Business backlash over plans to hike the minimum wage as firms say jobs will be at risk
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Firms have warned that jobs will be put at risk as Labour faces a backlash over reported plans to hike the minimum wage again.
Restaurant and retail bosses said they desperately need to be given breathing space in the Budget, as further wage rises will make it even harder for them to retain or take on staff – particularly young people.
Chancellor John Healey will reportedly announce plans for a 3.9 per cent increase. The national living wage, which applies to those aged 21 and over, is set to rise from £12.71 to about £13.20 an hour.
And the minimum wage, which applies to 18 to 21-year-olds, will rise from £10.85 to around £11.27, according to The Times.
Businesses have been bruised by inflation-busting wage rises over the past two years, as well as sharp increases to National Insurance Contributions (NICs) paid by employers.
Leaders of some of Britain's biggest firms, including Sainsbury's and Marks & Spencer, have been lobbying the Government for a reprieve after facing mounting costs across hiring, energy and business rates.
Allen Simpson, chief executive of trade body UKHospitality, which represents household names including Hilton hotels and Greene King, said the reported increases 'represent a considerable additional burden many businesses will struggle to absorb'.
Chancellor John Healey prepares for the Budget 2026, in his office in HM Treasury
He added: 'This announcement makes it even more important that the Government uses the Budget to back hospitality businesses by reducing the sector's tax burden.
'Without action to address mounting cost pressures, operators will have less capacity to invest, create jobs and drive growth across the country.'
Mr Healey admitted in an interview last week that there was a 'trade-off between the level of the minimum wage and the employment rate' and he was 'acutely conscious' of the impact on young people's prospects.
Former Pizza Express entrepreneur Hugh Osmond said that pubs and restaurants are major providers of first jobs and are 'at the heart of every community'.
He added: 'You would have hoped a Labour Government would understand this before taking measures that will put yet more hospitality venues out of business and further destroy our already decimated high streets.'
Helen Dickinson, chief executive of the British Retail Consortium, said that entry-level and flexible jobs are 'most at risk' and called on the Government to roll back some of its changes to employer NICs.
The BRC estimates that the NIC policy has, together with rises in minimum wages, cost the sector £6.5billion and 115,000 jobs.
The High Street reeled as employers were liable to pay the tax on many more workers, including young people employed on a part-time basis.
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