Businesses will pay out “more than £1bn” for National Living Wage
The introduction of the National Living Wage next year is likely to cost UK businesses more than £1bn, according to Government advisors.
The change to the minimum wage laws will mean that companies will have to pay out £804.4m in extra wages and staff costs if estimates by Government advisory body the Regulatory Policy Committee (RPC) are correct.
An additional £234.3m in "spillover" costs will also be added to the bill in order to keep pay differentials, according to the RPC.
From next April, workers over the age of 25 will receive a minimum of £7.20 per hour in pay.
However, the voluntary living wage, set at £8.25 per hour and £9.40 an hour in London, is already being paid out by more than 2,000 businesses signed up to the latter scheme, to the benefit of almost 70,000 workers.
Lower taxes for higher wages
Institute of Directors (IoD) director Seamus Nevin said: "IoD members supported the introduction of the Chancellor's living wage as part of a deal he made with business – lower taxes for higher wages."
"It is imperative that the Government now comes good on its promise of less red tape, fewer regulatory hurdles, and a lower rate of corporation tax to help employers absorb these additional costs and raise pay," he added.
Nevin also pointed out that companies would be paying out £12bn over the next five years under the terms of the new apprenticeship levy and would also be liable to more costs from auto-enrolment pension schemes.