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Rachel Reeves has warned Andy Burnham that he will be hit by “shocks and challenges” from the moment he walks into Downing Street, urging the prime minister-in-waiting to arrive with a “worked through plan”, advice that business owners bruised by two years of policy surprises may permit themselves a wry smile over.
In what could be one of her final major interviews as chancellor, Reeves told BBC One’s Sunday with Laura Kuenssberg: “It is important that when Andy walks through that door he has a worked-through plan, because governing is hard in Britain, and lots of challenges and shocks will come his way.”
For the UK’s 5.5 million small firms, the handover is now all but a formality. Burnham has been backed by 322 of Labour’s 403 MPs, one short of the number that would make a rival challenge mathematically impossible. If no one else enters the contest, he becomes Labour leader on 17 July and prime minister on 20 July.
That gives business owners barely a week to prepare for a new occupant of No 10, and, in all likelihood, a new chancellor. The question of who takes the keys to No 11 matters as much to SMEs as the identity of the prime minister, given the autumn Budget will land within months of the handover.
Burnham has already sketched out what he calls the “biggest rebalancing of power Britain has ever seen”, including a new No 10 North hub to push power and resources out of Whitehall. He has hinted at an early cost of living package, accepting that “people can’t wait for ever for change”. For high street firms, his most concrete offer so far is a pledged 20 per cent business rates cut for pubs and hospitality businesses, funded by higher levies on online retailers’ warehouses.
He will need to win the sector round. Exclusive research shared with Business Matters found eight in ten SME owners fear what a Burnham premiership would mean for their business, unease rooted in his interventionist instincts as much as any specific policy.
Reeves, for her part, insisted her successor inherits a healthier economy than the one she took on. “Andy will take over an economy that is much stronger than the one I inherited from the Tories just two years ago,” she said, pointing to a strategy designed “to return stability to the economy, to enable interest rates to come down”. The Bank of England held Bank Rate at 3.75 per cent in June, down from its recent peaks but with the next decision not due until 30 July.
The picture on the ground is less flattering. The latest ONS figures show real household disposable income per head fell in the first quarter, and the country’s debts are expected to be higher at the end of this parliament than when Labour took power, a squeeze that feeds directly into weak consumer demand for small firms.
Reeves conceded the government had lost the confidence of MPs and the public because “people are impatient for change”, and admitted she was “absolutely certain, if we could go back two years, there are choices that I made that would be different”.
Former transport secretary Louise Haigh, a key Burnham ally, said he had been planning for this moment “for at least the last year”. Reeves saw nothing wrong in that: “It’s perfectly reasonable for people to have ambition … And I want him to be ready for that.”
Her more personal advice, drawn from the day she was photographed in tears at prime minister’s questions, was simpler: “Don’t cry on national television.”
For business owners, the message is the same one Reeves gave Burnham. The next fortnight will settle who governs. What matters is whether the plan survives the first shock.
