Chancellor John Healey has sought to reassure business leaders ahead of the Budget, pledging to cut the cost of doing business and to back companies that make a profit, as firms delivered a blunt verdict on Labour's first two years in government.
Healey said he was as focused on reducing the «cost of business» as he is on the cost of living, and acknowledged that many companies had been under «a lot of pressure». He framed the forthcoming fiscal statement as an opportunity to rebuild the damaged relationship between Labour and the private sector, and to support entrepreneurs who take commercial risks.
The Chancellor's intervention follows warnings from firms that the first two years of the Labour administration have been «horrific» for business. The complaints point to a difficult operating environment in which companies have faced rising costs and uncertainty over tax and regulation, and they have sharpened concerns about how the Budget will be received by employers and investors.
In his remarks, Healey positioned himself as a chancellor «who backs business», saying he wanted to reward profit rather than treat it as something to be penalised. He also said the Budget would be aimed at supporting «bloody-minded entrepreneurs» — a phrase that appeared intended to signal sympathy for the persistence and risk-taking of business owners rather than a shift in policy detail.
The pitch is a recognition that the government needs private-sector confidence to deliver growth. Business investment decisions are sensitive to the tax treatment of profits, the cost of employment and the perceived stability of policy, and ministers have been under pressure to show that they understand those concerns after a period in which relations with parts of the corporate world have been strained.
For now, the Chancellor has offered direction rather than specifics. The test will come when the Budget measures are set out, and when firms judge whether the rhetoric about cutting costs and backing profit is matched by decisions on tax, regulation and support for entrepreneurs. Business groups are likely to press for concrete commitments, while the government will be looking for a visible improvement in sentiment that can be presented as evidence of a pro-enterprise approach.
The political stakes are considerable. Labour has staked its economic credibility on a partnership with business, and the warning that the first two years have been «horrific» underlines how far that relationship has to be repaired. Healey's language is an attempt to reset the tone before the Budget, but the response from companies will depend on whether the measures reduce the burden they say is holding them back.