the FT she was “never convinced by the crowding-in argument” for state investment and that it “sometimes is used as an excuse for a government subsidy and it doesn’t actually attract in the private capital behind it”.
The UK government invested £25mn in the Kraken technology arm that is being spun out of Octopus Energy through the British Business Bank last month while Britain’s National Wealth Fund recently said its strategy would focus on taking larger stakes in bigger companies.
In her first interview since taking up the role at Britain’s biggest business lobby group, Hogg said that while there were examples in infrastructure where it made “great economic sense” for the government to back risky construction phases, she would want to ensure “shareholders’ rights are protected and I think as a taxpayer I’d like to see a rationale for why it makes sense”.
“You need to do it in a very clear-eyed, financially literate way,” she added.
In response, the British Business Bank said it had a “catalytic impact” and its recent £6.8bn of public funding had attracted £32.2bn in private capital and lending guarantee — a ratio of £4.70 for every £1 put in by the Bank over the past 11 years of its existence.
Hogg was also critical of the government’s plans to cap salary sacrifice pension schemes while simultaneously encouraging people to save more for their future.
The policy, announced at the Budget and due to come into force in 2028/29, has already prompted companies to cut back on contributions to employees’ pots, she said.
She raised concerns about whether it could delay new parents returning to work because of the lack of childcare from family members: “If you have to go to work one or two days a week as a grandparent, because you haven’t got enough saved up or you don’t believe . . . your state pension’s going to be enough, then you can’t support your children when they want to return to the workforce.”
Hogg said the dwindling number of people in government with commercial business experience had meant “the perspective of business has left the cabinet . . . and that’s been detrimental to business”.
However, she added that it “would be very worrying if we had a cabinet where nobody had public sector experience”.
She said it was necessary for the CBI to engage with both Reform UK, particularly when there was still uncertainty about what the right-wing populist party’s policies might be, and the Green Party, which has a record of anti-business policies, including the nationalisation of utilities.
Hogg reveals that she had to be persuaded to take the role of chair at BAE, overcoming her concerns about a lack of career in defence and engineering and a “wee bit of imposter syndrome”.
She also revealed she had to win over some of her family who raised concerns about what their friends might think of her taking the top role at BAE when defence companies were still viewed as so-called “sin stocks”.
She said Russia’s invasion of Ukraine and other global conflicts had led to a reappraisal of the industry and her family was “now very proud of what we do and aware of the importance of national security”.
She refused to have photographs taken for the interview by the FT, partly she says because of her “paranoid” concerns around managing her security in an era of AI deepfakes and cyber threats.
“There are lots of ways that people can try and impersonate me, there have been enough incidents in defence companies and colleagues,” she said. “I wish we didn’t have to put pictures of our board [online] because there are threats.”
Her publicity-shy approach is a contrast to her predecessor Rupert Soames, who oversaw the CBI’s survival when its existence was in doubt due to a misconduct scandal in 2023 involving allegations of serious sexual misconduct by staff.
Hogg says that she had been motivated to take over at the CBI because she believed in its role of providing one business voice to government: “Sometimes these crises are quite good for organisations. They strip you back to your essentials . . . That’s being massively beneficial going forward.”