Autumn Statement: 4% rise in Living Wage is biggest concern
Small business groups have given a mixed response to Chancellor Philip Hammond’s Autumn Statement welcoming a cut in rural business rates but expressing concern at the latest National Living Wage rise.
Measures announced in Hammond’s between-Budgets report yesterday (November 24) included the extension of rural rate relief to 100% from next April, freeing many rural shops completely from business rates, and a freeze in fuel duty for the seventh successive year. However, the National Living Wage is to rise by 4% from next April, adding 30p an hour to the current £7.20 minimum for over-25s.
National Living Wage and National Minimun Wage increases:
The Treasury says:
“The National Living Wage and the National Minimum Wage will increase from April 2017
“The National Living Wage for those aged 25 and over will increase from £7.20 per hour to £7.50 per hour. That means over £1,400 a year more for a full-time worker previously on the National Minimum Wage.
“The National Minimum Wage will also increase:
- for 21 to 24 year olds – from £6.95 per hour to £7.05
- for 18 to 20 year olds – from £5.55 per hour to £5.60
- for 16 to 17 year olds – from £4.00 per hour to £4.05
- for apprentices – from £3.40 per hour to £3.50”
James Lowman, chief executive of small shops group ACS, whose members include the Guild of Fine Food, welcomed the “positive action” on rural business rates.
However, he said retailers would struggle to absorb the 4% increase in National Living Wage to £7.50. ACS members were “already cutting back” on employment since the last rise to £7.20.
“Today’s announcement of a £7.50 National Living Wage rate in 2017 will result in further staff hours being cut, investment plans being delayed or cancelled altogether and retailers having to take on more hours in the business to make ends meet,” Lowman said.
He also expressed disappointment that the Government had ignored to rethink it planned business rates appeals system, to help firms whose rates are based on high, out-of-date property valuations.
“At a time when business rates are increasing for many, ensuring that the appeals process does not leave retailers and other small businesses out of pocket is crucial,” Lowman said, “The current plans will see many businesses overpaying on their rates even if their appeals are successful. The Chancellor must take immediate action to address this issue.”
The Forum of Private Business said it gave the Chancellor 6 out of 10 for his Autumn Statement saying it was disappointed he had not gone further “to support businesses in the post Brexit era”.
Chief executive Ian Cass welcome the freeze on fuel duty and initiatives to support house builders, but said: “There is not much good news for our high street businesses, and importing manufacturers who are suffering at the hands of the weak pound, and who have no real indication what a post Brexit UK will look like.”
He also also described the absence of any specific incentives to improve skills through training as “an opportunity lost”.
“Small businesses find it very difficult to attract the talent that they need to succeed,” Cass said, “and a reinforcement of the Apprenticeship agenda would have been a move in the right direction.”
At the Federation of Small Businesses, national chairman Mike Cherry was more relaxed than the ACS and FPB about the National Living Wage rise, saying: “The 4% increase is within the range of small business expectations.”
But he added: “But small employers will need support, especially looking ahead to steeper increases to meet the 2020 target. Recent FSB research found that 47 per cent of small businesses cite labour costs as the main driver of the rising cost of doing business.
“For this reason, we are calling on Government to increase the [National Insurance] employment allowance from £3000 to £4000 to help small businesses increase pay and create jobs.”