What does the new Labour administration mean for businesses?

A new Prime Minister, a reshuffled Cabinet, and a fresh set of priorities. There is a new leadership team in place with Andy Burnham taking office as Prime Minister and setting out his government's vision for economic growth.

Whenever a new administration takes charge, business owners inevitably ask the same question: What does this mean for my business?

While many of the government's longer-term policies are still taking shape, the early signals suggest:

• A greater focus on supporting regional growth

• Improving access to finance

• Strengthening partnerships with businesses

• Devolving more decision-making away from Westminster.

For small and medium-sized enterprises (SMEs), that could present new opportunities — but as always, the key will be turning announcements into action.

Andy Burnham’s government is expected to focus on business partnership

One of Andy Burnham's first moves as Prime Minister was to arrange calls with business representative organisations including the Federation of Small Businesses, British Chambers of Commerce, Small Business Britain, and the CBI.

During these discussions, the government outlined what it described as a "new offer" to businesses. Rather than simply consulting industry after decisions have been made, the aim is to give businesses a stronger voice in shaping policy while providing greater certainty and faster decision-making.

The government has also committed to reforming business rates, reducing unnecessary barriers to growth, and bringing down costs where possible.

For SMEs, certainty can often be just as valuable as financial support. Whether you're hiring staff, investing in equipment or planning expansion, confidence in the wider business environment makes it easier to make long-term decisions.

Your own business might have spent the past few years navigating inflation, rising borrowing costs, supply chain disruption, and economic uncertainty. A more collaborative relationship between government and business could help restore some confidence if the commitments are followed through.

Regional business growth moves up the government’s agenda

Andy Burnham built much of his political reputation as Mayor of Greater Manchester, where he championed regional investment, transport improvements, and greater local decision-making.

The government has already indicated that it wants more decisions made closer to communities, employers, and investors rather than being controlled centrally from Whitehall. Further devolution and increased powers for regional authorities are expected to form a significant part of its economic strategy.

For businesses outside London and the South East, this could be particularly significant.

Regional investment often leads to stronger local business ecosystems, improved infrastructure, new skills initiatives, and greater support for entrepreneurs. While the exact details are still emerging, businesses across the Midlands, North, and other regions will be watching closely to see how these plans develop.

What UK government policies should businesses keep an eye on?

While many of the new government's plans are still being developed, several proposals have already emerged that could have a direct impact on SMEs over the next 12 to 18 months.

Valuable business rates reform

High street businesses could be among the biggest beneficiaries of the new government's plans.

Prime Minister Andy Burnham has reaffirmed his commitment to reduce business rates by 20% for pubs and music venues, with the changes expected to come into effect from April 2027. The proposal would be funded by higher business rates for large out-of-town warehouses and major online retailers.

Alongside this, Burnham has pledged to increase the threshold at which businesses begin paying business rates, potentially removing the tax altogether for many smaller businesses.

Speaking about his vision for Britain's town centres, he asked: "Shouldn't we make high streets a symbol of Britain's renaissance?"

If delivered, these reforms could help reduce overheads for thousands of independent businesses while encouraging investment back into local high streets.

Boosting employment and skills growth

Developing the UK's workforce is another early priority.

The government has announced ambitions to increase work placements for 16 to 18-year-olds and provide stronger guarantees around apprenticeship opportunities.

For SMEs facing skills shortages, this could create a larger pipeline of young talent while making it easier to recruit and develop future employees.

Burnham has also indicated he wants to revisit the increase in Employer National Insurance Contributions introduced in the 2024 Autumn Budget. While he has suggested the rise may not be fully reversed, businesses will be watching closely to see whether any adjustments are announced in the coming months.

Reducing barriers for UK employers

The government has confirmed it will scrap the planned digital ID scheme introduced under the previous administration.

For employers, this could mean (although not certain) that existing right-to-work checking processes will remain in place rather than moving to a mandatory digital identity system. The decision forms part of the government's wider focus on reducing costs and simplifying processes where possible.

Lower energy costs for small businesses

From the 1^st of October, VAT on domestic electricity is due to fall to 0%.

Although the measure is primarily aimed at households rather than businesses, owners who work from home may benefit indirectly through lower domestic electricity bills.

Backing innovation and local growth

One of the clearest themes emerging from the new government is its ambition to support innovation across the UK.

Burnham has spoken about backing "scientists, technologists, entrepreneurs and creatives" as part of his vision to make Britain an "Innovation Nation".

Supporting this ambition is the creation of a new combined Department for Business, Innovation, Science and Trade, bringing together key areas that influence business growth and innovation.

The government has indicated that it wants to explore how locally controlled investment models, including Greater Manchester’s “Good Growth Funds” approach, could support growth in other regions.

By bringing together public and private investment locally, these funds aim to make it easier for startups and growing businesses to access finance and support within their own communities.

Many of these proposals align closely with the government's wider commitment to regional growth and could create new opportunities for ambitious SMEs across the country.

Looking ahead under Burnham’s Labour government

While these proposals provide an early indication of the government's direction, many of the finer details — including how they will be funded and implemented — are expected to be announced in Chancellor John Healey's Autumn Budget on the 28^th of October.

For business owners, the coming months will be worth watching.

As policies evolve, understanding how they affect your costs, access to finance, and future growth plans will be key to making informed decisions.

Access to finance remains a priority

One of the most significant announcements for many growing businesses has been the government's renewed commitment to improving access to finance. This was announced by previous Chancellor Rachel Reeves, but is expected to be supported and built on by Burnham and Healey.

Alongside wider plans to unlock billions of pounds of additional funding for UK businesses, the government has also announced new backing for Community Development Finance Institutions (CDFIs), recognising the important role they play in supporting businesses that may struggle to access finance through traditional lenders.

For many SMEs, particularly startups, early-stage businesses, or companies that don't fit traditional lending criteria, access to funding remains one of the biggest barriers to growth.

That's where CDFIs make a real difference.

Why investment in CDFIs matters

CDFIs are responsible lenders with a social purpose.

Rather than focusing solely on credit scores or security, we look at the wider picture, considering the viability of the business, the ambitions of the entrepreneur, and the positive impact that funding could create within local communities.

The government's renewed investment in the sector, alongside new commitments from private sector organisations, represents an important vote of confidence in community finance.

It recognises that improving access to affordable finance isn't just good for individual businesses — it supports job creation, local economies, and inclusive growth.

For businesses that have previously struggled to obtain finance from high street banks, this could mean greater availability of funding and continued investment in organisations dedicated to supporting underserved entrepreneurs.

At First Enterprise, we've seen first-hand how access to the right finance at the right time can help businesses launch, grow, and create jobs.

Every year we work with hundreds of businesses across the Midlands, helping entrepreneurs who might otherwise struggle to secure the funding they need.

Government support for the wider CDFI sector helps ensure this vital work can continue reaching more businesses across the UK.

What should SMEs do now?

While it's still early days for the new government, you don't need to wait for every policy announcement before taking action.

Periods of political change often create uncertainty, but they can also create opportunity.

Now is a good time to review your business plans, assess future funding requirements, and think proactively about growth rather than waiting until finance becomes urgent.

Businesses that understand the funding options available to them — and build relationships with lenders before they need finance — are often in a much stronger position when opportunities arise.

It's also worth keeping an eye on future announcements around business support, regional investment programmes, and skills initiatives, as many of these could directly benefit your business over the coming months.

Looking for help growing your business? Get in touch

No government can transform the business landscape overnight, and many of the new administration's proposals will take time to develop.

However, the early direction of travel appears encouraging for SMEs. Greater engagement with business, increased regional decision-making, reforms designed to support growth, and renewed investment in community finance are all positive signs for small businesses.

For ambitious companies, access to the right support remains just as important as ever.

Whether you're starting a new venture, investing in growth, or looking to strengthen your cash flow, having the right funding partner can make all the difference.

Our team are here, ready and waiting, to listen to your story. To start the conversation, simply complete the enquiry form below or give us a call at 0345 602 7355.

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At First Enterprise, we're committed to helping businesses access fair, flexible finance alongside the guidance and support they need to thrive — whatever the political landscape looks like.

Please note:

This article is for general information only and does not constitute advice. All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All content is based on our understanding of HMRC legislation, which is subject to change.

We always recommend that you seek direct financial advice from a relevant expert or professional before making any financial decisions.

First Enterprise is a not-for-profit, FCA-regulated finance provider offering unsecured loans from £500 to £250,000 for start-ups and growing businesses across the UK.

We support businesses that struggle to access mainstream finance, with a focus on underrepresented groups. Funding is delivered through government-backed national and regional programmes. 

We offer human-made lending decisions, a dedicated advisor for every applicant, and no penalties for early repayment.