Prime Minister Andy Burnham has pledged to tackle the “cost of business” as he seeks to head off fears that the private sector faces another punishing tax raid at the Budget.

Burnham said he wants to “make life easier” for people and businesses as he prepares his first Budget under the new government. In an interview on Wednesday, the Prime Minister said the fiscal problems facing the government were “challenging”, but that he was taking steps to ease the pressure on households and the private sector alike.

“I’m not coming into this role thinking how do we make life harder? I’m trying to make life easier for people. How do I take pressure off? How do I meaningfully deal with the cost of living and the cost of business?,” he told the Financial Times.

The Budget on 28 October was “the earliest date we realistically could have done”, according to Burnham.

He also moved to ease worries among investors and business owners that a series of tax hikes was coming at the Budget. The Prime Minister said he was “acutely conscious of how hard the operating environment is for businesses, big and small”.

“People shouldn’t read into me giving that answer that all kinds of things are coming,” he added.

The remarks reflect mounting private sector concern that the government could again lean on businesses to raise revenue at the Budget. Research by the British Chambers of Commerce, one of the country’s largest industry groups, suggests that government policies over the last decade have pushed up costs on businesses by about 70 per cent.

Burnham says trade with EU can add to growth

The Prime Minister also appeared to signal that a trade summit with the European Union was set to take place in November, having previously been scheduled for July before Sir Keir Starmer resigned and left Number 10.

He echoed his predecessor in suggesting that boosting trade with the economic bloc, which remains the UK’s largest trading partner, would “add percentage points” to the UK growth rate. Starmer previously argued that boosting trade with the EU would be central to delivering growth.

Burnham’s approach suggests that the UK might yet plough ahead in lowering trade barriers across various industries. In its 2024 election manifesto, Labour said the UK would not seek to re-join the customs union or single market and described such a move as one of its “red lines”. But Burnham said relations with the EU were an issue that “we cannot ignore”.

The new Prime Minister also told the Financial Times that his focus on boosting “public control” over utilities such as water and energy was partially a way to show he did not “necessarily” back full nationalisation.

“It’s about making the basics function properly and function properly for business, so you create the most benign investment environment for companies,” he said.

Fiscal headroom and energy pressure

The comments come just under a week before Parliament returns, setting the government up for a two-month run-in to the Budget.

Several City economists have estimated that the size of the fiscal headroom is at around £15bn due to the hit from rising energy prices. However, the Resolution Foundation, a left-leaning think tank, calculates the headroom to be closer to £8bn. Fiscal headroom — the buffer the government holds against its debt-reduction targets — matters because it determines how much room there is to spend, cut taxes or borrow without breaching those rules. The official figure will be set by the Office for Budget Responsibility’s forecast accompanying the Budget statement, and any move to ease the “cost of business” will have to fit within whatever cushion that forecast shows.

Rising energy costs, driven by higher wholesale gas prices that feed through to household bills via the regulator’s price cap, have intensified calls from North Sea energy companies to be given permits to drill for more oil and gas. Decisions on new licences at the Jackdaw and Rosebank oil and gas fields are expected within days. The two fields, operated by Shell and Equinor respectively, have awaited fresh rulings since the Supreme Court quashed their original consents in June following a legal challenge by climate campaigners.

Burnham added that he backed comments made by the Labour donor Dale Vince, the green-energy tycoon and founder of the green energy firm Ecotricity who has long criticised fossil fuel usage, suggesting that drilling in the North Sea could “make sense” if some further price controls are introduced.