Rachel Reeves could get a lesson in harsh reality from business

All prime ministers seem to need a mantra when they assume power. A symbolic phrase to outline their priorities. Tony Blair famously had education, education, education. Boris Johnson build, build, build and now for Keir Starmer it is growth, growth, growth. Yesterday’s Budget was designed to be the foundation upon which that drive for expansion could be built.

Since Labour was elected in July, the chancellor and her team have gaslit the electorate, with one Budget tease after another. This Treasury has been as leaky as the Manchester United defence and even drawn the ire of Commons speaker Sir Linsday Hoyle for their indiscretions.

The Budget needed to create a sense of permanency, steady the ship, offer hope and help. It failed in this objective

For those of us trying to run a business, this “will she – won’t she” approach has proved a challenge. Having suffered flakiness and impetuosity under Boris Johnson and Liz Truss, what we required was stability and clarity under Starmer. Over the past three months or so, we ended up getting neither.

There is no guarantee that yesterday’s dramatic, albeit much leaked, fiscal event will turn Starmer’s wish to stimulate growth into reality. One thing is sure, expansion and enhanced productivity is not achievable without serious buy-in from business – and one of the largest and most influential sectors in the UK is still the built environment.

The construction industry is large, diverse and at times unwieldy, but we represent around 7% of GDP and employ a large part of the UK workforce. Put simply, without us the economy falters. We also have one of the largest cadres of SMEs, who already faced profit-sapping cost pressures prior to this Budget.

Arguably the most significant fiscal event in a decade did at least provide a direction of travel. It was not disastrous in, say, the manner of the Truss debacle of a mini-Budget. However, rather than playing the victim of a Tory plot to hide the true numbers, what we needed from the first Labour Budget in 14 years was for it to create a sense of permanency; steady the ship, offer hope and help. It failed in this objective.

For instance, most agree that the planning system needs reform, but there is only the funding for 300 new planning officers – and this is not enough. While asking business to expand its horizons, there is the introduction of costly new labour laws and increased national insurance payments, now up by 1.2 percentage points to 15%, with the threshold at which companies paid now much lower.

We are being asked to produce more houses, prisons and hospitals but no word on how we are supposed to find the 937,000 new workers required by 2034

We are being asked to produce more houses, prisons and hospitals – but no word on how we are supposed to find the 937,000 new workers highlighted by the UK Trade Skills index forecast and required by 2034 to deliver these projects.

Each employee is now going to cost us more to employ, and our risks over taking on staff have been heightened. Where is our incentive to grow? If we don’t grow, the UK doesn’t build.

One accountant has estimated that, for a service business with a wage bill of – say – 60% of revenue, the hike in employers’ NI, plus lowering of thresholds, is like taking the corporation tax rate to over 30%. If this is the case, ISG will not be the last significant contractor to disappear.

This was not a Budget which provided any sense of security for those still in the market for work. The Labour government’s mission is inextricably tied to construction. Its new infrastructure plans, while welcome, require our help and input; its housebuilding plans require our labour and its tax raising through enhanced NI payments needs us to hire more people.

The ability to attract investors is impacted by the tax they are now going to pay on any dividends created

At the same time the ability to attract investors is impacted by the tax they are now going to pay on any dividends created. So they may as well invest in companies that are not under UK government jurisdiction and keep their money out of the UK.

Business is adaptable. It has to be. My own has survived the Corn Law riots in the 19th century, two world wars, various market crashes from the 1920s to 2008 and we are still here. Reeves did not shake our world to that extent.

For businesses like mine, which are privately owned, our future over whether to expand or contract is in our own hands. For those organisations financed by those operating outside the UK, they are not driven by sentimentality.

It may be that, by squeezing the corporate purse, others decide to relocate elsewhere. Then the elusive growth that set the backdrop to this Budget will help other countries, rather than out own.

Finally, while this Budget was highly significant, the UK does not operate in glorious isolation. We need to trade to survive and, in just over a week, we could see a Trump presidency with all that brings in terms of tariffs and trade restrictions.

Europe is our biggest market and it is already suffering from lacklustre domestic economies and slowdown from demand in China. Trump has said he will impose levies on imported goods at 20% for the EU and 60% for China, prompting the IMF to issue warnings on growth.

Starmer wants growth and, with Budgets as complex as the one announced by his chancellor yesterday, the devil is in the detail. So we will need to wait and see its impact here. But, if things go amiss in the US next week, factors beyond his control could see the global economy panic – and our prime minister may need to adjust his objectives from future growth to defending what we have.

If this is the case, he will need business on his side – and it is worth remembering that the built environment is one of the UK’s biggest sectors.

Richard Steer is chair of Gleeds Worldwide