More than four in five UK business leaders expect trading conditions to either remain unchanged or deteriorate under Prime Minister Andy Burnham, according to new research highlighting the scale of the challenge facing the new government.
A survey of 400 CEOs commissioned by business network Helm found that 83% do not expect conditions for businesses to improve under Burnham.
Of those surveyed, 40% said they expected the business environment to get worse, while 43% predicted little change. Just 17% believed conditions would improve.
The findings come only weeks after Burnham took office as Prime Minister on July 20, following his election as Labour leader.
Burnham has sought to position his government as supportive of economic growth and business, but the survey suggests he faces considerable work to convince company leaders.
Just 6% of respondents described the new Prime Minister as pro-business, while 66% disagreed and 28% were unsure.
Business Leaders Call for National Insurance Reversal
Taxation appears to be one of the most immediate concerns.
Almost three quarters of respondents, 74%, said Burnham should reverse the increase in employers’ National Insurance within his first 100 days in office.
Only 13% said the increase should remain.
The findings reflect wider concerns among employers about the cumulative cost of taxation, employment and doing business in the UK.
Burnham has already made business taxation one of the early areas of focus for his government, including announcing a reduction in business rates for pubs, clubs and live music venues.
However, the Helm survey suggests business leaders want broader action.
Andreas Adamides, CEO of Helm, said the findings demonstrated a significant gap between the government’s pro-business positioning and the way it is currently perceived by company leaders.
“Andy Burnham says he is a pro-business Prime Minister. Just 6% of founders agree,” Adamides said.
He argued that reversing the employers’ National Insurance increase would provide an early signal that the new government intends to improve conditions for businesses.
Pressure Ahead of First Budget
Attention is now turning towards Chancellor John Healey’s first Budget, which is expected later this year.
Healey is serving as Chancellor of the Exchequer in Burnham’s new Cabinet.
Business leaders are likely to watch closely for decisions affecting employment costs, investment, company taxation and entrepreneurs.
The government has inherited an economy in which businesses have faced a period of higher costs and uncertainty, making its early economic decisions particularly important for confidence.
Helm argues that uncertainty around future taxation can itself deter companies from investing, even before any new measures are introduced.
The organisation represents leaders of scale-up businesses with combined annual revenues of more than £8 billion and says its members contribute around £1 billion in tax each year.
It has also been campaigning against what it describes as the gradual increase in taxes affecting business owners and wealth creators.
Concerns Over UK Competitiveness
Beyond immediate tax policy, the survey raises a wider question about the UK’s ability to retain successful businesses and founders.
Helm has warned that Britain risks becoming an “incubator economy” – successful at creating companies but less successful at keeping them as they expand.
Countries including the United States, United Arab Emirates and Singapore are increasingly competing internationally for entrepreneurs, businesses and investment through different tax regimes and incentives.
For the Burnham government, improving confidence could therefore involve more than stimulating short-term economic activity.
Business leaders will also be looking for greater certainty over the longer-term environment for investing, hiring and building companies in the UK.
Burnham used his first speech as Prime Minister to set out an agenda focused heavily on economic renewal and spreading growth more widely across the country.
The early reaction from business leaders, however, suggests confidence will need to be earned.
With only 17% of CEOs surveyed expecting conditions to improve, the government’s first Budget and its approach to business taxation could prove important in determining whether that sentiment begins to shift.
