Small businesses worried ahead of Budget as Rachel Reeves announces minimum wage hike

The minimum wage for 18 to 20-year-olds will also rise by £1.40 as Labour seeks to make a single adult rate.

Speaking ahead of this afternoon’s Budget, Ms Reeves said: “This Government promised a genuine living wage for working people. 

“This pay boost for millions of workers is a significant step towards delivering on that promise.” 

However this significant increase, along with speculation that the government is set to hike employer national insurance contributions, has small business groups fearing the worst.

Paul Harrison, chair of the Original Richmond Business and Tourism Association (ORBTA), said the living wage rise “will be challenging for very small businesses, particularly in areas like hospitality”.

Mr Harrison said it had been a challenging climate for small businesses at an “unprecedented” level, with Covid, the cost of living crisis, inflation and the energy price shock.

“We had hoped we would be coming out of it, but it remains to be seen what comes out in the Budget,” he told the Yorkshire Post.

“The Labour Party have said they are very supportive of small businesses - well let’s see. 

“At the moment, the things that are being leaked are not necessarily indicating a great deal of support.”

Mr Harrison said he hoped the government would bring about business rate reform, and Ms Reeves hinted this may be in the Budget.

Speaking at Treasury Questions yesterday, the Leeds West and Pudsey MP said: “In our manifesto, we committed to have reform of our business rate system.”

In the Budget this afternoon, Ms Reeves is expected to say: “My belief in Britain burns brighter than ever. And the prize on offer to today is immense.

“More pounds in people’s pockets. An NHS that is there when you need it. An economy that is growing, creating wealth and opportunity for all. Because that is the only way to improve living standards. 

“And the only way to drive economic growth is to invest, invest, invest. There are no shortcuts. To deliver that investment we must restore economic stability.”

Polling from YouGov, ahead of the Budget, has shown that only taxes that Britons support to improve public services are on businesses and the wealthy.

Eight in 10 people were in favour of increasing income tax for the super rich, while almost two-thirds of people supported a hike in corporation tax.

However, Labour has ruled out a rise in income tax and corporation tax this Parliament.

Instead, it is likely to hike capital gains tax - which had the support of 43 per cent of the public - and change the way debt is calculated to free up money for big infrastructure projects like hospitals and prisons.

Only 27 per cent of people are in favour of increasing borrowing to pay for public spending, with 50 per cent opposed.