Leaders from some of Britain’s most influential companies gathered at Downing Street on Wednesday evening as Sir Keir Starmer sought to strengthen relations with the business sector ahead of a widely anticipated tax-raising budget later this month.
Chief executives from NatWest, FTSE 100 software group Sage, Marks & Spencer, housebuilder Taylor Wimpey, and renewable energy leader Octopus Energy were among those invited to No 10 for an informal reception with the Prime Minister. This meeting was part of an effort to calm nerves across corporate Britain as the Treasury prepares a budget aimed at addressing a £30 billion shortfall in the public finances.
The Chancellor, Rachel Reeves, is set to deliver her statement on 26 November, with expectations already bleak. Businesses are preparing for potential tax increases amid already strained relations between the government and industry.
Reeves’s first budget, delivered in October last year, provoked discontent after employer national insurance and the minimum wage were increased, significantly raising costs for companies. For many business leaders, that announcement undermined much of the goodwill Labour had rebuilt with industry following its challenging relationship under Jeremy Corbyn’s leadership.
Labour had made concerted efforts before the general election to present itself as the party of economic stability and pragmatic growth. Starmer and Reeves engaged in a series of interactions with FTSE leaders, private equity firms, and entrepreneurs, pledging policy steadiness in contrast to previous Conservative administrations. However, much of that goodwill was expended in Reeves’s initial fiscal statement.
The Chancellor has since repeatedly warned that further “difficult choices” are necessary to restore public finances. In a recent speech, she stated that “each of us must do our bit for the security of our country and the brightness of its future,” a sentiment widely interpreted as a precursor to broad-based tax increases.
Reported measures under consideration include a rise in income tax, potentially violating Labour’s own manifesto commitments; a crackdown on limited liability partnerships, popular among law and accountancy firms; and restrictions on salary-sacrifice pension schemes, which would further increase employer costs.
Downing Street declined to comment on the guest list or the discussions held at the reception. However, for many in the City, it’s abundantly clear that the government seeks business support before imposing additional fiscal responsibilities.
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