Today, we saw an increase in the National Living Wage. So, what does this mean for you?
As an employee, you will see a pay increase of 6.6%. However, the financial impact on businesses is considerable.
Many businesses across the UK will find themselves in a difficult position with an increased National Living Wage alongside the introduction of the Health and Social Care Levy. The timing of this is unfortunate as we are experiencing sky-high fuel prices and an increase to energy prices which will see the average household fork out an extra £700 per year annum on average.
The drastic increase in energy prices is due to a number of factors, including an increase in wholesale global energy prices, with gas prices increasing to a record high in the last six months and wholesale prices quadrupling in the last year or so.
This rise in energy is predicted to be not only here for the short term but it is expected the next price cap increase will take place in October this year and may continue for several years to come
The result of this is that many businesses and households across the country will struggle financially this year and the question is, what can be done?
Can the government do more? Many are left wondering if the government are giving with one hand and taking with the other. Whilst the increase in National Living Wage, the £150 council tax discount and a £200 rebate on energy bills may help to offset some financial difficulties, the introduction of the Health Care levy paired with an increase in both energy bills and council tax may tip the scales unfavourably.
Undoubtedly, the country is facing the most significant financial hardship its’ faced since World War 2 due to the pandemic, and we have to consider whether the Chancellor has been backed into a corner with these decisions.
Whilst the government offered support to employees and employers alike during COVID, with the introduction of the Furlough Scheme, this has to come at a cost. The introduction of the Health and Social Care Levy is anticipated to raise almost £36 billion which we are assured will go straight back to the frontline services across the UK.
Many have challenged the government on the introduction of the levy, stating that it is breaking the Conservative manifesto commitment not to raise taxes.
The cost of living is increasing, as are businesses overheads, but we need businesses to succeed and thrive to ensure our economy is stable.