UK business chief urges Burnham to curb tax speculation
The leader of Britain’s largest business lobby has warned incoming Prime Minister Andy Burnham that a new round of tax and spending speculation will damage corporate confidence just as the UK seeks to reset its economic relationship with Europe.
Andy Burnham takes up the Labour leadership on Friday and will announce his cabinet on Monday, facing immediate pressure to avoid a “summer of speculation” over tax and public spending. Rain Newton-Smith, chief executive of the Confederation of British Industry, said that kite-flying about potential tax hikes or spending cuts creates damaging uncertainty for companies. Labour’s previous two summers were plagued by similar leaks ahead of Rachel Reeves’s autumn budgets, a pattern she urged the new leader to break.
The choice of chancellor is a critical early test, with briefings suggesting Energy Secretary Ed Miliband is a candidate. Newton-Smith said she was “not terrified of Ed Miliband”, but urged the next chancellor to “walk to the right answers, not run to the wrong ones” rather than feeling “bounced into making decisions in the first couple of weeks”. “What business wants to see is evolution, not revolution,” she added.
She also pushed back against renationalisation plans floated by some Labour allies, noting that private investment had delivered strong results. “Renationalising things is incredibly expensive,” she warned, arguing the ultimate cost falls on ordinary people. Instead, she called for public-private partnerships to deliver major infrastructure like reservoirs, new homes, and energy-efficient buildings.
For European investors, a major concern remains the UK’s industrial competitiveness, particularly on energy. A paper by the CBI and Energy UK showed that British businesses pay 45% more for electricity than the G7 average. Newton-Smith proposed scrapping green levies from industrial bills and moving the costs to general taxation or a privately funded scheme.
On EU relations, Newton-Smith urged Burnham to quickly reschedule a bilateral summit postponed after Starmer’s resignation. However, she dismissed any rush to rejoin the single market or customs union. “Rejoining the single market and customs union is just not on the table right now on the European side,” she said, backing the current framework to “negotiate hard and deliver that”.
The intervention comes after Reeves delivered her final major speech as chancellor at the Mansion House dinner on Tuesday. Newton-Smith praised her record on public investment but told Burnham he must “pick up the pace” to deliver growth.
