Why a boring budget is exactly what UK business needs

Businesses looking to be dazzled, be warned: there will be no fireworks at Wednesday's budget. John Healey is determined to keep his first major tax and spending announcement as chancellor as low-key as possible.

And, for now, boring may be exactly what the UK business sector needs. The uproar from business after Labour’s two tax raids cannot be understated. The anger has not gone away. As one hospitality boss put it: “Those ***** have cost us 100,000 jobs.” Most of my other messages are unprintable. In this piece:

• Why a low-key budget may be exactly what business needs
• How a national insurance holiday and youth minimum wage reform could get young people into work
• Why shifting the business rates burden isn’t the same as cutting it
• Why wealth should be celebrated, not tapped whenever the Treasury needs cash

Why the budget can’t simply mean more tax rises for business

Andy Burnham will no doubt announce dozens of small measures to ease the squeeze on households and cement his reputation as the man of the people. But combining that with a credible promise to get Britain’s finances under control will be a difficult balancing act.

Luckily for him, he has a boring chancellor. If Rachel Reeves was dubbed “Rachel from accounts”, she has been replaced by “John from compliance”. That’s no bad thing.

Healey’s job is not to win applause from the bond market or dream up another round of crowd-pleasing giveaways. It should be about sending a message that this administration is serious about supporting business, jobs and growing the economy.

To do that, first he needs to recognise what he can and can’t control. The situation in the Middle East is one example. The conflict has already dealt a blow of as much as £19bn to his tax and spending plans. Repairing that will not be easy – but the answer cannot simply be more tax rises.

The chancellor can’t control the price of oil, what happens in the Strait of Hormuz or the path of global interest rates. But he can decide whether Britain becomes an even more expensive place to create jobs and build businesses. Spending cuts won’t be easy, but they’re needed.

Why it needs to be cheaper to hire young people

That brings us to the second test: jobs. Almost a million young people are not in education, employment or training. That represents a huge failure to them, and to society. Alan Milburn will make recommendations on how to get more young people from school into work.

But structural reform takes time. Businesses need incentives to employ people now. Former Tory prime minister Theresa May once proposed a national insurance holiday for employers taking on people who struggle to find work, including former care-leavers, disabled people and those out of work for more than a year.

Business wants the idea revived. The Treasury has modelled the policy and doesn’t like it. However, the principle is simple: if the government wants companies to employ people who face barriers to work, it should reduce the cost of doing so.

The minimum wage is another obvious place to start. Even Labour’s favourite think tank has warned of the damage that the Tories and Labour have done by seeking to close the gap between rates paid to younger people compared with working adults.

Analysis by the Resolution Foundation estimates that if youth and adult minimum wage rates had not converged since 2023, there would have been around 15,000 additional jobs. There is a trade-off: young people would collectively have lost £379m.

But that is precisely why the government needs to be honest about the choices it is making.

The same applies to Labour’s wider employment reforms. If businesses become more nervous about taking a chance on someone, they will simply take fewer chances.

Why shifting the tax burden isn’t the same as cutting it

Third, Healey should resist adding to the cost of doing business. Business rates are an obvious example. The answer cannot simply be to make Amazon pay a little more while giving the high street a little relief. Shifting the tax burden somewhere else is not the same as cutting it.

Britain already has some of the highest property taxes in the industrialised world, according to the OECD. While the Labour manifesto may have tied Burnham’s hands on changing some of the bigger taxes, he shouldn’t reach for one of the few levers he has in the name of semantics.

The same warning applies to devolution. Burnham talks constantly about “growth in every postcode”, but devolution is no silver bullet. Giving politicians more powers does not, by itself, make an economy grow faster and banking on it in the short term would surely be a mistake.

Finally, wealth should be celebrated rather than treated as a problem to be solved whenever the Treasury needs cash. The instinct to soak the rich whenever the public finances deteriorate may be politically tempting. But there is a danger of taxing the very investment and enterprise Britain needs to generate more growth.

Healey therefore has a choice. He can make the budget memorable with giveaways and new tax raids. Or he can do something much less exciting: make it cheaper to employ people, easier to invest and less risky to build a business. That might sound boring. But after years of tax rises and policy uncertainty, boring is exactly what UK business needs.