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Chancellor's pledge

Javid promises ‘to end low pay’ with £10.50 national living wage

Sajid Javid: promises

Chancellor Sajid Javid has pledged to raise the National Living Wage to £10.50 within the next five years and invest millions in infrastructure.

Mr Javid said four million workers would benefit from raising the hourly rate from its current £8.21 and lowering the age threshold for those who qualify from 25 to 21.

He promised that the Tories would make Britaijn the first major economy to end low pay. The Tories renamed the National Minimum Wage as the National Living Wage in 2016.

Mr Javid’s announcement was met with a promise from Labour that it would introduce a £10 minimum immediately if it was elected as the next government.

John McDonnel, Shadow Chancellor, said: “This pathetic attempt at catch-up by the Conservatives will fool nobody.

“Labour will introduce £10 as a minimum as soon as we take office and, rising with living costs, it will mean everybody over 16 years of age will be earning comfortably more than £10.50 an hour by 2024.”

Mr Javid confirmed £25 billion for road projects, £220m for bus improvements and £5bn for digital infrastructure. He also announced a crackdown on red tape, saying business would be freed from EU bureaucracy when Britain leaves the bloc.

There was a cautious welcome from business groups for what was seen as a broadly pro-business speech to the Conservative Party conference, but with a warning that small businesses may struggle to cope with a rise in the living wage along with other increases in costs.

Adam Marshall, director general of the British Chambers of Commerce, welcomed significant improvements to roads, broadband and mobile coverage, but said some key business infrastructure priorities, such as HS2 and Heathrow, “were notable by their absence”.

On increases to the National Living Wage, he said:  “Companies already face significant cumulative employment costs, including pensions auto-enrolment, immigration skills charge and the apprenticeship levy, so government must take action to alleviate the heavy cost burden facing firms, or risk denting productivity and competitiveness.” 

Dame Carolyn Fairbairn, CBI Director-General, said: “The Chancellor has put his money on a modern, connected, low carbon economy, which is exactly what business wanted to hear. 

“But it feels like there was a page missing from his speech. It was silent on how the Government and the Treasury would respond to the serious rupture caused by failing to secure a deal with the EU – and the implications for the investments he announced today.

“Business shares the Chancellor’s ambition to end low pay. Increasing productivity is the only way to sustainable pay rises.”

On a Brexit red tape challenge, Carolyn said: “This isn’t a priority for businesses at a time where stability is paramount. Where poor regulation suffocates enterprise, businesses do want to see changes.

“But the key issue for businesses – large and small – right now is not scrapping regulations, but getting a Brexit deal that sees off the economic turmoil of a no deal scenario.”

David Lonsdale

David Lonsdale: challenging (pic: Terry Murden)

David Lonsdale, director of the Scottish Retail Consortium, said: “We fully share the aspiration for having better paid colleagues within the industry, however the key to raising pay on a sustainable basis ultimately rests with increasing productivity.

“Frankly, that’s made all the more challenging at a time when retailers are grappling with a hodgepodge of government-imposed cost rises – on employer pension contributions, business rates, the apprenticeship levy, and with DRS and workplace parking levies in the pipeline – at a time when retail sales are flat and shopping habits are changing.

“The only fixed point in a world of flux for retail seems to be rising government-costs, which are increasingly difficult to absorb.”

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