Burnham comes in at number 10 with eight out of ten SME owners adjusted for impact
Andy Burnham has become Britain’s seventh prime minister in a decade, entering Downing Street with a promise of liberalism on the high street on one hand and a small business community seeking influence on the other.
Buckingham Palace confirmed his appointment on Monday. “His Majesty welcomed the Honorable Member of Parliament Andrew Burnham to the audience and asked him to establish a new administration,” said the spokesperson. “The Honorable Andrew Burnham MP accepted the King’s proposal and shook hands when he was appointed prime minister and first lord of the treasury.”
No actual kissing took place, this saying is a traditional summary of accepting the King’s invitation to form a government. The business community will hope that all the promises of the new administration will be seen as less than festive.
Burnham’s growth has been remarkably rapid. The former mayor of Greater Manchester became MP for Makerfield four weeks ago, took over the Labor leadership on Friday following Sir Keir Starmer’s resignation, and now leads a government facing an Autumn Budget with precious little room for leeway.
For Britain’s 5.5 million small business owners, the question is not constitutional reform but what the new prime minister intends to do with his newfound powers.
This time, there are early signs. Burnham has promised a 20 per cent cut in business rates for pubs, clubs and music venues, with a cap on rates for small private hospitality, leisure and retail businesses raised for the first time since 2017, supported by higher levies on major online retailers.
He also promised to honor the commitments in Labour’s manifesto of 2024 not to increase VAT, income tax or national insurance. “I stick to the manifesto and the promises it made,” he said before taking office. “So, I can’t make it clear, but there is a certain place in that electoral roll for tax travel.”
That last clause is the one to watch. Any re-rating would come on top of the ever-low business rate multipliers introduced for retail, tourism and entertainment from April, and would mark a further shift of the property tax burden away from the high street.
However, the economic legacy is not forgiving. Figures from the Office for National Statistics show the economy grew by 0.1 per cent in May, with services operating almost as hard as manufacturing and construction contracted.
Ben Caswell, senior economist at the National Institute of Economic and Social Research, puts it bluntly: “With volatile energy prices, high inflation on the horizon, and weak public finances, the new Prime Minister inherits a booming economy and will have just under three years to fix a difficult economic situation.”
And Burnham doesn’t start with the benefit of the doubt. Exclusive research shared with Business Matters last month found that eight out of ten SME owners fear what Prime Minister Burnham will mean for their business, concerns stemming from his sense of intervention and previous flirtations with land value tax.
In his first words as prime minister-in-waiting, Burnham promised to make politics “less toxic”, to improve living standards across the country and “bring back the hope we all longed for.”
Optimism, however, is not a linear element in cash flow forecasting. For SME owners, the real test comes in the autumn Budget, when the gap between the new prime minister’s sympathy for the high street and the state of the public finances will have to be redressed. Until then, Britain’s business owners will do what they’ve learned from the past six prime ministers: keep calm, and keep the outlet open.
