Leaders from some of Britain’s most influential companies were ushered into Downing Street on Wednesday evening as Sir Keir Starmer sought to shore up relations with business ahead of what is widely expected to be a painful, tax-raising budget later this month.
Chief executives from NatWest, the banking giant; FTSE 100 software group Sage; Marks & Spencer; housebuilder Taylor Wimpey; and renewable powerhouse Octopus Energy were among those invited to No 10 for an informal reception with the prime minister. The gathering formed part of an effort to steady nerves across corporate Britain as the Treasury prepares a budget designed to plug a £30 billion hole in the public finances.
The chancellor, Rachel Reeves, will deliver her statement on 26 November — and expectations are grim. Businesses are bracing for a new round of tax rises at a time when relations between the government and industry are already strained.
Reeves’s first budget, delivered in October last year, sparked anger after employer national insurance and the minimum wage were pushed up, driving costs sharply higher for companies. For many bosses, that announcement torpedoed much of the goodwill Labour had rebuilt with industry after its bruising relationship with business under Jeremy Corbyn’s leadership.
Labour had worked hard before the general election to reposition itself as the party of economic stability and pragmatic growth. Starmer and Reeves held a succession of charm offensives with FTSE leaders, private equity firms and entrepreneurs, promising policy steadiness in contrast to the turbulence of previous Conservative administrations. Much of that capital, however, was spent in Reeves’s opening fiscal statement.
The chancellor has since warned repeatedly that further “difficult choices” are unavoidable if the government is to restore public finances. In a speech earlier this month, she cautioned that “each of us must do our bit for the security of our country and the brightness of its future” — a line widely interpreted as a prelude to broad-based tax increases.
Among the measures reportedly under consideration are a rise in income tax that would break Labour’s own manifesto commitments; a clampdown on limited liability partnerships, favoured by law and accountancy firms; and restrictions on salary-sacrifice pension schemes, which would drive up employer costs even further.
Downing Street declined to comment on the guest list or the discussions held at the reception. However, for many in the City, the message is already clear: the government wants business on side before asking it to shoulder yet another share of the fiscal burden.
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