Gordon Brown has assembled a star-studded cast of business leaders from around the world to advise him on how the UK can improve its competitiveness and attract more investment from international companies.
The Chancellor's initiative, announced on the eve of today's Budget, drew a guarded response from Britain's business community and came as a survey showed the UK slipping down the league of international cost competitiveness. Sir Digby Jones, the director general of the CBI, warned it needed to be more than just "politically helpful window-dressing".
The 12-strong International Business Advisory Council for the UK will meet once a year at 11 Downing Street, and will provide the Chancellor and the Secretary of State for Trade and Industry, Alan Johnson, with advice on how to respond to the "challenges and opportunities of globalisation".
Among its members are the Microsoft chairman Bill Gates, the Hong Kong-based billionaire and chairman of Hutchison Whampoa Li Ka-shing, Lee Scott, the chief executive of the world's biggest retailer Wal-Mart, Bernard Arnault, the chief executive of the French luxury goods group LVMH and Jean-Pierre Garnier, the chief executive of GlaxoSmithKline.
Three of Britain's best-known businessmen - BP's chief executive Lord Browne of Madingley, the Tesco chief executive Sir Terry Leahy and Sir John Rose, the chief executive of the aero-engine manufacturer Rolls-Royce, have also been invited on to the council.
The remaining members are Robert Rubin, the Treasury Secretary in the Clinton administration and now a director of Citigroup, Ratan Tata, the chairman of the Indian industrial conglomerate Tata, Meg Whitman, the chief executive of the online auction company eBay, and James Wolfensohn, the former president of the World Bank.
Announcing the creation of the council, Mr Brown said: "There is no more important question for advanced industrial countries today than how to rise to the challenges and opportunities of globalisation. In Britain, we have strong foundations built on macroeconomic stability, openness to competition and trade and investment in infrastructure, science and skills. But we must do more."
But the CBI's Sir Digby gave a more guarded response. He said the council was "on paper an eminently sensible idea" but went on to caution: "The practical test will be whether the advise of these 'wise men' is acted upon - not just regarded as politically-helpful window-dressing. This Government has 'previous' for being good on the talking but not making the walking effective."
The council will run for three years and its first meeting will take place later this year. Its remit will be to advise the Chancellor and the Secretary of State for Trade and Industry how Britain can retain its position as a top location for international companies to undertake "value-added activity" such as research and development and product design.
Mr Brown's announcement came as a global study by the accountants KPMG revealed that the UK had slipped from third to sixth in the international table of cost competitiveness in the past two years. The 2006 'Competitive Alternatives' report showed the UK being overtaken by France, Italy and the Netherlands, although it remains ahead of the US, Japan and Germany.
The biennial report measures the competitiveness of countries against 27 different measures of cost - ranging from labour and taxes to utilities business premises.
A report in January from the authoritative Conference Board found the productivity gap between the UK and the US had widened, despite Mr Brown making it one of his top priorities as Chancellor to narrow the gulf. Last year Britain's competitiveness, as measured by output per hour worked, rose 0.9 per cent - half the 1.8 per cent increase recorded in the US.
Mr Brown will also announce plans today to bolster London's standing as a financial centre by joining forces with a dozen or so City institutions to develop a co-ordinated strategy for the Square Mile. The Treasury will publish a detailed analysis of the challenges facing London, arguing that it cannot afford to be complacent about its strengths.Reuse content