Living Wage plan criticised by Norfolk campaigners for not going far enough

Chancellor of the Exchequer George Osborne outside 11 Downing Street, London, before heading to the

Chancellor of the Exchequer George Osborne outside 11 Downing Street, London, before heading to the House of Commons to deliver his first Tory-only Budget. PRESS ASSOCIATION Photo. Picture date: Wednesday July 8, 2015. See PA story BUDGET Main. Photo credit should read: Lauren Hurley/PA Wire - Credit: PA

About 2.7m low-wage workers are expected to benefit from the chancellor's announcement of a 'living wage' of £7.20 an hour.

In Norfolk and Suffolk, one fifth of workers currently earn under a Living Wage, and in Norwich, more than a quarter of people earn less than £7 an hour.

But campaigners in Norfolk have criticised the plan announced in the budget for not going far enough, and local businesses could suffer, it is claimed.

The increase will see workers paid £7.20 by April, an increase of 70p on the current minimum rate, and 50p above the rise coming into effect in October.

However Tony Gammage, chairman of Living Wage Norwich, claimed George Osborne's declaration was misleading, and said the real Living Wage was £7.85 an hour.

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'It is a step in the right direction but it should be increased more,' he said.

He added the current Living Wage of £7.85 per hour had been worked out using a formula, and questioned the legitimacy of the new national 'Living Wage'.

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Selena Dawson, regional chairman for the Federation of Small Business, said the £7.20 rate would pose significant challenges for many small firms, particularly in hospitality, retail and social care.

She added: 'We have been supportive of gradual increases in the national minimum wage in recent years, to reflect the improvement in the economy.

'However, we believe annual increases should be set according to the recommendations of the independent Low Pay Commission.'

But local employers such as Aviva and Norwich City Council, which both introduced the higher rate in 2012, welcomed the move.

Council leader Alan Waters, said: 'A Living Wage is about what you need in order to meet your bills and have that little bit extra to participate in society beyond meeting the basics.

'It's good for business, encourages lower staff turnover and increases productivity – all of which makes people feel more valued and boosts morale in the workplace.'

Last year Aviva extended its Living Wage to include its subcontracted workforce.

'Paying the Living Wage is absolutely the right thing to do for our people, our business and the communities we are part of,' said Stuart Wright, Aviva's property and facilities director.

For Roland Pascoe, 56, of Lincoln Street in Norwich, the announcement means his hourly wage will increase. He said: 'It is a welcome move but we will have to see how it pans out.

'However high the National Living Wage is it doesn't take away the issue of zero-hour contracts.'

The adult minimum wage has increased from £6.08 an hour in 2011 to £6.50 now, rising to £6.70 in October.

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