What would Andy Burnham as PM mean for employers?

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23/06/2026

What would Andy Burnham as PM mean for employers?

After Sir Keir Starmer’s resignation as Labour Party leader, and an expectation that Andy Burnham’s will be prime minister within weeks, what would a government led by the former mayor of Manchester mean for employers?

With Wes Streeting now backing Andy Burnham, and only a slim possibility that any other Labour MP would garner the backing of 81 colleagues to challenge him, the “King of the North” could be in Number 10 by 17 July.

Can Burnham create the conditions needed by business to drive growth while addressing the tax and spending challenges? Or will his appointment as PM – the UK’s seventh PM in a decade – just create further uncertainty and inertia?

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said: “More change in Whitehall could be a challenge to the stability firms need, but business are adept at getting on with it. Whoever is prime minister, one thing will remain true though: only private sector growth can address the fiscal challenges the government faces and put money in the pockets of people across the country.

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“What firms really need is a government that will back them to deliver growth, rather than making trading more difficult by heaping up ever more regulatory and taxation costs.

“That means making sure that government works with business to achieve its aims, rather than imposing solutions that sound good to Westminster think-tanks and more radical union leaders, but do not help ordinary workers and companies who are trying to drive the country forward.”

Burnham has already committed a future government to the current administration’s fiscal rules, allaying some fears that he could spook foreign investors by borrowing more.

He will set out his plans for economic growth next week, but he is already facing calls for him to balance better Labour’s commitment to strengthen workers’ rights with the need to preserve the flexibility that has long characterised the labour market, flexibility that is currently the focus of a consultation on regulations for guaranteed hours.

Carberry said: “Pragmatism on the unworkable approach to guaranteed hours set out by the Employment Rights Act would be a good first step in working out whether any new Prime Minister really has growth and prosperity at the heart of their plan.”

Angela Rayner, previously deputy prime minister, and the lead architect of Labour’s reforms to “Make Work Pay”, was a vocal opponent to Starmer’s decision to block Burnham from running in the Gorton & Denton by-election.

She is likely to return to Burnham’s cabinet, joining Jonathan Reynolds, another pioneer of the Employment Rights Act, who has been tipped to return to his former role as business and trade secretary.

Both are unlikely to water down the government’s zero-hours reforms, particularly in the face of pressure from the trade unions.

Shifting wealth and power

Andrea Egan, Unison’s general secretary, said: “The next prime minister has an opportunity to break with tinkering around the edges and deliver a complete transformation of this country, permanently shifting wealth and power to working-class people.

“That means full implementation of the plan to Make Work Pay, a massive programme of public investment and insourcing to repair our public services, and national public ownership of utilities.”

Rain Newton-Smith, CBI chief executive, said: “With geopolitical tensions high, the country now needs stability, confidence and a clear path to growth. The UK’s economic challenges will not disappear with a change of prime minister. The economy won’t fix itself while politicians look inwards. And you cannot tackle the cost-of-living without addressing the cost of doing business.”

She added: “Business will want their voice to be heard and for the needs of our economy, the ability to invest and create jobs throughout the UK, to be at the forefront of any decisions. It’s a competitive game to capture global investment and one in which the UK needs to stay ahead.

“We look forward to working with the government on the transition and with the next prime minister, who must move quickly to reassure businesses and investors, protect living standards, and set out a credible, deliverable plan for growth.”

Nationalisation

While Starmer was considering his future at Chequers over the weekend, allies of Burnham published The Productive State: A Framework for Manchesterism, a policy paper outlining an economic approach for Burnham to scale up nationally what he has achieved in Manchester.

It examines how public control can be reasserted through direct engagement in public investment, provision, ownership and coordination. It criticises the long trend of privatisation of utilities, saying this is at the heart of the UK’s growth and productivity struggles, since loss of control over the basics has made life more expensive.

The publication does not, however, advocate for blanket nationalisation but argues for a framework for greater state intervention to protect the public from soaring costs.

Tax and NICs

In his Makerfield campaign, while wishing to focus on local politics rather than national policy, Burnham did say he would consider cutting some employers’ national insurance contributions and cutting business rates for pubs and small businesses.

In an interview with the BBC’s Newsnight, Burnham said: “I have said that I thought the weight of the burden on employers’ national insurance wasn’t the right decision. However, it was the decision.

“There is more that needs to be done to listen to the voice of small business, and as I’ve gone around this constituency, I’m hearing it a lot. People just feel they are at the kind of limits of what they can do.”

Whether this thinking could also apply to bigger businesses remains to be seen. The only thing we know for sure is that Starmer’s leadership is over. While the Conservatives and Reform UK call for a general election, employers will once again adapt to yet another period of relative instability.