CBI warns Burnham to avoid tax speculation, curb business energy costs
The CBI has urged incoming prime minister Andy Burnham to avoid a damaging period of tax uncertainty and urgently address UK energy costs that run 45% above the G7 average.
Andy Burnham takes the Labour leadership on Friday and will name his cabinet on Monday. He faces immediate pressure from the UK’s largest business lobby to maintain fiscal predictability.
Rain Newton-Smith, chief executive of the CBI, warned that another “summer of speculation” over tax and spending would spook investors. “What we mustn’t have is a summer of speculation where there’s kite-flying over, ‘we might cut spending in this area or boost that’ – or the more damaging one is, ‘we might increase this tax or maybe we won’t’. I think that uncertainty is just really difficult for business,” she said.
The appointment of the next chancellor is a critical early test, with Ed Miliband among the floated candidates. Newton-Smith said she was “not terrified of Ed Miliband”, but warned the new chancellor must not “feel bounced into making decisions in the first couple of weeks”. She added that business wants “evolution, not revolution” and an early “credible fiscal plan with fiscal rules that that underpin it.”
The CBI chief firmly rejected radical proposals from Labour allies to renationalise key utilities. “Renationalising things is incredibly expensive,” she said, arguing that private investment delivers high-quality outcomes and shifting away from it forces ordinary people to bear the cost. She instead advocated for public-private partnerships to fund major infrastructure like reservoirs and energy-efficient buildings.
Beyond fiscal rules, corporate competitiveness hinges on energy, with UK businesses paying 45% more for electricity than the G7 average according to a new CBI and Energy UK paper. “Our view is, you can’t address the cost of living without addressing the cost of doing business,” Newton-Smith said, urging the government to shift green levies like the renewables obligation off commercial bills and onto general taxation or a private funding scheme.
On trade, Newton-Smith urged Burnham to quickly reschedule a postponed EU summit to finalise the relationship reset. She dismissed calls to rejoin the single market or customs union, noting that option “is just not on the table right now on the European side”. The government has “the right framework for the UK-EU reset” and must now “negotiate hard and deliver that,” she said.
Newton-Smith, who took the helm in 2023 after a misconduct crisis devastated the lobby group’s income and membership, said the organisation is now growing again. “We’ve changed. The business landscape has changed,” she said.
