Mel Stride: Labour’s claims to be business-friendly are as hollow as their ‘plan for growth’

Mel Stride is Shadow Chancellor of Exchequer and MP for Central Devon

9-months ago Rachel Reeves shamelessly stated that Labour is “the natural party of business”.

How increasingly absurd that sounds.

Let’s be clear. The first eight months of this government has been an utter disaster for businesses. Looming tax rises have crushed business and investor confidence. Labour’s Jobs Tax will impose a £25bn burden on employers, and it comes on top of a host of other new costs and red tape.

Meanwhile prices are going up across the board, with inflation now at 3% and expected to keep rising, fuelled by Labour’s borrowing spree and by businesses who have no choice but to pass on their higher tax bills to consumers. That means a higher cost of living for families. It also means interest rates staying higher for longer, prolonging the financial pain for businesses, consumers and mortgage holders.

The Bank of England has halved its growth forecast for this year following Labour’s disastrous Budget. According to the Office for National Statistics, GDP per capita – the measure that Rachel Reeves wishes to be judged by – has fallen, which means we’re getting poorer. Do not be fooled by the Chancellor’s excuses about external factors beyond her control – all of this was happening well before the latest developments in global affairs.

But the most striking indication of economic decline comes from businesses themselves. Countless surveys show mounting concern, with businesses reporting lower confidence and growing apprehension over the economic policies of this government.

Businesses are the driving force of wealth creation, job creation, and the tax revenues we rely on to support our public services. They are now being battered by punitive tax hikes, increased regulatory burdens, and a complete lack of understanding from this government about what it takes to foster a thriving economy.

Given the Labour front bench has little to no real-world business experience between them, we shouldn’t be too surprised that they don’t get it. Labour’s policies are suffocating the very businesses they claim to champion.

When Keir Starmer and Rachel Reeves made their pitch to the country, they promised a pro-business government, but instead, what we’ve seen is an assault on entrepreneurship and innovation. Tax burdens are skyrocketing, leaving businesses in peril. Labour promised “growth, growth, growth” – instead we’ve been given uncertainty, stagflation, and failure.

Take Labour’s increase to employers’ National Insurance contributions. This Jobs Tax is a ticking timebomb for the economy. It will force businesses to cut jobs, freeze hiring, raise prices, and shelve investment plans.

In fact, it’s already having an effect. According to the Chartered Institute of Personnel and Development (CIPD), nearly a third (32%) of affected businesses will cut jobs, more than four in ten (42%) will raise prices, and near enough a quarter (24%) will scale back their investment plans.

In the hospitality industry alone, which employs millions of workers, more than three-quarters of a million jobs will be dragged into the tax net by this policy. Businesses like Young’s pubs have already warned that it will add 20p to the price of a pint.

Cliff Nicholls runs two trampoline parks and indoor play centres in Tamworth and Bolton. Labour’s Jobs Tax means he’s had to cut 10 jobs to offset a £79,000 increase in staff costs. This is just one example of the ripple effects this policy is already having.

A fortnight ago, I told the government we would support them if they cancelled the National Insurance rise before it kicks in – and said money could be found elsewhere if they grip the welfare budget. There are at least £12 billion of savings a year to be made, as we set out in our manifesto last year. We are told to expect details shortly of their welfare plans, where we will see if they have stepped up to the scale of the challenge or ducked it. So far they seem to be dithering even over the existing reforms they inherited from the last Conservative government.

And it’s not just the tax hikes that are causing concern.

The government is making it even harder for businesses to hire and keep staff with new regulations through the Employment Rights Bill. This will inevitably raise the cost of hiring, especially in lower-wage sectors like hospitality and retail, and it will further discourage businesses from taking on new workers. The government’s heavy-handed approach to business is suffocating innovation and entrepreneurship.

The Labour Chancellor says these policies are necessary to fund public services. But the money raised from higher taxes will not be spent on improving public services – it will be consumed by interest payments on the rising national debt. This government has mismanaged the economy, and the consequences are being felt by businesses and workers.

And Rachel Reeves does not seem to understand that international markets are watching. Not only is she piling up more debt, but she is raising the costs of servicing that debt as investors see a stagnant economy and a government unable to grip the public finances. We are already spending almost twice as much on debt interest as we are on defence – if investors demand a higher premium to lend to us due to the Chancellor’s incompetence, we end up wasting billions more on debt interest that could been spent on priorities like our national security.

As an entrepreneur who has built businesses from scratch, I know how disastrous Labour’s policies are and how out of touch the government is with the realities of running a business. They’ve made it clear that they don’t understand what it takes to create jobs, grow companies, and drive innovation. This is a government that has taken the most anti-business approach in modern British history.

We cannot afford more of this economic mismanagement.

Businesses are thebackbone of our economy, and it’s time the government started acting like it. Urgent action must now be taken. The Spring Statement later this month is the obvious moment. But the smart money is on this Chancellor failing to act.

We will all continue to pay the price.