Client Update - 25th September 2026

Labour's annual conference is being held in Liverpool, a city that symbolises both economic renewal and also underlines the Labour party’s complicated relationship with business. Liverpool is seeking billions of pounds of private investment to transform its waterfront, build new commercial developments and create jobs. This regeneration reflects the success seen in Greater Manchester under Prime Minister Andy Burnham, who, as mayor, helped attract investment through infrastructure spending and local decision-making.

However, Burnham's rise to power has raised concerns within the business community. In his first speech as Labour leader, he criticised the "neoliberal" economic model that has shaped Britain since the 1980s. Many business leaders feared this suggested a return to more interventionist, state-led policies.

While former Labour leaders such as Tony Blair embraced business and markets, Burnham's language appeared more nostalgic, referencing Britain's industrial past of steelworks, shipyards, and coalfields. So, the question now is – “Is the new government genuinely pro-growth and pro-business, or is it returning to a more traditional socialist model”?

It is an interesting and key question, as those who know Burnham argue that he is above all a pragmatist. His record in Greater Manchester suggests he believes in using government investment to encourage private-sector growth rather than replace it.

The Manchester model has produced impressive results. Economic growth in the region substantially outpaced the national average over the decade leading up to 2023. Importantly, much of that growth came from modern sectors such as financial and professional services rather than traditional manufacturing.

Burnham's philosophy, often described as "Manchesterism", focuses on:

• Devolving power away from London.

• Giving regions greater control over investment.

• Improving infrastructure and transport.

• Encouraging private-sector investment.

• Creating local economic growth rather than relying on Whitehall.

This approach has attracted support from many major business organisations, including the CBI and British Chambers of Commerce.

However, businesses remain concerned about several significant obstacles. These include rising costs from higher employer National Insurance contributions, increases in the National Living Wage, rising energy costs and additional employment regulation.

Industrial electricity costs in the UK remain significantly higher than many European competitors, creating challenges for manufacturing businesses and potentially limiting economic growth. The government has promised to reduce regulatory burdens, but at the same time has introduced stronger employment rights and greater protections for workers.

While many employees welcome these changes, businesses worry that implementation may increase costs and reduce flexibility.

Perhaps the greatest uncertainty surrounds taxation. The government faces substantial pressure on public finances and only this week we heard that Chancellor John Healey is considering reducing his fiscal headroom level so the pressure to raise taxes at a time of high government debt costs are reduced.

Burnham has a difficult juggling act. On one side is Labour's traditional belief that government should play an active role in shaping society and addressing inequality. On the other is the practical reality that economic growth, jobs, and tax revenues are created largely by successful private businesses.

Most business leaders believe Burnham understands this reality. They see him as less interested in ideology and more interested in achieving tangible economic results.

Nevertheless, difficult choices lie ahead as he needs to balance investment against taxation, workers’ rights versus business flexibility and regional development against a vast national debt burden.

The most encouraging aspect is that there remains broad agreement across government and business on one fundamental objective: the UK needs stronger, sustainable economic growth.

Burnham's success in Manchester and the regeneration of Liverpool demonstrate that investment, infrastructure and collaboration between government and business can revitalise local economies. While uncertainties around tax, regulation and public spending remain, there are signs that the government understands prosperity cannot be delivered by the state alone. Do have a good weekend.