When Labour swept in two summers ago, most entrepreneurs in our network — at least those without a strong political affiliation pulling the other way — were relatively optimistic about the new Government. After the churn and disruption of Brexit and Covid, founders just wanted some stability. However, the October 2024 Budget decisively soured that for many of them.
ICAEW’s Business Confidence Monitor collapsed to 0.2 in Q4 2024 from 14.4 the previous quarter, as the share of firms citing the tax burden as a growing challenge hit a record 41% — the first time tax had ever topped the survey’s concerns. The IoD’s Directors’ Economic Confidence Index fell to –65 in November 2024, close to its Covid-era record low of –69, with 83% expecting higher employer NI bills and investment intentions dropping to –27.
It doesn’t stop there. BDO’s Optimism Index posted its steepest monthly fall since August 2021. The BCC’s Quarterly Economic Survey sank to its weakest since the 2022 mini-budget, with tax worries jumping to 63% from 48%. And the CIPD’s survey of more than 2,000 employers found employment intentions falling sharply, with almost a third planning to cut headcount or hire fewer and a quarter scaling back or cancelling investment — all explicitly linked to the Budget’s NIC and minimum wage rises.
Given all this, Andy Burnham takes the keys to Number 10 without the same reservoir of goodwill. As our latest Entrepreneurs Survey with Public First makes uncomfortably plain, the relationship between founders and Westminster has curdled. Asked which party they trust most to understand them, Britain’s entrepreneurs hand victory to “none of the above” (32%), ahead of the Conservatives (30%) and streets ahead of Labour, on under 7%. Nearly four in five (79%) say the Government simply does not understand what they do.
I really didn’t want to write about tax again this week, but am duty bound. If I could give one piece of advice to Burnham for getting Britain’s businesses back on side, it would be to convince them that his Government’s tax policies will be tolerable. This isn’t purely about rates, but the uncertainty that engulfs the system.
Our survey finds that more than four in five founders (82%) take a dim view of the level of taxation, and when we asked what sends the strongest message that a country is serious about entrepreneurship, they put tax levels and breaks top (68%) — ahead of access to capital (60%) and simpler regulation (49%). Entrepreneurs don’t just experience tax as a cost; they read it as a message about whether Britain wants them and whether the country is heading in the right direction. Well before the Budget, Burnham and his new Chancellor need to put an end to speculation about equalising capital gains with income tax and bolting on an exit tax.
Of course, entrepreneurs won’t stop innovating. Almost two-thirds (63%) are optimistic about their own business over the coming year, even as almost three-quarters (73%) are pessimistic about the economy they’ll be building in. The founders in our survey are, despite everything, still hiring — 43% plan to grow headcount — and still investing, with a third (34%) increasing R&D spend. They back themselves, but Burnham needs to give them a reason to back Britain.
As I argued here at the very start of the year:
“Despite the challenges, the UK remains one of the best places in the world to start and grow a business. Across multiple independent rankings, produced by different institutions using different methodologies, the UK sits comfortably in the global top tier. We aren’t at the frontier on every single metric — but we’re very close on many.”
Most of the headlines are focusing on what Starmer failed to achieve, but to end I want to suggest that some policy changes that move the dial don’t ever make the front pages. These don’t outweigh the big issues of tax and employment costs, but they can compound over time.
Take the Fingleton Review of nuclear regulation: the Government commissioned it, accepted the principle of all its recommendations, and pledged to extend the same reset to infrastructure more widely. The positive impact of its implementation was never going to be realised in one Parliament, but in time the tough choices made by Starmer should result in cheaper, cleaner energy for Britain’s entrepreneurs.
The same logic runs through other policy areas: the Regulatory Innovation Office was created to unblock the regulators governing engineering biology, space, drones and other autonomous technology; the AI Opportunities Action Plan’s 50 recommendations were adopted in full; and an Innovator Passport, tucked inside the NHS’s ten-year plan, lets a technology proven in one trust spread to the rest.
If the new Government is going to win back entrepreneurs, it needs to offer a clear path on tax. But Burnham can also build on these small successes and set in train some of his own. It’s time for Burnham’s new order.
On Purpose
The Cabinet Office is seeking members for its new Impact Economy Advisory Council — a quarterly forum advising government on how it works with impact investors, philanthropists and purpose-driven businesses, from B Corps to social enterprises. Please share with anyone relevant in your network.
Procure Meant
We’re delighted to welcome Gus Tugendhat as an Adviser. Gus is the founder and MD of Tussell, which he started in 2015 to bring transparency to the UK’s £300 billion public procurement market. He and his team have bootstrapped Tussell into the trusted, market-leading brand in its sector, built on proprietary datasets not available elsewhere.
Procurement is one of the biggest and least legible ways government shapes the market for entrepreneurs, and Tussell’s research helps make it visible. Their latest SME Procurement Tracker, produced with the British Chambers of Commerce, found that England’s public sector spent a record £45.2 billion with SMEs in 2025 — 21% of direct procurement, a six-year high — though central government and the NHS lag well behind local government. You can sign up for Tussell’s updates to follow the data yourself.