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Firms struggling with rising wage bills, inflation and apprenticeship levy, says CBI in Budget submission

PUBLISHED: 10:07 06 February 2017 | UPDATED: 11:03 06 February 2017

Many firms are struggling to adjust to planned increases in the National Living Wage and plans for an apprenticeship levy, the government is being warned. Picture: Dominic Lipinski/PA Wire.

Many firms are struggling to adjust to planned increases in the National Living Wage and plans for an apprenticeship levy, the government is being warned. Picture: Dominic Lipinski/PA Wire.

The National Living Wage, the apprenticeship levy and inflationary pressures are weighing heavily on firms, a major business group has warned the government in its Budget submission.

The CBI said many companies were worried about the increased inflationary pressures facing their businesses in the coming months.

The current wage rate of £7.20 an hour for workers over the age of 25 will go up to £7.50 in April, the same month the apprenticeship levy comes into force.

What would you like to see in next month’s Budget? Leave your comment below.

In its submission ahead of next month’s Budget, the business group said the government should prioritise stability because of “heightened economic uncertainty” this year.

Rain Newton-Smith, the CBI’s chief economist, said: “In a more challenging economic environment, the government must be careful not to put further pressure on firms.

“Top of list for the high street and our manufacturers is for the government to tackle the UK’s outdated business rates system, as this seriously risks impairing their ability to deliver the jobs and investment in our economy.

“While the economy has proved resilient, inflation is rising and growth is set to slow.

“As uncertainty around the manner of our EU exit dampens investment and higher inflation erodes consumer spending growth, the government must show that it is serious about supporting companies to invest, to help our regions and nations prosper.”

The CBI added that the government should use a current review of taxes for innovation, to help smaller firms make the most of the system.

On the education front, the CBI called for dedicated careers leaders to be appointed in every school.

Neil Carberry, the CBI’s director for people and skills policy, added: “We know that improving schools is the best long-term growth strategy a nation can have.

“While in many areas schools have made impressive improvements in recent years, too many regions are left behind and too many young people still don’t get the education they need.

“Raising young people’s aspirations has to be one of our top priorities, opening their eyes to a world of possibilities and ultimately underpinning the UK’s future economic fortunes.”

A Business Department spokesman said: “All workers, whether they are temporary or on a zero hours contract, are entitled to receive at least the National Minimum Wage, and for those aged 25 or over the National Living Wage.

“The increased rates from April this year reflect the considered judgment of the independent Low Pay Commission, who took into account the state of the economy and labour market when making their recommendations.”

Do you agree with the CBI’s priorities? You can leave your comments below or email businessdesk@archant.co.uk

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