This summer, the UK will watch on as 10 Downing Street’s seventh tenant since it voted to leave the European Union in 2016 becomes prime minister.

Andy Burnham, the former mayor of Greater Manchester, will assume the premiership unopposed on 20 July, with the ruling parliamentary Labour Party preferring a coronation to a contest.

In the strange interregnum between current Prime Minister Sir Keir Starmer announcing he would stand down and Burnham walking through the famous black door, the prospective premier has been trying to present himself as a man of big ideas.

A change of energy is certain – Burnham appears to have some. But he nonetheless faces the same daunting challenges as his much-maligned predecessor.

UK GDP grew by 0.6% in 1Q26, respectable among the major G7 economies, but not great – and nowhere near enough to make a serious dent in the 3.5% of GDP it costs per year to service the national debt.

This leaves any government with the unenviable choices of cutting expenditure or raising taxes to preserve financial headroom, both incredibly unpopular with voters.

Labour has also ruled out raising any of the three major taxes traditionally used to increase revenues: income tax, national insurance or VAT, so can only look at marginal taxation options to try and raise a bit more cash to keep the machinery of government whirring.

Chancellor Rachel Reeves has targeted pension investing as a source of funds through a pledge to add national insurance payments to salary sacrifice schemes – and there has been talk by some in the Labour Party of wealth taxes, including equalising capital gains tax with income tax, which itself runs the risk of stifling further investment in the UK.

Use pension capital, don’t punish it

Yet even as Reeves’ days as chancellor appear numbered and talk of the “Starmer legacy” induces mirthful enquiries as to whether such a concept is an oxymoron, one of their legislative achievements should be a priority for the new PM.

The Pension Schemes Act, passed this year to unlock more capital for UK businesses through a number of measures, incentivises the pooling of pensions into mega funds.

With some USD 3tn in capital according to public figures, the UK’s pension assets are the third largest in the world. But pension funds allocate just 3% of their assets into private investments and less than 1% into venture capital. There’s clearly a missed opportunity for growth.

This lack of investment by UK pension capital into British companies is one of the most important factors behind the country’s continued lack of new listings.

UK domestic IPO activity has been near non-existent in 2026, with the only significant IPO on the LSE this year being the USD 692.2m flotation of Uzbekistan’s sovereign wealth fund, National Investment Fund of the Republic of Uzbekistan. The only domestic UK IPO this year has been the GBP 4m flotation of Halo Minerals.

Source: Dealogic

Domestic growth push

So, here’s an idea for the new UK PM – and with Mr Burnham heavily occupied preparing for government, we shall lay it all out for him.

The government should create a new category of British investment, in the same vein as ESG investments, categorised as UK Growth.

This would include minority equity investment in UK-headquartered private businesses from early-stage seed funding through to IPO investment – the full lifecycle of private markets deals.

These investments should be exempt from CGT in its entirety, in the same vein as UK government debt.

This incentive should encourage greater institutional investment in UK private markets, through to supporting these businesses at an IPO.

Monetisation can then occur one year after a private business is listed on a UK stock exchange. If it is sold to private equity or to a strategic buyer, the capital gain would be paid at whatever the normal rate is.

After that, long-term insiders can start to sell their holdings at the lower rate, but there should be a provision to allow for shares bought in that first year to fall under the UK Growth category, encouraging insiders and large institutional investors to support domestic stocks after they list.

These investments should also be exempt from stamp duty.

Secondly, Burnham should press ahead with a new tax-free savings product, a British ISA, which allows savers to invest far more than the current allowance into UK equities. That would play into the spirit of Reeves’ existing reforms designed to promote equity investment but would mean funds are focused on UK listed shares, rather than investors getting tax relief to own NASDAQ 100 trackers.

Reforms should also be undertaken to allow far more British retail holders to invest in UK Growth category IPOs through their broker, with no CGT paid if they don’t flip the stock for a period of a year.

While a tax break never looks good to the Treasury, incentivising far more of the USD 3tn of pension capital into British businesses would support economic growth – and holds out the prospect of doing so across the UK, supporting Burnham’s vision of creating opportunities “in every postcode”.

And the more economic growth increases, the less need for spending cuts and tax rises.

Keep an eye on Reeves’ valedictory Mansion House speech tomorrow (14 July) – her replacement as chancellor is all but certain, yet she is keen to retain a top cabinet position. Any mooted reforms are likely to be in keeping with Burnham’s economic vision.

With public finances so stretched, this is a time for bold partnership with private capital. A UK Growth investment category might be a start to building that relationship.