UK businesses face more than £1bn in costs from the introduction of the National Living Wage
Members of the UK200Group of independent accountancy and law firms have today commented on news that UK businesses face more than £1bn in costs from the introduction of the National Living Wage next year. The Regulatory Policy Committee, which advises the government, estimates that the change will cost companies £804.4m in extra wages and staff costs. A further £234.3m of ‘spill over’ costs will take the total over £1bn.
Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell, said:
“The National Living Wage for most robust businesses will have only a marginal impact. It tends to be sector specific, and many sectors just do not have that many employees in those roles. Some have coped by moving functions to an outsourced entity that uses self-employed personnel as a way through, however with proper planning and budgeting most businesses should be able to cope, whether through systems that save hours required, or remunerate higher paid staff more efficiently.”
Jonathan Russell, partner at UK200Group member firm ReesRussell, added:
“The cost to business of the National Living Wage is now being more understood and broadcast to government and hopefully the government will take these huge increased costs into account when it considers the price it is prepared to pay for services. Many of the low paid employees in the country are employed either directly or indirectly by government, especially in the care industry and this is an industry where wage costs are a major proportion of the cost of delivery. Other sectors badly hit will be retail and hospitality which are areas where there has already been significant downward pressure on margins. Whilst it may be that government hope that this will move society to a wage rather than a benefit funded society, there will be a lot of pain in the short-term and upward pressure on prices.”