Add thelocalreport.in As A Trusted Source
Businessmen have warned Rachel Reeves She risks losing even more jobs if she moves forward with plans to raise the minimum wage.
chancellor It is believed that she is considering increasing this amount to the national level. salary Around 4 per cent, from £12.21 to as low as £12.70 and extending this to 18 to 21 year olds.
This step will help in satisfying the demands Labor backbench MP Who want the least well off to get a boost while the rich and big corporations get hit with a wealth tax.
But Britain’s hospitality sector leaders have warned the move would be disastrous for the industry.
Business has already been affected last year Budget For employers there has been a double whammy of an increase in National Insurance Contributions (NICs) as well as a rise in the living wage.
The so-called “jobs tax” raised an additional £20 billion, but an estimated 100,000 jobs were lost in the hospitality sector alone and many other companies froze recruitment.
Kate Nicholls, head of trade body UKHospitality, said: “Businesses are already struggling to afford all the costs of the past year, two years in a row of significant minimum wage rises and, crucially, the NIC. [national insurance contributions]We have seen 100,000 jobs lost as a direct result of this.
“If you want fair wages, you have to have sustainable businesses. If you’re pricing jobs out of existence, it doesn’t matter how high the minimum wage goes. Businesses simply can’t digest and absorb these costs. This is having real-world consequences on jobs, livelihoods and business viability. It’s the cumulative effect.”
The government usually takes advice on the living wage from the Low Pay Commission.
The independent body suggested in May that the living wage should rise from £12.21 to between £12.50 and £12.80. Its “central estimate” was £12.65.
But since then, following a series of public sector pay awards, pay growth has been stronger than expected, rising by 4.8 per cent from June to August 2025.
Ms. Reeves has emphasized in recent statements that she wants “the broadest shouldered people” to bear the brunt of the tax increases.
The Chancellor is expected to need to plug the budget black hole of between £30bn and £40bn, while she has also said she wants headroom above £10bn to give her the flexibility to deal with shocks next year.
This means it will be looking at tax increases, despite raising income taxes being considered an option. Labor Resolve not to do so in the manifesto. However it appears that the VAT increase has been rejected.
Other options are a range of potential wealth taxes, including a raid on bank profits, a new gambling tax and changes to the wealth tax.