A New Prime Minister Is Here: What Does It Mean for Your Business?

Britain has its seventh prime minister in a decade. Keir Starmer has stepped down as Labour leader, and former Greater Manchester mayor Andy Burnham is now in Number 10.

For many business owners, the politics isn’t the point. The real question is simple.

Does any of this change my tax bill, my payroll costs, my plans for the year ahead?

A week ago the honest answer was that nothing was settled. That’s started to change. Burnham has been sworn in, named his cabinet, and made his first policy move: a cut to VAT on household electricity bills. There’s still no new manifesto and no Budget, but the direction of travel is clearer than it was, and a couple of the early signals point straight at the costs growing businesses care about most.

In this article, we look at what’s happened, what the new prime minister has done and said about tax and employment, and what business owners should do while the rest of the picture fills in.

What has happened?

Starmer confirmed his resignation earlier this summer after losing the confidence of much of his own party following heavy local election losses. Burnham, who had returned to Parliament only weeks before by winning a by-election in Makerfield, emerged as the clear successor.

The leadership contest quickly turned into a coronation. Burnham was the only candidate, having secured nominations from 379 of the 403 Labour MPs, and his main potential rival, former health secretary Wes Streeting, stood aside and backed him. He was formally elected Labour leader on 17 July, and took office when Starmer travelled to Buckingham Palace to tender his resignation to the King and Burnham was invited to form a government.

That makes his stated positions, and now his first actions, the ones business owners should be reading.

His first move: VAT off electricity bills

Burnham’s first policy as prime minister is a cut to VAT on domestic electricity, from 5% to zero. It starts on 1 October, runs for six months to the end of the financial year in March, and is worth around £45 a year to the average household. The timing is deliberate: it lands as the October price cap comes in, taking some of the sting out of an expected rise. The cost is being met by scrapping the previous government’s planned digital ID scheme.

One thing to be clear on, because it’s easy to misread. This is a cut to household electricity bills, not business energy. If you run a company, you’ll feel this at home rather than on your commercial electricity account. It’s a cost-of-living measure aimed at families, not a business energy relief, so it’s worth knowing what it is before anyone assumes their premises bills are about to fall.

At his first cabinet meeting Burnham told ministers “we need to be a cost-of-living government” and signalled more measures to come over the following days, while adding that he would show how each one is paid for. So this is likely to be the first of several early announcements rather than a one-off.

Who holds the purse strings?

One question matters more than almost any other for the cost side of running a business: who becomes chancellor. That’s the role that shapes tax, thresholds and spending.

That’s now settled. John Healey, until recently the defence secretary, is the new Chancellor of the Exchequer. It was a slightly surprising pick, Healey wasn’t the widely tipped frontrunner, but the early signals are of a chancellor keen to stress fiscal discipline. In his first remarks he called fiscal control “the first duty of any chancellery” and talked about reprioritising spending rather than loosening the purse strings.

For business owners, the takeaway is that the cost-of-living measures are being paired with a message about credibility and paying your way. That matters, because it makes big unfunded giveaways less likely and holds the real tax decisions back for the Budget.

When the real decisions come: the Budget

Almost everything of substance on tax now waits for the first Budget, which is expected in the autumn. It’s unlikely to come before the party conference season ends in early October, and some expect it to slip to November to give the Office for Budget Responsibility the notice it needs.

That’s the moment to watch. Burnham has committed to honouring Labour’s 2024 manifesto pledges, which means holding firm on income tax, VAT and employee national insurance, and working within the existing fiscal rules. He has also said he’s looking at the income tax personal allowance, which is worth noting for anyone thinking about how they draw income from their business over the year ahead.

Beyond that, much of what’s been reported is drawn from interviews and campaign remarks rather than firm policy. The themes below are signals, not commitments. They’re a guide to where the wind may be blowing, and the Budget is where we’ll find out how hard.

The signals that matter for your business

A handful of themes have come up repeatedly, and these are the ones with a direct line to the costs of running a growing business.

Employers’ National Insurance

The rise in employers’ national insurance contributions, introduced in Labour’s first Budget in 2024, added real cost for any business with a payroll. Burnham has signalled he was uncomfortable with it.

“I have said that I thought the weight of the burden of employers’ national insurance wasn’t the right decision,” Burnham told the BBC. “However, it was the decision.”

He has talked about reviewing the increase rather than reversing it, and has been clearer about easing the burden for small businesses than for larger ones. For an employer, this is a watch-item rather than a planning assumption.

Business rates

Burnham has floated cutting business rates for smaller and high-street businesses, with talk of reliefs for pubs, cafes, independent shops and similar premises. The cost would be met, on his account, by higher levies on the large warehouses of online retailers and on commercial properties left deliberately empty.

If your business occupies high-street premises, this is the proposal most likely to land in your favour, though again none of it is yet policy.

Property and land tax

A recurring theme is Burnham’s long-held view that land and property in Britain are undertaxed relative to income from work. He has spoken about the case for a land value tax and about reforming council tax, whose valuations still date from 1991.

For any business that owns commercial premises, or any owner with a property portfolio, this is the area worth keeping an eye on over the longer term.

Energy and the North Sea

One area to watch is energy. Burnham has signalled he’s open to reconsidering British access to North Sea oil and gas, saying he has “something of an open mind” on the question. For most SMEs this matters less as a direct cost and more as a signal of where energy policy, and the prices that flow from it, may head over the next few years.

Employment rights

Separately from the change of leader, the Employment Rights Bill and a live consultation on guaranteed hours are already working their way through. A Burnham government would be expected to keep strengthening workers’ rights, and employers are already being urged to balance that against the flexibility the labour market has relied on. If you employ people, it’s worth understanding what the Employment Rights Bill means for your business, because this is the area where change is most certain to come.

So what should you do now?

The temptation during a political handover is either to panic or to ignore it entirely. Neither helps. A few steady habits serve you better than reacting to headlines.

• Don’t restructure on speculation. Nothing beyond the VAT cut is confirmed, and the substance waits for the Budget. Making a major change to your payroll, premises or company structure on the back of a campaign interview is a risk in itself.
• Know your numbers. If a national insurance or business rates change does land, you want to know immediately what it does to your costs. That means up-to-date management accounts, not a year-end surprise.
• Model the scenarios that apply to you. A high-street retailer, a property-owning company and a fast-growing employer each have a different exposure to these signals. Understanding yours is worth more than following the politics.
• Keep flexibility where you can. Periods of change reward businesses that can adapt quickly. The business community itself has taken a measured view of the handover.

“More change in Whitehall could be a challenge to the stability firms need, but business are adept at getting on with it,” said Neil Carberry, chief executive of the Recruitment and Employment Confederation.

Stay steady through the uncertainty with WCL

A change of prime minister rarely changes anything overnight. What it does is shift the direction of travel, and the signals so far point to a government that wants to ease costs for households and smaller businesses while looking harder at property, assets and larger employers. The first move is on the table, the rest waits for the Budget, and the sensible response isn’t to guess, but to keep your finances clear enough that you can move quickly when it comes.

If you’d like help understanding what these changes could mean for your business, please get in touch. WCL brings finance director, accountancy and business law support together under one roof, so whether the questions are about your costs, your forecasts or your people, there’s a senior team on hand to talk them through. We’d love to help.