Andy Burnham becomes Prime Minister with a political identity built around regionalism, workers' rights, and public investment. He has spent a decade in Greater Manchester making the case that economic power should sit closer to the people it affects. For Scottish SME owners, that instinct is familiar, and welcome in principle. The question, as ever, is what it costs to get there.
On employment law, Burnham is expected to accelerate the direction set by Keir Starmer's Employment Rights Bill: stronger protections for workers, tighter rules on zero-hours contracts, and day-one rights for employees. The Federation of Small Businesses has consistently flagged that these reforms, while well-intentioned, land hardest on businesses with small headcounts and thin margins. According to FSB data, roughly 5.5 million UK businesses employ fewer than ten people. A single additional employment tribunal, or a mishandled redundancy under new rules, can be genuinely destabilising for an outfit that size.
On tax, Burnham has historically been more comfortable with public spending than fiscal restraint, but he has also shown pragmatic instincts when running a combined authority budget. The inheritance tax changes to agricultural and business property relief already working through parliament will likely continue under his leadership. Scottish farmers and family business owners who haven't already taken advice on succession planning should not delay. According to the Scottish Government's own figures, around 18,000 Scottish businesses could be affected by changes to business property relief thresholds, depending on final implementation.
The more interesting angle for Scotland is devolution. Burnham has championed English devolution with genuine conviction, and his elevation to PM creates a useful mirror. If he accelerates devolved powers for English metro mayors, the political pressure to match or exceed that for Scotland increases. The Scottish Government has consistently argued for greater fiscal autonomy, and a Burnham-led Westminster that philosophically believes in localism makes that conversation easier to have. Research from the Fraser of Allander Institute at the University of Strathclyde suggests that greater fiscal devolution to Scotland could unlock more targeted SME support, particularly in rural and island economies currently underserved by UK-wide schemes.
There is also the cost-of-living dimension. Burnham has strong form on housing affordability and public transport investment as economic levers, his Bee Network in Greater Manchester is the most cited example. Whether that translates into a coherent national small business support strategy, or stays an urban infrastructure story, remains to be seen. For Edinburgh and Scottish SMEs, the most immediate pressure points are energy costs, rates relief, and the cumulative weight of employer National Insurance contributions that rose in April. Burnham's spending instincts suggest some relief measures, but no firm commitments are yet on the table for small business specifically.
The Scottish Government's relationship with a Burnham-led Westminster is worth watching closely. His regionalist politics make him a more natural interlocutor for Holyrood than many of his predecessors. Whether that translates into practical policy alignment on areas like green infrastructure, AI investment, or skills funding, where Scotland has distinct ambitions, depends on how quickly his government sets its agenda. Scottish Enterprise and Highlands and Islands Enterprise will be monitoring the new industrial strategy direction closely, particularly any changes to Innovate UK funding structures and how Barnett consequentials flow from English infrastructure commitments.