Budget 2021: Business will struggle as living wage rises, trade body warns

26 October 2021, 09:21

EJ Ward

By EJ Ward

Mike Cherry, the chairman of the Federation of Small Businesses, told LBC he has reservations about the Budget.

The comments come as it looks set more than 5 million workers could receive a pay rise next year - after Chancellor Rishi Sunak confirmed he's lifting the public sector freeze.

It was also announced workers on the minimum wage will get a pay boost from April.

The Chancellor announced adults aged 23 and over will see the rate go from £8.91 to £9.50 per hour, but the FSB has hit out at the plans, warning it could have a tragic impact on small businesses.

Read more: Millions of public sector workers to benefit as pay freeze set to be axed

Mr Cherry told LBC's Nick Ferrari: "For the smallest employers they will struggle to maintain jobs they need because of the increase of the national living wage, and employees will have to face the increase of NI contributions next April so it is problems all around.

"As we look at consumers we should look at businesses and tradesmen, the cost of diesel and the cost of materials. That's alongside debts and coming out of the pandemic."

The 6.6% hike is twice the current consumer price inflation rate.

Read more: No need for Covid Plan B – we can have Christmas so long as we're careful, minister says

Mr Cherry added: "The smallest businesses will really struggle to keep people employed with the living wage going up higher than expected.

"The Government should increase the employment allowance to allow businesses to employ people on their books.

"We believe it will go a long way in supporting those businesses."

He said he would ask Paul Scully, minister for small business, where the support is "to keep people in the jobs they need".

He added: "Small businesses need that support coming out of the pandemic and we hope the Chancellor will announce that tomorrow."

More Nick Ferrari

See more More Nick Ferrari

Wes Streeting teased Sajid Javid about when he will get booster jab

Wes Streeting 'can't jump the queue' for Covid booster, Sajid Javid jokes

The Health Secretary was speaking to LBC's Nick Ferrari

Sajid Javid denies Boris Johnson broke Covid rules with No 10 Christmas party

Sajid Javid told Nick Ferrari at Breakfast people don't need to cancel Christmas plans.

'No need to change Christmas plans' despite Omicron fears, says Sajid Javid

The Shadow Health Secretary was speaking to LBC's Nick Ferrari

Wes Streeting: Government 'falling well short' of half a million daily booster jabs

The JCVI member was speaking to LBC's Nick Ferrari

JCVI Member: Medics are 'keeping their fingers crossed' booster jabs will deal with Omicron

The care minister has urged everyone to get their jab in time for Christmas

'All we want for Christmas is for everyone to get jabbed', says care minister

Ian Maxwell was speaking to LBC's Nick Ferrari

Watch in full: Nick Ferrari speaks to Ghislaine Maxwell's brother ahead of trial

The sex trafficking trial of Ghislaine Maxwell is set to begin in New York today

Ghislaine Maxwell’s brother says Prince Andrew was 'cancelled' on 'dubious grounds'

The UK wants to step up cooperation with France, a minister has said.

'Not just a British problem': UK ready to send ground support to France, minister says

Dominic Raab has dismissed claims Boris Johnson has been the subject of a number of no confidence letters

Raab dismisses PM no confidence letters as 'tittle tattle' as party rating plummets

Dominic Raab defended Harper's Law

Raab: Harper’s Law isn’t blurring lines between murder and manslaughter

The uncle of Dawn Ashworth says Pitchfork should have been handed a whole life sentence

Uncle of Pitchfork victim says Parole Board put kids 'at risk' by releasing killer

Exclusive
The Education Secretary refused to be drawn on the subject of Priti Patel

Education Secretary refuses to grade Priti Patel's performance over migrants

Exclusive
Nadhim Zahawi told LBC the new law was the forward in dealing with the migrant crisis.

Migrant crisis: New law must 'close the loophole, break the business model', Zahawi says

Exclusive
The Education Secretary was speaking on LBC's Call the Cabinet

Nadhim Zahawi: Anti-vax protesters should be 'nowhere near' schools

Exclusive
Nadhim Zahawi spoke to Nick Ferrari on LBC this morning

Zahawi hails UK jab rollout, saying Covid pandemic can shrink