‘Last days of the honeymoon’: Anxious bosses prepare charm offensive at Labour conference
Ahead of the Labour Party Conference on Sunday, and one month away from the Budget, businesses are feeling nervous, write Mauricio Alencar and Felix Armstrong
Stepping onto an early-morning Avanti West Coast train from London Euston is now a familiar feeling for the Prime Minister. Andy Burnham is set to make the journey more regularly after opening a Number 10 outpost in Manchester shortly after taking office. This weekend, however, he will not be travelling alone. The Merseyside-born leader will be followed by hordes of top executives and lobbyists as they decamp up North for the Labour’s annual party conference.
Although they are heading to Liverpool – rather than his adopted home of Manchester – the Prime Minister hopes the private sector will become a little more accustomed to life in the North West.
The conference’s Business Day on Monday will allow London-headquartered business chiefs to get an idea of what Burnham and Chancellor John Healey’s devolution dream looks like in practice. Downing Street needs the private sector on their side for investment to spread across Britain’s regions, with Healey promising that he is on the side of wealth creation.
And there are signs that business will be playing ball.
The likes of Currys, Sage and Hargreaves Lansdown will all be hosting sessions focused on boosting growth across the country. Natwest is sponsoring the metro mayors’ reception; its chief executive, Paul Thwaite, will host a meeting of the Mid-market Growth Council, and chair Rick Haythornthwaite will speak as a member of the 2030 Prosperity Alliance.
Yet bosses are likely to still have some trust issues. Just months after former Chancellor Rachel Reeves told chief executives she would preside over the most pro-business government in a lifetime, she hit them with a £25bn tax bill on labour at her first Budget in 2024.
High hopes for high streets
Burnham’s team has already looked to win over Britain’s most recognised brands seen on high streets. His vow to revive town centres has been a central pledge of his premiership so far. Retail and hospitality businesses will hope to convince the Prime Minister that this is impossible if taxes and costs continue to rise.
The government has pledged to support pubs and crack down on vape shops and gambling centres. These gestures have been dismissed as “populist” and “pointless” by business grandees Mike Ashley and Tim Martin – thankfully for Burnham, neither will be making the journey to Liverpool.
But plenty of retailers and hospitality groups will be joining party activists in Liverpool. They have, in part, been prompted to attend the conference because of a curiosity to get to know the new Chancellor’s beliefs. One senior retail source told City AM that the sector had had “basically no engagement” with Healey since his appointment in July.
“If you imagine somebody looking at their watch and tapping their foot impatiently, I think that’s where we all are,” the person said. “It’s five weeks to the Budget, guys, should we have a conversation about what we might do? So we’re looking forward to that, and hopefully we’ll get some more information out of them.”
Following increases to business rates and national insurance contributions (NICs), retailers are desperate to avert further tax hikes, they said. “Everyone gets that the fiscal situation is impossible, but the goose has been plucked and it’s hissing.”
Sainsbury’s chief executive Simon Roberts will be at the conference in Liverpool, and will hope that Burnham’s recent photo op at one of its supermarkets will have earned him the goodwill to put these points across. A food industry source said supermarkets are “hearing some good talk from the government on cost of living” but are yet to see any “meaningful engagement”.
Pubs have played a central part in Burnham’s attempts to convince voters that he is on the side of working people. The Prime Minister – who recently claimed he has had a pint in every pub in London – pledged to cut pubs’ business rates by 20 per cent in one of his first acts of government.
This has ensured that the mood among the hospitality sector in Liverpool “is likely to be constructive rather than confrontational,” a public affairs boss at a leading pub company said.
“There is still real frustration across hospitality about ongoing cost pressures, particularly around employment costs, taxation and business rates, but there has also been a noticeable shift in the relationship with [the] government since the new PM came into office,” they added.
Small businesses are hoping to convince Labour that they can drive Burnham’s high street ambitions, one City PR boss said. “John Healey has made a good early impression. There is still a frustration, however, that the Treasury instinctively sees ‘business’ as meaning the biggest businesses.”
Burnham’s ‘substance’ problem
Investors with deep pockets, who will ultimately finance his growth vision, are more nervous. Speculation over bank taxes has unnerved the City. In turn, international banking chiefs have issued stern warnings and their British peers have taken extraordinary steps to flatter the Prime Minister. Natwest’s Thwaite announced a £20bn lending programme in the North earlier this year while HSBC boss Georges Elhedery talked up a call centre in Swansea and an office in Birmingham.
But it’s not just tax and spending plans that are irking investment chiefs. One investment source also said they had not had any engagement with Healey and were particularly worried about the lack of communication on retail investment, particularly since it was central to Reeves’ approach to the City. Even when meetings have taken place, there has been little “substance” to discussions, according to another person with knowledge of a recent CEO summit in Downing Street.
One lobbyist working across financial services also warned that the conference may be less fruitful than hoped. Meetings scheduled with special advisers are few and far between, they said. MPs may also be absent, opting instead to campaign in Holborn and St Pancras for the crucial by-election against the Green Party’s Zack Polanski, the person added.
Businesses come with the Budget in mind
Several lobbyists told City AM businesses will come bearing warnings for Healey and Burnham over the dangers of further tax hikes. Rumours of another raid on the private sector have grown in recent weeks after a spike in government borrowing costs and fears of resurgent inflation, and bosses now view conference as a chance to make their case in person.
“[Businesses] are acutely aware of the worsening economic pressures and challenging fiscal backdrop but are urging the government not to repeat cost-increasing policies like [the 2024] hike in employer national insurance contributions, which made it harder for businesses, particularly small and medium-sized businesses, to hire and grow,” said Alex Dismore, director of public affairs at Henham Strategy.
Others said patience was wearing thin.
“If conference simply celebrates better polling and cleaner communications without signalling where Burnham intends to tackle the structural issues the country faces, it will just signal the last days of the honeymoon,” said Mark Simpson, a former Keir Starmer adviser and strategist at Apco.
“I do wonder if they get it,” said another. “There’s a distinct lack of business experience among the entire parliamentary Labour party, let alone the government.”
In the first year Labour conference was held while the party was in government, there was a sense of anxiety over the so-called £22bn black hole, actively fuelled by the government. Last year, there was an overwhelming feeling of betrayal among businesses. It is now perhaps harder to describe the mood among business representatives travelling to Liverpool this year. But a mixture of fear and fatigue is unlikely to put either business or government officials at ease.