Chancellor of the Exchequer, Sajid Javid, has revealed the Government aims to increase the national living wage to £10.50 within the next five years.
The Chancellor was speaking at the Conservative party conference in Manchester, where he confirmed the Government’s intentions to boost the current £8.21 an hour national living wage for over 25s to £10.50 an hour from 2024.
Javid also confirmed that the age eligibility for the national living wage will also be moved to younger workers aged 23 and over from 2021 and those aged 21 and over from 2024.
This would equate to two-thirds of median earnings in the next five years, although the Chancellor included the caveat, “provided economic conditions allow”.
Javid said at the Conservative party conference: “Over the next five years, we will make the UK the first major economy in the world to end low pay altogether.”
He added that these proposals would result in “giving four million people a well-earned pay rise”.
In response to the Chancellor’s pledge, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), insists that FSB members and other small firms will require additional support to meet these ambitious wage targets.
“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,” said Cherry.
“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.”
Subsequently, the FSB is urging the Government to consider uprating the Employment Allowance, implemented by George Osborne to limit the costs of employment, along with a National Insurance holiday for small businesses that recruit those furthest from work.
Within the same speech, Javid also confirmed a new £5 billion fund to improve the delivery of gigabit-capable broadband nationwide. The announcement comes fresh off the back of new FSB research, which found that 30% of small businesses don’t have a minimum-standard broadband connection.
Almost two-fifths (39%) of small firms in rural areas don’t have access to broadband connections of at least 10 Mbps.
“Whether it’s contacting clients, banking online or taking credit card payments, a good internet connection is vital for small firms,” added Cherry.
“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.”