The new national living wage is a “public relations stunt” that could spell disaster for small shops and adult care services in Rochdale, MP Simon Danczuk has said.
The compulsory living wage was introduced on April 1, with all working people aged 25 and over now receiving a minimum of £7.20 per hour, an hourly increase of 50p.
Speaking in a Parliamentary debate, Mr Danczuk welcomed the pay increase but criticised the Government for failing to support the sectors struggling with the increased cost.
Mr Danczuk, chairman of the All-Party Parliamentary Small Shops Group, argued that the policy could have a devastating impact on independent retailers.
The MP described the increased wage bill and the inflated cost of business rates as a “double whammy” for small shops in towns like Rochdale.
While business rate reforms will see many small shops lifted out of business rates in 2017, Mr Danczuk expressed concern that many businesses will not survive the year-long wait.
Accusing Chancellor George Osborne of poor planning, Mr Danczuk said: “Small businesses employ 35% of the nation’s workforce, but they employ more than half of those who are on the minimum wage.
“They will have to put up prices, slow recruitment or perhaps downscale their operations.
“The truth is that the new national living wage should have coincided with the changes to the business rate system.”
Mr Danczuk also echoed the concerns of those in the adult care sector, pointing out that the increased cost of paying higher wages would completely cancel out the benefit of the new social care precept.
Calling on the Government to reverse years of funding cuts, the MP said: “The social care sector has faced a wave of pressure from the Government over the last few years.
“If we want to give care workers the wage that they deserve, it must be adequately funded.
“The new change is even more worrying in view of the fact that many in the care sector are not even paid the minimum wage.
“Work by Unison has shown that pay structures, such as not paying travelling time, mean that those who care for our elderly loved ones are not being paid for the vital work that they do.
“They are some of the most hard-working people, and they deserve to earn at least the minimum wage. But unless the appropriate funding is in place, that simply will not happen.”
Summing up, Mr Danczuk said: “Britain deserves a pay rise, not some public relations stunt from a Chancellor who is obsessed with political strategy.
“An increase in the minimum wage must be done properly, and small businesses must be helped so that they can afford it.”