Businesses throughout London are responding to the initiatives laid out by Chancellor Rachel Reeves in the Budget presented on Wednesday.
One of the major highlights is the announcement that the lowest-paid employees will see an increase in wages starting in April. Specifically, workers aged 18 to 20 will benefit from a minimum wage increase of 85p, bringing it to £10.85, while those over 21 will experience an increase of 50p to £12.71.
Companies operating in properties valued over £500,000 will face increased business rates, a significant concern for enterprises in the West End.
Ros Morgan, Chief Executive of Heart of London Business Alliance, remarked, “The stark reality is that businesses have been severely impacted, and with the wage hike, the National Insurance (NI) rise, and now the increase in business rates, it’s a trifecta of challenges.”
She went on to say, “There must be a breaking point, and this may very well be it. It’s important to clarify that businesses do want to pay fair wages.”
“In my discussions with various businesses and the members I represent, the overarching sentiment is a desire to attract talented individuals and a willingness to offer competitive pay. However, if they simultaneously have to contend with these exorbitant business rates, then compromises will need to be made.”
“My concern is that they may slow down recruitment even more than they did after the introduction of the National Insurance increase.”
Mouna Elkekhia, who operates Mouna’s Kitchen specializing in Middle Eastern street food, expressed her “extreme disappointment” and “frustration” with the Budget.
She stated, “We participated in a campaign where we clearly articulated the needs of our sector for survival, and I feel the government listened but chose to disregard us yet again.”
“There are practical measures they could implement to help reduce our costs, but they’ve opted for superficial solutions that won’t significantly impact us.”
Alice Di Chiara, owner of Mezzo in Seven Dials, criticized the government for not providing sufficient support to small businesses.
“Without a doubt, the biggest letdown is the absence of a reduction in VAT for hospitality, which is something everyone was hopeful for,” she told the BBC.
“The increase in NI has had a significant effect on us as we were compelled to incorporate that into the costs for all our staff, including those with fewer hours, just like last year’s minimum wage hike.”
The Night Time Industries Association described the Budget as a “severe blow to the already delicate night-time economy,” pointing out that the minimum wage increase poses serious challenges for a sector that relies heavily on younger workers.
Michael Kill, the chief executive, stated, “Many venues are already on the brink, and we will likely see businesses closing their doors by January when VAT, quarterly rent, and other financial commitments reach a critical point.”
“The strain on both operators and consumers has become completely unsustainable.”
While praising the rise in minimum wage, the Mayor of London welcomed the new potential to raise up to £250 million annually by implementing a charge for overnight visitors.
Sir Sadiq Khan told BBC London, “I will collaborate closely with those in hospitality, tourism, the business sector, and our local councils to develop the best possible tourism levy scheme.”
However, Antonia Jennings, chief executive of the independent think tank Centre for London, warned about the new powers.
She noted, “It’s inevitable that the central London boroughs will generate the majority of this revenue, raising questions about how it will be fairly allocated throughout the city.”
