News

Cardiff Business Club interviews Sir Michael Rake

On Monday 13^th November, Cardiff Business Club Sir welcomed Michael Rake, who stepped down from his role as Chair of BT just a few weeks ago following 10 years at the helm. Under his watch, the telecoms giant has undergone perhaps the greatest and most significant change in its 180-year history (making BT the oldest telecommunications company in the world) but he isn’t about to leave the corporate world any time soon.

The 69-year old Sir Michael has long been regarded as one of the UK’s highest profile corporate chiefs, with previous positions including President of the CBI, business adviser to David Cameron during the coalition government, and Chair of both KPMG and easyJet on his CV. He retains his roles as Chair of Worldpay Group and the International Chamber of Commerce, and in June this year he was appointed Chairman of Great Ormond Street Hospital.

Before his address Sir Michael took the time out to be interviewed by Paul MacKenzie-Cummins, managing director at ClearlyPR, on behalf of Cardiff Business Club.

During the interview, he talked about the advances made by BT over the last few years and why it is in a stronger position now than when he took over. But he was also keen to express his thoughts and frustrations over Brexit and the far-reaching implications it will have (and is already having) on the UK and Welsh economy, particularly when it comes to jobs and safeguarding Britain’s role as a key trading partner.

Sir Michael Rake (MR), Paul MacKenzie-Cummins (PMC)

PMC: BT is one of the largest and most important employers in Wales and you leave BT after a decade in the role, how has the company changed in that time and what does the future hold for the business in the post-Brexit era?

MR: The business has changed hugely. Ten years ago, BT faced a number of challenges – the onset of the global financial crisis being the most obvious. This was compounded by problems that existed within our global services business, which resulted in significant losses and a collapse in our share price.  We needed to get costs under control and we did this through cost reduction, increased efficiencies and stabilising our global services business. Fast-forward a few years to 2009, we successfully rolled out fibre optic broadband when no one else was doing it and within a matter of a few years we transformed it from being a luxury to a necessity to a utility.

We then moved into sports (BT was a sponsor of the 2012 Olympics) and [since the subsequent launch of BT Sport a year later] successfully defended our position and created competition in the market place for the first time – Sky had previously enjoyed 95% domination of that market space. And as our share price strengthened and bottom line improved, we acquired EE: we’re now stronger than we were, with a healthier balance sheet.

PMC: Two weeks ago, the Bank of England declared that as many as 70,000 jobs will be within the finance and banking sector as a direct consequence of the UK leaving the EU. Some commentators dispute these figures, suggesting they are worst-case scenario, so what is your take?

MR: Mark Carney was completely right. We have probably already lost 30,000 jobs from the sector and we could easily see another 30,000-40,000 jobs lost – the Stock Exchange suggest this figure could rise to 100,000. But the losses are right across the UK and some will be gone due to changes in technology. Carney is the voice of stability and forward thinking.

"Whether people like it or not, the UK has lost a significant amount of its influence on the world stage"

London will remain a leading player, it just won’t be 'the' leading player. Whether people like it or not, the UK has lost a significant amount of its influence on the world stage. We seem to have a completely dysfunctional government that is at civil war with itself, and we have an opposition that wants a return to the days of nationalism and high taxes. This is a position that is heavily supported by a younger generation that is increasingly angered at the older generation for leading them to where we find ourselves today.

PMC: As a staunch Remainer, you have previously talked of the need for politicians to provide leadership so as to give business clarity and minimise risk and damage. Does the announcement of the date for Britain’s withdrawal now give greater clarity, and what does this mean for businesses both in Wales and elsewhere in the UK?

MR: The setting of a date for withdrawal has provided absolutely no further clarity whatsoever. We are in a very difficult and dangerous situation. There is no certainty. We’ve made no progress with the negotiations to date and we’re running into difficulties. Regardless of what the Brexit supporters say, it has been disproved that they were either mistaken or that they deliberately misrepresented the facts around trade treaties.

The continued uncertainty is already having an impact on business. For the first quarter in 20 years, we have had net dis-investment in the UK and the CBI has found that 60% of businesses are currently holding back on investment. Apart from opportunistic acquisitions, due to the fall in Sterling, plans are being held up and everyone is looking to see what will happen – contingency plans have not only been put in place, they are already being executed.

"Brexit is the biggest act of economic self-harm in our history"

Brexit is the biggest act of economic self-harm in our history; people had the political choice and as the Electoral Reform society said, there was no guardian of the facts – the £350 million figure for instance was shown to be false yet it continued to be used despite being a mendacious statement. The transition process will take at least five to 10 years to negotiate new trade agreements and sensibly withdraw from the EU.

Brexit was the first plebiscite in history that had irreversible constitutional change at its heart and was allowed to be varied by a minority of the electorate.

PMC: Of all the roles you have held and experiences gained throughout your career to date - from finance (KPMG), Telecoms (BT) and charity (Great Ormond Street Hospital), what one lesson would you share with other business leaders and those of the future?

MR: Everyone should determine what they want to get out of life. If you are ambitions, then you need to learn to be resilient, to be thick-skinned and most important is that you have to learn how to deal with people and organisational culture because people trump structures. So, it’s about people, leadership, leading by example and bringing people with you.

The Club's next event will take place on 15th January, when we will be joined by Liz Nicholl CBE, Chief Executive of UK Sport. Bookings for this event are now open.