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

26 October 2021, 09:21

FSB Chair warns of impact wage rises will have on small businesses

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

How will we afford the budget promises, Minister?

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

Rishi Sunak is facing a revolt for sacking Lee Anderson

Lee Anderson refuses to apologise for 'Islamist' comments as he doubles down on criticism of Sadiq Khan

Rishi Sunak is facing a revolt for sacking Lee Anderson

PM denies Tories have 'Islamophobic tendencies' as minister says Lee Anderson's comments were 'profoundly wrong'

Dame Esther Rantzen has told LBC why she is campaigning to change the law on assisted dying

‘Dogs get treated better than humans’, Esther Rantzen says, as TV legend demands assisted dying law change

Rishi Sunak (l) puts on a brave face to the Tories by-election defeats on a visit to Harlow. New Kingswood MP Damien Egan (top r) and Wellingborough MP Gem Kitchen (bottom r)

Rishi Sunak begs frustrated Tories 'not to put Starmer in power' after party suffers double by-election disaster

New Labour MPs Damien Egan and Gen Kitchen

'They are not very good results': Tory chairman admits after double by-election drubbings as MPs call for tax cuts

The peer was speaking to LBC's Nick Ferrari at Breakfast

'It was known yesterday' Azhar Ali had made more Israel conspiracy theory comments, peer tells LBC

Scammers should be treated like violent criminals, a senior anti-fraud officer has said.

Scammers should be treated like violent criminals, senior anti-fraud officer tells LBC

The vessel is due to lead the largest Nato exercise since the Cold War, involving more than 40 vessels, after its sister ship was forced to cancel its deployment because of an 'issue' with its propeller shaft.

HMS Prince of Wales docked while it should be 'defending our interests abroad', Minister brands it 'not acceptable'

Lord Rose took aim at government quangos in the wake of the Post Office scandal

'They grow like multi-headed hydras': Asda chairman takes aim at government quangos after Post Office scandal

Exclusive
Lord Stuart Rose speaking to LBC's Nick Ferrari

Police 'not picking up the phone' to attend shoplifting 'endemic', Lord Stuart Rose tells LBC

Dentists who set up practice in areas of England with poor access to NHS care will be offered a £20,000 bonus

Health Secretary Victoria Atkins stumped on exact figure for new dentists as ministers plan £20,000 ‘golden hello’

When asked by Nick to sum up the Government in one word, Ms Keegan said: "Delivering."

Gillian Keegan rates the Government using Ofsted descriptions - and it's not 'Outstanding'

Education Secretary Gillian Keegan tells LBC she is ‘very, very confident’ of 15 hours of free childcare by April

Education Secretary Gillian Keegan tells LBC she is ‘very, very confident’ of 15 hours of free childcare by April

'Fairer' social housing reforms will ensure system used 'in the right way' by those who 'play by the rules', the Housing Minister told LBC

'Fairer' social housing reforms will ensure system used 'in the right way' by those who 'play by the rules'

Iceland CEO on his support for Labour after defecting from the Tories.

'The Tories have failed the nation': Iceland CEO and former Tory donor throws support behind Labour

The policing minister has said first-time offenders for knife crime will not be jailed.

No plans to jail first-time knife offenders despite desperate pleas of Nottingham attack victim's family