Wednesday 5 October 2016 8:48 pm

Theresa May hit by a business backlash over her Conservative party conference speech

Prime minister Theresa May was lambasted by business groups and policy wonks yesterday for a speech that laid bare an interventionist economic policy and a heavy-handed approach to business reform.

May used her closing speech at the Conservative party conference in Birmingham to pledge action against “dysfunctional” markets and to slam the so-called liberal metropolitan elite.

She delivered a populist broadside against bad bosses who allow pension funds to go bust or fail to look after their staff, and launched a scathing attack on multinationals that 'dodge' tax. "I'm putting you on warning. This can't go on any more," she said. "We're coming after you".

May also hinted at a move to control energy prices, and appeared to blame market failure for both the housing crisis and poor broadband services.

"Where markets are dysfunctional, we should be prepared to intervene," she said.

Economist James Sproule from the Institute of Directors hit back. "Business leaders are not pantomime villains, evading taxes and employing cheap labour from abroad out of some destructive desire to do Britain down," Sproule said.

Ryan Bourne, head of public policy at the Institute of Economic Affairs told City A.M: “Clearly this is an ideological change in direction for the party and her view of the worthiness of government interventions is much greater than previous Tory leaders.

“She seems to want to expand government interventions in a range of markets, not least energy, housing and industrial strategy more broadly. In each of those areas she has bought in to the narrative that somehow there's huge market failure which requires the government to correct.

“She's bringing together an interventionist economic policy and an authoritarian migration policy. It's quite an ugly mix.”

Adam Smith Institute executive director Sam Bowman said: “We call on the Prime Minister to abandon her ideological attachment to interventionist economic policies, look at the evidence, and accept that it tells us that markets, not the state, are the solution to our problems.”

Other industry groups responded by warning the prime minister not to “dictate” reforms.

“We need government to act in partnership with business communities, not dictate to them – so that businesses in turn can deliver both opportunity and prosperity," said British Chambers of Commerce acting director general Adam Marshall.

CBI director-general Carolyn Fairbairn warned the government against imposing approaches that look good on paper without making a difference in practice, citing May's plans to force companies to place workers and customers on corporate boards.

Terry Scuoler, chief executive of manufacturing body EEF, pleaded with May to recognise that the vast majority of businesses are well-run, rather than penalise the majority with fresh legislation.

The furore comes as Home Secretary Amber Rudd signalled a retreat from her own proposals to encourage business to recruit more UK workers by listing the number of foreign workers they employ, following a stinging backlash.