Cut our costs or kill growth, industry warns Chancellor

Big business finally admits it: Britain costs too much

Britain's biggest business groups are finally saying what small and micro businesses have been shouting for years: it simply costs too much to do business. Taxes, employment costs, energy bills, borrowing and regulation are piling pressure onto an already fragile economy. Now industry leaders are telling the Chancellor that unless the Budget delivers genuine breathing space, Britain's much-promised growth could be strangled before it starts.

CUT THE COST OF DOING BUSINESS

Industry leaders warn the Chancellor: rising costs, taxes, and risks are taking a toll on a fragile economy that needs breathing space.

Britain’s largest industry groups, the B5, have issued a message to Chancellor John Healey ahead of the Autumn Budget: reduce the cost of doing business or risk choking off growth.

9th September was the cut off for organisations wanting to tell the Chancellor how to write his budget and City AM reports that on top of that deluge of advice, most of it conflicting, letters landed on Treasury desks last night from major business bodies. They are urging the government to ease pressures on employers, clarify fiscal rules, and rethink tax decisions that are pushing up costs for firms of all sizes.

For small and micro businesses, this lobbying matters. It signals that big business is finally saying what small firms have been saying for years: the cost of doing business is too high, unpredictable, and damaging to growth.

COSTS UP, CONFIDENCE DOWN

Industry groups warned Healey that:

• employer costs have risen sharply

• tax uncertainty is hurting investment

• energy prices remain volatile

• fiscal rules are unclear

• borrowing costs could rise again

• youth unemployment is climbing

• growth forecasts are weakening

The Office for Budget Responsibility expects growth of 1.1% this year and 1.6% in 2027, but City economists are already more pessimistic.

For small businesses, that means a slow economy, weak demand, and rising costs, all at the same time.

You might wonder why business groups need to tell the Chancellor what to do and what the impact of his measures are but he doesn’t run a business, nor do his advisers, so they’re not on the front line experiencing the effects for themselves.

Key Demands

Cut the cost of doing business

The B5 groups centred their proposals on reducing employer costs, echoing Healey’s promise to give firms “breathing space.”

For small businesses, this means potential relief on employer national insurance, business rates, energy bills, the admin that goes with the plethora of regulations businesses face and the costs of complying with those regulations.

These are the everyday pressures that hit micro‑firms hardest.

Be honest about the cost of fiscal decisions

In a rare move, some industry leaders have reportedly asked the government to be clearer about the cost of its own policies. This matters for small firms because unclear fiscal rules create uncertainty and market volatility which in turn lead to higher borrowing costs and unpredictable tax changes,

Reconsider the triple lock pension

The British Chambers of Commerce called for replacing the triple lock on state pensions, That would be a politically sensitive move because of its long‑term cost to public finances.

If pension spending rises faster than GDP, business taxes often rise to compensate. The Prime Minister Burnham has committed to keeping the triple lock, but there’s a debate going on behind the scenes.

Avoid tax changes that damage investment

The Institute of Directors warned that changes to capital gains tax could reduce long‑term revenue if handled badly. For small businesses, this is critical as CGT affects founders, investors, succession planning, and the ability to raise capital.

Poorly designed changes could reduce investment in small firms, not increase it.

Reverse the employer NI hike

Retail, recruitment and business groups have urged the Chancellor to undo Rachel Reeves’ £25bn increase in employer national insurance. For small businesses, employer NI is one of the biggest barriers to taking on people and it’s part of the reason young people are finding it so tough to get into work. Undoing the hike could reduce payroll costs, support job creation and ease pressure on micro‑employers

Youth unemployment is already as high as 16%, and reducing those numbers is a recurring theme in industry proposals.

Cut energy costs for producers

Make UK and the CBI urged the Chancellor to reduce electricity costs for manufacturers.

For small firms, especially makers, workshops, food producers, trades and local manufacturers, high energy bills are still a major drag on margins. Where some big high-energy using companies will get government help, small firms won’t.

A United Voice

This lobbying push is important because it shows:

Big business and small business are finally aligned, and everyone is saying the same thing, that costs must come down.

The Treasury is under pressure to act. The Chancellor must balance cost‑cutting with defence spending, inflation relief, and fiscal rules, but the message from industry is significant.

Tax changes could go either way: some proposals could help small firms; others could hurt them. Businesses cry out for clarity. Uncertainty eats confidence.

Youth unemployment is now a business priority and reducing the number of young people struggling to find employment or training and education opportunities is seen as a key part of boosting growth. Small firms will be central to delivering opportunities.

Energy volatility is a major risk and any relief on electricity or fuel costs would be a lifeline for micro‑firms.

Decision Time

Industry leaders have told the Chancellor what small businesses have known for years: the cost of doing business is too high, unpredictable, and damaging to growth.

Healey must now decide what to cut, clarify, rethink, while managing a shrinking fiscal headroom and rising global risks. Who would want the Chancellor’s job.