Following the announcement that the National Living Wage is set to rise by 6.6 per cent from £8.91 per hour to £9.50 in this week’s Budget, the Federation of Small Businesses has warned that small firms need additional support amid rising costs across the board.
Federation of Small Businesses (FSB) National Chair Mike Cherry said: “The Treasury must play its part to secure wage increases – the taxman will gain almost £500 for every worker whose pay increases to £9.50 an hour. Larger than expected increases in the Living Wage must be matched by support for those who will struggle to afford to maintain jobs – these are the smallest employers, up and down the country, who need to see the extension of the small business Employment Allowance, which covers the first £4,000 of Employer NICs.
“Without an increase in the EA, the combination in April of higher wage bills and higher tax bills will see many more than the forecast of 50,000 people added to unemployment queues. After pre-briefed announcements to help the banks with their tax bills, and to help international companies to invest here, there needs to be a clear offer from this Government to small businesses, too.
“Across the board, costs for small businesses are on rise, from energy bills, input and recruitment costs as well as taxes and shipping – small firms are well and truly under the cosh. The Government pledged to cut the burden of business rates and we need to hear this loud and clear in the Budget.
“Increasing the employment allowance, alongside reforming of upfront costs such as business rates, are the most important reforms called for today by the UK’s small business community.
“Despite the economy being as open as it has been since the start of the pandemic, confidence continues to drop and we need to see some positive pro-business actions announced that supports small firms who are the backbone of this economy.”