One tax cut could make us all better off – so why won’t Burnham do it?

For all his social media antics since becoming Prime Minister, Andy Burnham is still an enigma. We might know his favourite bar snacks, but we don’t yet know what he really wants to do to allow the pubs serving those pork scratchings and crisps to keep operating. Next week, parliament returns, and with it the difficult questions about Burnham’s real priorities as leader. One of them is how can the new Prime Minister really help business? This week, he gave a “pro-business” interview to the Financial Times where he claimed that he wanted to lighten the burden on companies this autumn. “I’m not coming into this role thinking how do we make life harder? I’m trying to make life easier for people. How do I take pressure off? How do I meaningfully deal with the cost of living and the cost of business?” How can he really meaningfully deal with the “cost of business” without addressing the tax burden that firms are struggling under, though? All Burnham’s comments thus far have involved him refusing to rule out raising taxes still further, but talk to any business in any postcode of the UK – given Burnham is so fixated on “good growth in every postcode” – and they’ll say that they are still staggering about under the weight of the increase in employers’ national insurance contributions, along with business rates and new workers’ rights legislation. The chief executive of UK Hospitality recently described Labour’s approach to his sector as one of “contempt” which had led to 45 per cent of all job losses in the economy coming within hospitality – though presumably the business rates cut that Burnham has already announced for pubs, due to come into force next April, will help with some of that. In retail, businesses are also having to contend with widespread shoplifting as a ongoing running cost. These pressures, particularly the NICs increase, have a clear knock-on effect on one of Burnham’s other big concerns, which is youth unemployment. He has vowed after the latest figures on NEETs (young people not in employment, education or training) to press ahead with meaningful welfare reform, but you can have the most sophisticated youth employment programmes in the western world and they’ll amount to nothing if employers don’t think they can afford to take on young workers. Burnham will not unpick the new workers’ rights legislation: it is something most Labour MPs are absolutely passionate about. But the environment is not working currently. The Prime Minister’s own business rates adviser Jerry Schurder has previously argued that business rates have become an “increasingly excessive burden”, and that they should be reduced by a third. When he made that submission to the Treasury Select Committee back in 2019, Schurder accepted that it would cost the then Conservative government around £8-9bn a year, but could be funded by levying rates on agricultural land and buildings. That solution will not wash, either with a farming sector enraged by the inheritance tax changes and exhausted after an appalling summer of bad harvests, or with infuriated rural Labour MPs, who have already spent the past year working on their own CVs in anticipation of being unceremoniously chucked on the muck heap at the next election. But the underlying argument is correct: businesses are struggling to survive under the burdens placed on them by government. Something needs to change. The reality is that unless Burnham starts looking at tax cuts for businesses, he is going to find the whole good growth in every postcode pledge rather difficult to realise. He is making a statement next week to MPs where he’s expected to major on energy grid connectivity. This is undoubtedly something that would relieve some of the pressure on businesses if it does indeed lead to lower electricity costs, which are also a significant burden. It will be the kind of move that ministers will spend the autumn talking about whenever they are asked what they’re actually doing for business. As a device to answer a question in a broadcast interview, it may help. But it will not be enough to solve the real problem. Burnham likes to argue that he is pro-business, in part because he worked so well with the private sector when he was Mayor of Greater Manchester. But it is very different to be the metro mayor who sympathises with local firms when they complain about the decisions made by central government. It’s much harder when you’re in central government and you have so many competing priorities. Many business leaders fear that they will be the ones expected to take on more of a burden in order to fund the defence spending that Burnham has also rightly made a priority, not least because his vision of “meaningful” welfare reform is highly unlikely to lead to any upfront savings. But he should be wary of that: unless he defines “good growth” as something entirely engineered by the state, Burnham needs business even more than it needs him.