Theresa May has backed away from plans set out in her Tory leadership campaign to put workers on company boards.

The Prime Minister had promised the radical overhaul to give staff more influence over firms run by over-paid executives, but today she confirmed the measure would not be compulsory.

Speaking to the Confederation of British Industry’s annual conference, Ms May said she would bring out a policy paper later this year addressing executive pay and accountability to shareholders.

Telling business leaders she would consult with them, she said: “Let me be clear about some important points.

“First, while it is important that the voices of workers and consumers should be represented, 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.

“Some companies may find that these models work best for them – but there are other routes that use existing board structures, complemented or supplemented by advisory councils or panels, to ensure all those with a stake in the company are properly represented. It will be a question of finding the model that works.”

Ms May said in July that if she became Prime Minister she would “have not just consumers represented on company boards, but employees as well”.

Her confirmation that the plan would be watered down comes after Business Secretary Greg Clark also signalled weaker proposals by suggesting this morning that there were “different ways” of giving workers a voice.

The Prime Minister has been under pressure from the business community after giving a conference speech which signalled a potentially disruptive hard Brexit and focused on migration and tackling poor corporate governance.