Chancellor George Osborne, with an eye firmly fixed on next year’s General Election, is endeavouring to attract lower paid voters by suggesting that he wishes to see the minimum wage increased to £7 per hour from the current £6.31.

This represents an increase of over 10 per cent in one go, which for small businesses, would be a severe burden, and without doubt could cause job losses.

The West Midlands has hundreds of small businesses struggling to survive and take advantage of the small increase in activity in the market place. Many of them pay the minimum wage or close to it in order to secure such business that there is to be had, but they are creating an increasing number of jobs.

So a double figure increase would be a severe handicap.

I agree that there has to be a minimum wage, which should keep pace with the RPI, but it is the least amount that has to be paid.

Employees, especially in small businesses have the opportunity to build on the rate for the job by impressing employers of their abilities and talents, which, if they have any sense, will be recognised. 

I appreciate that in larger companies, where unions are involved this may be a little more difficult.

The greater the degree of skill that an employee can offer, then, if business activity continues to increase, there will be greater opportunity to negotiate better pay rates, for if there is one thing I am certain of, skill is going to be in short supply in the future and will command higher reward.

Small companies are going to be hit with further overheads as the cost of the new pension laws come into effect, which coupled with the ever increasing, and above inflation rates for fuel and power, will place additional burdens and squeeze the already slim margins of profitability.

Job creation is important, but also where possible, living standards should be improved.

If George Osborne had suggested that his Government wished to see minimum rates improved by 2 per cent over RPI during the next five years, then this would be a more realistic target, but a 10% rise in one go, just when business is starting to move, is a step to far.

He could, of course, reduce employers National Insurance contributions to compensate, but I cannot envisage such a move.

Think again George.

  • Russell Luckock is chairman of pressings firm AE Harris