CBI warns on two-tier boards

THE Confederation of British Industry fears the development of a 'pointless bureaucracy' if the draft report of the Cadbury committee on corporate governance is adopted.

Sir Michael Angus, CBI president, was speaking after a council meeting to decide how to respond to the Cadbury recommendations. When it was published in May, the report gave tomorrow as the deadline for comments.

The CBI welcomed the report as 'an important stimulus to improved corporate governance', but Sir Michael added that members were concerned that strong emphasis on the 'policing' role of non-executive directors could lead to two-tier boards.

The concept of the unitary board - resting on all directors working as a team, with equal legal duties and obligations - had worked well, he said.

Similar fears are voiced by the Institute of Directors in its response to the draft Cadbury report.

Like the CBI, the IoD accepts the Cadbury committee's view that the roles of chairman and chief executive should generally be accepted.

Their responses contrast with that of the Chartered Institute of Management Accountants, which has called for the code of best practice to be made mandatory.

On the economy, the CBI council agreed that it would urge the Government to be more positive about the potential for future interest rate cuts and a commitment to maintain public spending on investment programmes, which should help to foster an improvement in business confidence.

The CBI said: 'The impression that the Government is totally boxed-in is itself damaging to business and consumer confidence.'

Despite the constraint of high German rates, CBI officials felt the Government would be able to engineer a small cut in rates in the next two months.