The UK may not be able to afford a planned rise to the national living wage due to economic impact of the coronavirus pandemic, according to reports.
Any decision not to go ahead with the increase could be announced by Rishi Sunak in the upcoming autumn budget, The Telegraph claims.
A target had been set by the Chancellor that would see the rate increased to the equivalent of two-thirds of the country’s median earnings by 2024.
However, members of the Low Pay Commission – which advises Mr Sunak on annual increases to the rate – believe an increase to £9.21 in April could now be unaffordable for many companies and result in increased unemployment, it is claimed.
Bryan Sanderson, the chairman of the Low Pay Commission, told The Telegraph: “The Low Pay Commission always advises Government based on a thorough review of the evidence and detailed discussions with workers and businesses alike.
“This is more important than ever, given the profound impact of Covid-19. We’ve listened carefully in recent months to the views of employers and trade unions, and we’ll continue to look at the latest economic data over the autumn, before agreeing recommendations on next year’s minimum wage rates in late October.”
The panel will meet at the end of next month to decide on a recommendation for Mr Sunak’s budget.
It comes as the Chancellor told Tory MPs to expect tax rises in the Budget as he said it was time to be “honest” with the public about how the cost of coronavirus will be met.
The National Living Wage (NLW) – the rate for over 25s – rose from £8.21 to £8.72 an hour, a 6.2% increase, in April 2020.
In August, Mr Sunak launched the Eat Out to Help out scheme, giving diners half-price restaurant meals for up to £10 per person.
The scheme was introduced to help the struggling hospitality industry, which was among the worst hit during the coronavirus pandemic.