New Prime Minister appointed – industry reaction

Andy Burnham has become the UK’s new Prime Minister, following a trip to Buckingham Palace after Keir Starmer formally resigned. In his first speech Burnham has set out his domestic priorities.

Responding to the appointment of Andy Burnham and his first speech as the new Prime Minister of the UK, Jonathan Geldart, Director General of the Institute of Directors, said “The Institute of Directors welcomes the Prime Minister’s focus on an economic model aimed at spreading opportunity and growth more evenly across the country. Business leaders share the ambition of building a more resilient and prosperous economy, but success will depend on creating the conditions that enable firms to invest, innovate and grow with confidence. Maintaining a competitive and predictable tax environment will be essential if the UK is to attract the investment needed to deliver sustainable growth.

“Businesses will be encouraged by a willingness to examine how public spending can be better targeted. Given the pressure on the public finances, a sharper focus on value for money and outcomes is essential. The private sector stands ready to work with government to identify more effective ways of delivering infrastructure, public services and economic development. What matters is not simply how much is spent, but how effectively resources are allocated to support long-term prosperity.

“We agree that devolution can be a powerful driver of economic growth when it combines local flexibility with clear accountability. Local leaders are often best placed to identify barriers to growth and unlock economic potential, but devolved institutions must also be accountable for the outcomes they deliver. The success of devolution will depend not only on transferring powers and funding, but on ensuring transparent governance, clear responsibilities and effective scrutiny.

“We support the Prime Minister’s ambition to strengthen Britain’s industrial base. The UK’s industrial strategy is designed to provide long-term certainty for investors, support innovation and skills development, and create the conditions for businesses to grow and compete internationally. Within it, strategic public procurement is referenced for its ability to contribute to these objectives, particularly where it helps develop domestic capability, strengthen supply chains and encourage investment in the industries of the future. We welcome the opportunity to work with the government to ensure that a focussed industrial strategy delivers for British industry.

“The Prime Minister is right to identify the cost of living as a defining concern for households. However, the cost of living cannot be separated from the cost of doing business. Higher energy costs, employment costs, taxation and regulatory burdens ultimately feed through into prices, investment decisions and wage growth. Sustainable improvements in living standards require a policy environment that enables businesses to operate competitively, invest confidently and create well-paid jobs.

“We welcome a greater focus on accountability and long-term stewardship in essential services, such as the water sector. However, there is a risk in assuming that greater public ownership will, by itself, solve the industry’s problems. The central issue is the implementation of sound governance. Public utilities require boards, incentives and regulatory frameworks that promote investment, resilience and customer outcomes. As the IoD has argued previously, there may be scope for a new corporate model that better balances the interests of investors, customers and the public while continuing to attract private capital.

“As the government develops its 10-year plan for Britain, business leaders will be looking for a clear partnership with policymakers based on stability, predictability and a relentless focus on growth. The UK’s economic challenges are significant, but so too are its strengths. With the right conditions in place, business can play a central role in delivering the investment, innovation and prosperity that communities across the country need.”

Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), said “We extend a warm welcome to Andy Burnham as he takes on the most important role in public life. This is a golden opportunity to restart the Parliament, go for growth, and get it right on supporting small businesses.

“The new Prime Minister has set out a positive, pro-small business stall in recent weeks, and we are optimistic that he can galvanise the new government to make these plans a reality. That will mean reworking the mistakes on business rates made by the last government, by increasing Small Business Rate Relief, acting on costs after the sledgehammer of National Insurance rises, and scrapping pointless paperwork that holds business back.

“Where the last government did get things unquestionably right – such as the new late payment laws currently going through the Lords – we need the new Prime Minister to stand firm behind small firms.

“This must include taking novel steps to drive change through the system, including opening up procurement and making sure that decisions that impact local communities are made locally.

“For the Prime Minister to get growth in every postcode, he needs to back the UK’s 5.7 million small businesses which are at the heart of local economies and communities right across the country.”

Alan Vallance, ICAEW Chief Executive, said “We congratulate the new Prime Minister Andy Burnham on his appointment, and stand ready to work with him and his government.

“Our members are business leaders whose decisions shape the economics of towns and cities across the UK, and they tell us that to lay the foundations of economic growth, the new government must create the conditions for businesses to invest, hire and expand.

“In particular, ICAEW Chartered Accountants are clear that there must be no more business tax rises. The decisions the government takes in its first weeks and months will be critical to whether it achieves its ambitions for economic growth and prosperity, and we hope Andy Burnham will give business a shot in the arm by committing to this.”