Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), has warned incoming Labour leader Andy Burnham against another "summer of speculation" on tax and spending that could unsettle British businesses. Speaking to the Guardian, she urged Burnham to tread carefully as he prepares to take up the Labour leadership on Friday, with a new cabinet to be announced on Monday.
Call for stability and credible fiscal plan
"What we mustn't have is a summer of speculation where there's kite-flying over, 'we might cut spending in this area or boost that' – or the more damaging one is, 'we might increase this tax or maybe we won't'. I think that uncertainty is just really difficult for business," Newton-Smith said. Labour's last two summers were dogged by leaks and speculation about Rachel Reeves' autumn budgets.
One of Burnham's key decisions is whom to appoint as chancellor, with speculation over energy secretary Ed Miliband potentially taking the role. Newton-Smith said she was "not terrified of Ed Miliband" nor any other candidate, but stressed the new chancellor should not "feel bounced into making decisions in the first couple of weeks" and should take time to listen to business. "I would say, let's walk to the right answers, not run to the wrong ones." She added: "What business wants to see is evolution, not revolution. I think what any chancellor needs to do is early on set out a credible fiscal plan with fiscal rules that underpin it."
Warning against renationalisation and energy costs
Newton-Smith praised Burnham's business-friendly approach as mayor of Greater Manchester but warned against radical ideas like renationalising key utilities. "Renationalising things is incredibly expensive. Obviously it depends on which sector we're looking at, but what we do know is that private sector investment has delivered a lot of high-quality outcomes, and I think if you're going to move away from that, there's a huge cost involved and ultimately that cost falls on ordinary people."
Instead, she called for a new generation of public-private partnerships to fund major projects. "We need more homes, we need more reservoirs, we need more energy-efficient buildings. And I think we've got to be thinking about public-private partnerships."
With Burnham expected to announce cost of living measures early in his tenure, Newton-Smith urged him not to neglect businesses' costs, particularly sky-high energy bills. "Our view is, you can't address the cost of living without addressing the cost of doing business. From the business leaders I speak to, whether you're a supermarket, whether you're a food and drink manufacturer, even financial services when they're looking to expand, the cost of data [and] energy costs is a really big issue for our overall competitiveness for so many different firms."
Electricity costs and EU reset
A CBI and Energy UK paper this week noted UK businesses' electricity costs are 45% above the G7 average. It called for moving clean energy transition costs off business bills by scrapping levies like the renewables obligation, with costs met by taxpayers or a privately financed "energy transition funding scheme".
Newton-Smith attended the Mansion House dinner where Reeves gave what was expected to be her last major speech as chancellor. The CBI boss praised Reeves' record on boosting public investment but called on Burnham to "pick up the pace".
On EU relations, Newton-Smith said Burnham should complete the long-awaited "reset" by rescheduling the summit postponed by Keir Starmer. However, she was sceptical about rushing to rejoin the single market and customs union: "Rejoining the single market and customs union is just not on the table right now on the European side ... the government has taken absolutely the right approach. We've got the right framework for the UK-EU reset. We need to go in and negotiate hard and deliver that."
CBI's recovery after misconduct scandal
Newton-Smith, 51, took over as CBI chief executive in 2023 after the organisation was rocked by allegations of sexual misconduct. She said the culture has shifted significantly: "I'm super proud of where we are now. Culture is a living, breathing thing. And I think you always have to make sure that people feel they can raise issues internally, externally, and that you're open when they do. But I think any leader will say that work is never done, right?"
The CBI's income plunged in 2023 as members left in protest. Newton-Smith declined to say whether membership numbers had recovered but insisted both membership and income were growing. "We've changed. The business landscape has changed."
