Burnham enters No 10 with eight in ten SME owners braced for impact

Andy Burnham has become Britain’s seventh prime minister in a decade, walking into Downing Street with a pledge of relief for the high street in one hand and a small business community bracing for impact on the other.

Buckingham Palace confirmed the appointment on Monday. “His Majesty received in audience the Rt Hon Andrew Burnham MP and requested him to form a new administration,” a spokesman said. “The Rt Hon Andrew Burnham MP accepted The King’s offer and kissed hands upon his appointment as prime minister and first lord of the treasury.”

No actual kissing took place, the phrase being the traditional shorthand for accepting the King’s invitation to form a government. The business community will hope the rest of the new administration’s promises prove less ceremonial.

Burnham’s rise has been remarkably swift. The former Greater Manchester mayor became MP for Makerfield only four weeks ago, took the Labour leadership on Friday following Sir Keir Starmer’s resignation, and now heads a government facing an autumn Budget with precious little room for manoeuvre.

For the owners of Britain’s 5.5 million small firms, the question is not the constitutional choreography but what the new prime minister intends to do with the power he has just acquired.

On that, there are early signals. Burnham has pledged a 20 per cent business rates cut for pubs, clubs and music venues, with the rates threshold for smaller independent hospitality, leisure and retail firms raised for the first time since 2017, funded by higher levies on the giant distribution sheds of the online retailers.

He has also promised to honour Labour’s 2024 manifesto commitments not to raise VAT, income tax or national insurance. “I stick by the manifesto and the promises that it made,” he said before taking office. “So, let me be absolutely clear about that, but there is some room within that manifesto for movement on tax.”

That last clause is the one to watch. Any rebalancing would come on top of the permanently lower business rates multipliers introduced for retail, hospitality and leisure properties from April, and would mark a further shift of the property tax burden away from the high street.

The economic inheritance, however, is unforgiving. Figures from the Office for National Statistics show the economy grew by just 0.1 per cent in May, with services doing almost all the heavy lifting while production and construction contracted.

Ben Caswell, senior economist at the National Institute of Economic and Social Research, put it bluntly: “With volatile energy prices, higher inflation on the horizon, and fragile public finances, the new PM inherits a stagflationary economy and will have just under three years to turn around a tough economic situation.”

Nor does Burnham start with the benefit of the doubt. Exclusive research shared with Business Matters last month found that eight in ten SME owners fear what a Burnham premiership will mean for their business, anxiety rooted in his interventionist instincts and past flirtations with a land value tax.

In his first remarks as prime minister in waiting, Burnham promised to make politics “less toxic”, to improve living standards across the country and to “bring back the hope we have all been missing.”

Hope, though, is not a line item in a cash flow forecast. For SME owners, the real test arrives with the autumn Budget, when the gap between the new prime minister’s high street sympathies and the state of the public finances will have to be reconciled. Until then, Britain’s business owners will do what they have learned to do through six previous prime ministers: keep calm, and keep the overdraft facility open.