CBI Delays Naming President Amid Labour Row

The UK's biggest employers' group is to delay naming its new president until well after the General Election following a row over the preferred candidate's public backing for the Conservatives' deficit reduction strategy.

Sky News has learnt that the CBI has decided to defer an announcement that Paul Walsh, the former chief executive of Diageo (LSE: DGE.L - news) , the FTSE-100 drinks group, is to replace Sir Mike Rake, who is due to step down in June.

The lobbying group had planned to announce Mr Walsh's nomination as its new president in April, in line with recent practice.

However, insiders said that it had now decided to try to wait until "post-election noise" had subsided before doing so.

They insisted that Mr Walsh remained the CBI's favoured candidate and denied that his appointment could be derailed if Ed Miliband becomes Prime Minister in the wake of next week's poll.

Senior Labour figures, including Chuka Umunna, the shadow business secretary, had questioned whether Mr Walsh could take the role after signing a letter last month which praised economic policies pursued by David Cameron and George Osborne.

"The current president of the CBI, Mike Rake, has been strenuous in ensuring the CBI remains a politically neutral body, but it is not tenable for the CBI’s next president to be involved in a party political stunt by the Conservative party in a general election campaign," Mr Umunna said in March.

"I am sure Mike Rake would not have involved himself in this letter because he takes the role of the CBI as a politically neutral body very seriously."

Some people connected to the CBI's leadership have acknowledged concerns that the organisation's political neutrality could be compromised.

However, another insider pointed out that the CBI had always been, and would continue to be, critical of politicians' pledges if they were perceived to be damaging to the business environment, regardless of their origin.

The CBI presidency, the appointment to which is subject to the endorsement of the chairman's committee, is among the most prestigious roles in British business.

CBI members are entitled to vote on the president's appointment, although there is no suggestion that Mr Walsh's nomination would be the subject of unusual levels of dissent.

A date for the group's annual meeting has not yet been finalised but is expected in June.

Mr Walsh, who is chairman of Compass, the catering group, and a director of the parent company of Formula One motor racing, would ordinarily be regarded as a credible choice for the CBI presidency during what could be a defining period for the UK.

Depending upon the outcome of the election, Sir Mike's successor at the CBI may have to steer the group through an in-out referendum on the UK's membership of the European Union.

CBI presidents are appointed for a two-year term and provide one of the most important interfaces between business and Government.

Mr Walsh, a former member of David Cameron's Business Advisory Group and UK Business Ambassador, also serves on the boards of companies including Fed-Ex, the delivery group, RM2, a pallet-maker, and Unilever (NYSE: UL - news) , the consumer goods giant.

Prior to stepping down at Diageo, Mr Walsh was quoted on the subject of the EU as saying that Mr Cameron was “right to seek a new settlement to take account of the different needs of the Eurozone and of those countries, like the UK, which will be in the single market”.

The CBI has itself been going through a period of change, moving into new headquarters in the City last year and launching a campaign aimed at demonstrating the efficacy of business as a broader force for good in society.

It encountered turbulence last year over its role ahead of the Scottish independence referendum, although its director-general, John Cridland, is widely regarded to have done a capable job since taking on the role in 2010.

Mr Cridland is due to step down later this year, and a search is underway for his successor.

The CBI declined to comment on the timing of its announcement about a new president, while Mr Walsh could not be reached for comment.