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

Britain is about to get its seventh prime minister in a decade. Keir Starmer has announced he will step down as Labour leader, and former Greater Manchester mayor Andy Burnham is the clear favourite to replace him.

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?

The honest answer, for now, is that very little is settled.

There is no new manifesto, no Budget and no confirmed leader. What there is, though, is a set of signals worth understanding, because a few of them point directly at the costs growing businesses care about most.

In this article, we look at what’s happening, what the likely next prime minister has said about tax and employment, and what business owners should do while the picture becomes clearer.

What is happening?

Starmer confirmed his resignation outside Downing Street on 22 June, after losing the confidence of much of his own party following heavy local election losses. He will stay on as caretaker prime minister until a successor is chosen.

Nominations for the Labour leadership open on 9 July and close on 16 July. If a single candidate emerges, a new leader could be confirmed as soon as nominations close, and be prime minister within days. If the contest is fought, a new leader will be declared by 1 September.

Burnham has confirmed he will stand. His main potential rival, former health secretary Wes Streeting, has stood aside and backed him. That makes Burnham the runaway favourite, and means it’s his stated positions, rather than anyone else’s, that business owners should be reading.

What do we know about the economic direction?

Two things are worth holding in mind together. The first is reassurance. Burnham has said he will honour Labour’s 2024 manifesto commitments, which means holding firm on income tax, VAT and employee national insurance, and working within the existing fiscal rules. On his tax pledges he has been direct.

“I am committed to the manifesto commitments on tax,” according to Andy Burnham. “I think that’s really important from a trust point of view.”

The second is uncertainty. Burnham hasn’t published a formal programme for government, and much of what has been reported is drawn from interviews and campaign remarks rather than firm policy. Nothing below is confirmed. It is a guide to where the wind may be blowing, not a forecast.

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.

Employment rights

Separately from any 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, this is the area where change is most certain to come, whoever is in Number 10.

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.

• Do not restructure on speculation. Nothing here is confirmed. 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 Whittock Consulting

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 smaller businesses while looking harder at property, assets and larger employers. None of it is settled, and the sensible response is not to guess, but to keep your finances clear enough that you can move quickly when it is.

If you would like help understanding what these changes could mean for your business, please get in touch. Whittock Consulting 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.