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Chancellor’s Living Wage pledge will be a challenge for small employers

Responding to the Chancellor Sajid Javid’s speech at Conservative Party Conference, Federation of Small Businesses (FSB) National Chairman Mike Cherry called for more support to help small employers meet Sajid Javid’s ambition on raising the Living Wage to two thirds of average median income by 2024.

  • FSB calls for support to offset extra wage costs
  • Stresses need for caution in dropping age for National Living Wage eligibility
  • But funding for broadband upgrade is welcome, as new FSB research reveals the gap in coverage

He said:

“While it is welcome that the Chancellor is giving businesses five years to adapt, this increase will leave many small employers struggling and, without help, could make some small firms unviable.

“Those in sectors with tight margins and which are heavily labour-dependent, such as the care sector, retail or hospitality, will be particularly badly hit without support.

“Four in ten small employers say operating costs are rising due to employment costs.

"The Chancellor must now find ways to help those smaller businesses to meet his ambition, without deterring them from expanding and hiring more employees.

“We are suggesting to the government that it should uprate the Employment Allowance introduced by George Osborne to bring down the costs of employment, together with a National Insurance holiday for those that recruit those furthest from work – as promised in the 2017 Conservative Manifesto.

“Any drop in age eligibility for the National Living Wage should be gradual. A sudden drop to 21 poses a real risk to jobs and the economy. Any reduction should be gradual, with the Low Pay Commission assessing the impact on employment levels after an initial reduction in the 25 year-old threshold before further changes are made.”

Broadband

Meanwhile, as the Chancellor announced a £5 billion fund to improve broadband, new research from FSB reveals that a third (30%) of small firms still don’t have a minimum-standard connection.

That figure rises to 39% among small businesses in rural areas, which don’t access a basic connection of at least 10 Mbps.

Mike Cherry said:

“Whether it’s contacting clients, banking online or taking credit card payments, a good internet connection is vital for small firms.

“It is a national embarrassment and an economic absurdity that in 2019 one-in-three small businesses are being held back because they don’t have a decent broadband connection.

“The Chancellor’s announcement is a strong step forward to improving productivity and promoting growth, at a time when small firms really can’t afford to be stifled by shaky internet access.

“A significant share of this money should be used to target the hardest to reach areas, where the lack of connectivity can make running a business virtually impossible.”

Roads & infrastructure

Responding to the Chancellor’s other infrastructure pledges, including investment in roads, Mike Cherry added: “Investing in the road network is vital in keeping the country competitive.

“Having goods, business owners or customers stuck in traffic jams on inferior main roads is not only frustrating, but it hammers productivity and economic prosperity.

“Those who live, work and trade near roads earmarked for improvement will desperately hope that upgrades are delivered quickly and effectively.

“Many of these are stretches of road which have long been bugbears of those who have to use them. It is essential that the years of underinvestment is reversed.”

 


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