Rising costs are damaging business investment and undermining the government’s efforts to raise living standards, the CBI has warned the chancellor, John Healey, ahead of his first major economic speech and the budget on 28 October.
In a 75-page report drawing on cross-sector surveys and evidence from trade associations, the industry confederation said businesses paid almost £345bn in taxes in 2025-26. That was 12.7 per cent higher than the previous year and represented 31.3 per cent of all UK tax receipts.
Employer national insurance contributions, which were increased in the Labour government’s first budget in 2024, rose to £123.1bn in 2025-26, according to the CBI’s analysis of business tax contributions. That was a 28 per cent increase year-on-year and meant the levy overtook corporation tax as the largest single source of business tax revenue.
The report also found that UK non-domestic electricity prices were about 45 per cent above the median of G7 countries in 2023 and 2024.
The CBI called on the government’s new cost of living taskforce to prioritise cutting business costs. Rain Newton-Smith, the CBI’s chief executive, said Andy Burnham was right to put the cost of living at the heart of his new government but warned that “business costs are kitchen-table costs too”.
“When firms are forced to absorb higher taxes, energy bills and regulatory costs, the consequences are weaker investment, fewer jobs and less scope to raise wages,” she said.
“Business is the economic engine that powers better public services, creates jobs and raises living standards, the very things we need to revitalise our communities and help them prosper.”
The report identified four barriers holding back investment: labour and energy costs; fragmented rules that raise compliance costs; unnecessary regulatory friction with the EU; and tax complexity. It called for measures in the budget to ease what it described as the most significant pressures, from employment costs, energy bills and business rates.
The CBI’s members include some of Britain’s largest employers, among them Tesco, Centrica and Lloyds Banking Group, as well as trade associations covering retail and hospitality, food and drink manufacturing, construction and energy.
Healey has said he is as concerned about the cost of business as about the cost of living. In his first address to the House of Commons as prime minister, Burnham pledged to “bring back hope” and said life was “too expensive and too hard for too many”, but he declined to say whether taxes would rise in the budget. He also said his administration would be “grounded in fiscal responsibility”, as the cost of government borrowing reached its highest level in almost two decades.
The British Chambers of Commerce made a similar case in its own submission to the chancellor. Its research found that domestic policies have increased the costs facing a typical small or medium-sized business by 70 per cent over the past decade.
The BCC proposed cutting national insurance contributions for under-25s, reducing energy taxes and business rates, and providing greater support for exporters. It said the measures could be partly funded by replacing the triple lock on pensions, and urged Healey to “back business, cut costs and deliver growth”.
Shevaun Haviland, the BCC’s director-general, said: “We know the government is in a fiscal bind and its choices are limited. But support for business is not just money out the door, it generates vital economic returns. Easing cost pressures will give firms breathing space to create jobs, investment and growth. Right now, too many businesses are being held back by ever increasing bills.”
The two submissions follow earlier CBI warnings against further tax rises on business under the previous chancellor, Rachel Reeves.
The government was approached for comment.
