The Confederation of British Industry has secured emergency funding from a series of banks, staving off potential collapse after members fled the business lobby group in the wake of sexual misconduct allegations.
The funding package comes after a last-minute cancellation of the trade body’s scheduled annual meeting last week as it scrambled to raise the £3m it needed to get through this year.
After failing to persuade its own members to provide the funds, the CBI has secured a revolving credit facility – in effect an overdraft – from a collection of banks to buy itself some more time, the Sunday Times reported.
The banks are thought to include Lloyds Banking Group, NatWest, HSBC and Barclays.
A spokesperson for the CBI said: “We are satisfied that we have secured the financing necessary to overcome the short-term cashflow challenge and that the organisation remains in a strong medium- to long-term position.”
Last week the CBI shelved plans for a tie-up with the manufacturing body Make UK, telling members it was confident that an alternative emergency cash rescue would be found.
The trade body, which relies on membership fees, told staff in June that it needed to reduce its salary bill by a third.
Its cashflow problems follow an exodus of the CBI’s members, which was triggered by reports in the Guardian in April of sexual misconduct, including two alleged rapes.
Since then, nearly 100 British companies have paused or suspended their membership, including the carmakers BMW, Ford and Jaguar Land Rover; the supermarkets Tesco and Sainsbury’s; the asset managers Aviva, Fidelity and Schroders; the US banks Goldman Sachs and JP Morgan; and the oil companies Shell and BP.
The government and the Labour party had paused contact with the organisation, hampering its ability to represent businesses, although communications have now resumed.
Before news of the overdraft, the CBI was thought to be nearly £3m short of meeting its financial obligations from mid-October onwards, according to sources familiar with its financial position. That would have left a gap before it could expect its next wave of membership fees from its remaining members in January next year.
The lobby group’s new director general, Rain Newton-Smith, is expected to meet the chancellor, Jeremy Hunt, before his autumn statement on 22 November.
