Sir Keir Starmer has admitted his Budget tax hikes piled massive pressure on British businesses.
The prime minister said his government “asked a lot” of firms in the UK after coming to power in last year’s general election, as Rachel Reeves imposed £25bn of tax rises on companies through her employer national insurance increase.
But, addressing business chiefs at the British Chambers of Commerce (BCC) conference, he said, in doing so, Labour had “wiped the slate clean and stabilised the economy”.
“We can now go on to the next phase of government, building on that foundation… and that means we have to back you to the hilt,” the prime minister vowed.
The BCC speech was Sir Keir’s bid to win back the trust of business chiefs after months of deteriorating relations. Before Labour came to power, Rachel Reeves and Sir Keir launched a notorious charm offensive in the City, frequently entertaining executives over pastries and smoked salmon sandwiches.
Many former Conservative donors flocked to support Labour as it vowed to run the “most pro-business government the UK has ever seen”.
But they were quickly let down by the party as the chancellor’s October Budget hit employers with the £25bn hike in national insurance contributions. Firms have also felt the impact of Labour’s decision to raise the national minimum wage and are bracing for Labour’s employment rights bill, which is coming down the line.
That will include a right to guaranteed hours, cracking down on zero-hour contracts without the offer of work, and introducing new restrictions on “fire and rehire” processes when employees are let go and then re-employed on new contracts. Critics have claimed the bill will drive up costs for businesses and lead to bosses hiring fewer staff.
Acknowledging the impact of his policies, Sir Keir said: “This year, as we have had to fix the foundations of our country and deal with the unprecedented mess that we inherited, we asked a lot of you.
“I understand that, and I want to acknowledge that it has made a huge difference. Because of it, the money’s gone into the NHS and waiting lists are coming down.
“We have put investment into the skills of our young people, the new homes, new roads, new infrastructure that we’re building.
“They are all vital for the long-term growth of our country, but none of that would have been possible without your contribution. And I say thank you.”
BCC director general Shevaun Haviland used her speech to warn the prime minister that there must be “no further tax increases on business in the autumn Budget”.
She said: “Business leaders are resilient, but they are also flexible. Some of our well-thought-out business plans sometimes no longer meet our needs. When the facts change, so do we.
“And the government needs to take the same approach. If the UK economy is subject to any further economic shock, such as a sustained spike in oil prices, then we need fiscal rules that are responsive and protect business investment.”
Sir Keir went on to cite his trade deals with India, the US and the European Union as evidence that the government is backing businesses “to the hilt”, adding that he has UK companies “in his mind’s eye” when he is negotiating with world leaders.
But, during the Q&A after his speech, Sir Keir was asked if he “fully gets the deep concerns when it comes to the employment rights bill”.
The PM said: “Yes, I get the concerns… one good thing about business is that they don’t hold back when they talk to me, and they are quite right too, because those conversations matter.”
He said some firms have raised concerns about the bill, which will offer workers greater employment protections, but said it will be “good for business and drive up productivity”.
