One year ago, Andy Burnham faced a challenging reception from business leaders during the Labour Party’s conference. At that time, the Mayor of Greater Manchester expressed his aspirations to succeed Keir Starmer, prompting unease in the City of London with his remarks about reducing the UK’s dependence on bond markets.
Now, as he returns to the annual conference in Liverpool as Prime Minister, the atmosphere has shifted significantly. Labour is actively working to mend its relationship with the business community and to reassure bond traders in the City amidst the tensions arising from the ongoing conflict in the Middle East.
During a private gathering on Monday evening organized by the Confederation of British Industry (CBI), alongside HSBC and National Grid, John Healey addressed business executives, asserting the government’s commitment to assist companies grappling with escalating costs. The Chancellor emphasized that his upcoming budget would prioritize fiscal responsibility.
“I am eager to collaborate with you as Chancellor,” he stated.
As attendees enjoyed refreshments overlooking the River Mersey, one executive complimented the Chancellor, saying, “I must say, your speech at the conference was absolutely fantastic. Your determination to succeed resonated well.”
However, many business leaders expressed cautious optimism, emphasizing the importance of the budget set for October 28. Labour has previously earned a reputation for charming business executives before implementing tax increases on companies after returning to power in 2024.
“Check back with us on October 29 to see how businesses are feeling,” remarked Rain Newton-Smith, the CBI’s chief executive.
She noted that while Burnham seemed receptive to feedback, Labour would face tough choices in the forthcoming budget. “When there’s a change in administration, it’s akin to altering course mid-journey, prompting reflection on what has been effective and what hasn’t. Without disparaging the previous government, they’ve indicated a need for change while also seeking responsiveness,” she explained.
In recent years, there had been significant interest from the business sector in attending Labour’s annual conference, humorously referred to as the “Davos on the Mersey,” in reference to the elite gathering in Switzerland.
Starmer had previously strategized to secure corporate endorsements to enhance Labour’s standing in business circles, but relations soured shortly after he took office when Rachel Reeves announced £40 billion in tax hikes predominantly affecting employers.
This year, attendees noted a decrease in high-profile executives present at Labour’s “business day,” where tickets cost £6,000 for exclusive access to a breakfast hosted by the Business Secretary, Jonathan Reynolds, followed by a discussion with Burnham.
Nonetheless, corporate representation remained strong, with companies such as Mastercard, HSBC, and Heathrow sponsoring sessions and private networking opportunities.
After smaller policy-focused discussions, executives were guided to the main auditorium to hear the Chancellor’s address, which included the participation of Paul Thwaite, CEO of NatWest, along with leaders of the “B5” group representing key business associations.
In his speech, the Chancellor offered few specifics regarding the forthcoming budget but adopted a tone markedly different from Burnham’s previous comments about the UK’s financial ties, affirming that he and the Prime Minister were aligned in their dedication to fiscal balance.
“There’s nothing progressive about losing control, as it’s always the working class that bears the costs,” he asserted.
Shevaun Haviland, Director General of the British Chambers of Commerce, deemed Healey’s address “significant,” recognizing the Chancellor’s acknowledgment of the crucial role private enterprise plays in the UK’s economic growth.
However, she cautioned that companies continue to face substantial challenges. “The government’s strategy is unlikely to be effective while the everyday costs of doing business continue to rise. Firms are being asked to invest amid a surge in expenses related to labor, energy, and business rates,” she remarked.
Lobbyists noted a deliberate effort to facilitate interactions between senior ministers and business leaders, aligning them more closely with relevant sectors.
An external affairs executive from a FTSE 250 retailer observed a noticeable increase in the government’s willingness to engage with business concerns, crediting the efforts of the Prime Minister’s special adviser for business relations, James Carroll.
Varun Chandra, who previously served as Starmer’s chief adviser on business investment and trade and continued in his role under Burnham, was also facilitating meetings at the CBI reception.
One minister indicated that the business leaders they encountered in Liverpool appreciated the renewed optimism projected by the new government, contrasting it with what some perceived as Starmer’s more pessimistic approach.
While businesses have welcomed specific initiatives, such as Burnham’s tax reduction for pubs and clubs, there remains uncertainty about the implications of “Manchesterism” on a national level, alongside concerns about potential tax increases in the upcoming budget.
Steve Rigby, CEO of the family-owned property and technology firm Rigby Group, acknowledged an improvement in Labour’s approach to business over the past two years but stated he would reserve final judgment until after the budget.
“The Prime Minister and Jonathan Reynolds are visible and engaged. Whether they are truly listening to our concerns will become evident in the budget,” he commented. “Access to the right discussions is available, but it requires effort to attain it. We are essentially in a holding pattern until the budget is released.”
