‘Culture shift’ needed in how UK does business, PM urges

The UK needs a “culture shift” in how it does business, Andy Burnham has said ahead of a meeting between some of Britain’s biggest bosses and the government.

The prime minister said that those who take risks in business should be backed by the government, and that local leaders should have the power to work with companies.

Burnham had been due to attend the meeting, but cancelled his engagements for Monday and Tuesday following the death of his father.

The Labour government has been criticised for increasing costs for firms, such as with the employer national insurance and minimum wage changes under Burnham’s predecessor Sir Keir Starmer.

The meeting comes as Chancellor John Healey prepares for his first Budget next month, with rising borrowing costs in recent weeks adding to the pressure on government finances.

Monday’s gathering will include the heads of companies such as BP, Shell, HSBC, Morrisons, Sainsbury’s, BT, Vodafone and Rolls-Royce.

Ahead of the meeting, Burnham said he would give people “the confidence that if they have a great idea, they’ll get all the support they need to bring it to life”.

“When local leaders have the tools to get things done and government works in partnership with business, you can pull in investment, create jobs and transform communities,” he said.

He added the government would be “a partner for growth to make every part of Britain better off”.

The meeting comes as higher borrowing costs in the UK and other countries present problems for governments looking to spend money on business support or investment.

Separately, hundreds of hospitality businesses have written to the prime minister, calling on him to cut VAT for the sector.

More than 800 pub, restaurant and hotel bosses – include celebrity chefs Heston Blumenthal and Tom Kerridge – signed the letter asking for the hospitality VAT rate to be reduced from 20% to 10%.

When he was still Mayor of Greater Manchester, Burnham said he would argue for the tax to be aligned with the lower rates in other European countries.

Official data revealed a surprise boost in the economy in July partly driven by artificial intelligence (AI) investment, though experts expect growth to slow in the months ahead due to high energy prices.

The US-Israel war with Iran has led to a sharp jump in oil prices, which has fed through to higher energy and fuel prices, affecting households and businesses.

The rise in energy costs has prompted fears that inflation will remain high and increase the chance that central banks will hike interest rates to keep the pace of price rises under control.

The expectation of higher interest rates, as well as competition in the global debt market from AI firms looking to spend money on development, has driven up the cost of government borrowing in many countries.

However, many argue the UK has a particular problem. The UK yield for 10-year bonds, a key measure of government debt costs, is higher than countries such as the US, France, and Japan.

Experts say this is due to several factors affecting investor confidence in the UK, such as multiple prime ministers, chancellors and policy U-turns over a short period.

The boss of chip designer Fractile, Walter Goodwin, who will be attending the meeting on Monday, said the government’s acknowledgement that high-growth businesses are crucial to job creation and the economy has been “a positive thing”.

But speaking to the BBC’s Today programme, he said the UK could do better in attracting the best talent as the current system is “less dynamic” than other countries.

Goodwin said the UK should be attracting the best talent in the world, and mobility could be improved by reducing notice periods for when someone wants to change jobs from three months to a shorter timescale.

In an interview with the BBC last week, Healey called for a restoration of “confidence about Britain” despite acknowledging the challenge of “historic high” borrowing costs.

Others have argued that the Labour government has created its own problems by increasing costs for businesses.

Conservative shadow business secretary Julia Lopez said: “The way for the prime minister to get businesses thriving, delivering jobs and driving growth is to cut their taxes.

“Labour’s jobs tax and employer red tape have been devastating for businesses. The consequence has been a drying-up of the jobs market, weaker investment and businesses facing ever greater costs.”