CBI chief warns Burnham to avoid tax speculation

Rain Newton-Smith, the chief executive of the Confederation of British Industry (CBI), has cautioned Andy Burnham, who is set to assume the Labour leadership, against a period of "speculation" regarding tax and spending policies that could unsettle British businesses. Newton-Smith emphasized the need for clarity and stability, particularly as Burnham prepares to announce his new cabinet.

Newton-Smith advised against a "summer of speculation" involving "kite-flying" about potential spending cuts or tax increases, stating that such uncertainty is detrimental to businesses. She noted that Labour's previous summers were marked by similar leaks and speculation concerning fiscal plans. While not "terrified" of potential candidates for Chancellor, including Ed Miliband, she stressed that the incoming leadership should not rush decisions but instead listen to business concerns.

She advocated for an "evolution, not revolution" approach, urging the new Chancellor to establish a credible fiscal plan with clear rules early on. Newton-Smith praised Burnham's business-friendly record as Mayor of Greater Manchester but warned against radical proposals like renationalizing utilities, citing their significant expense and the value of private sector investment. Instead, she called for enhanced public-private partnerships to fund essential projects such as housing, reservoirs, and energy-efficient buildings.

Addressing business costs, particularly high energy bills, Newton-Smith highlighted that UK businesses' electricity costs are 45% higher than the G7 average. She proposed shifting the costs of the clean energy transition away from businesses' bills, potentially through taxpayer funding or a private "energy transition funding scheme." She also suggested that Burnham should quickly reschedule the postponed UK-EU summit to reset relations, while expressing skepticism about rejoining the single market and customs union at present.

Newton-Smith, who took over as CBI chief executive in 2023, also commented on the organization's recovery following past allegations of sexual misconduct. She expressed confidence in the significant shift in the CBI's culture and stated that its membership and income are growing.