The Prime Minister has ruled out forcing companies to appoint workers to boards or create continental-style dual boards, despite her earlier complaint that too many directors are drawn from the same narrow social and professional circles.

Speaking at the Confederation of British Industry (CBI) Annual Conference, Theresa May said that the Government would publish a Green Paper within weeks that will set out reforms to shareholder accountability, executive pay and employee representation.

She told business leaders: “I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards.

“This is not about creating German-style binary boards which separate the running of the company from the inputs of shareholders, employees, customers or suppliers. Our unitary board system has served us well and will continue to do so.”

The update will please many businesses, who have privately lobbied against direct employee representation, citing fears over confidentiality and diluting boards’ primary responsibility to act in the interests of shareholders.

For advocates of the idea, Mrs May’s comments will represent a U-turn. As she campaigned for the Conservative leadership in July she pledged that “we’re going to have not just consumers represented on company boards, but workers as well”.