A small business owner said she is “considering selling” her firm after the Government announced it will be increasing the national minimum wage in the Budget.
Christina French, 42, from Birmingham, is founder of Diverse Sparks Limited, an electrical contracting business, and fears she will have to sell this business to make ends meet.
She is also co-founder of a start-up manufacturing firm, which she does not intend to sell but said she will be forced to find ways of keeping the business afloat.
Ms French watched the Budget closely on Wednesday, which saw Chancellor Rachel Reeves announce the national minimum wage will rise by 6.7% to £12.21 an hour after asking the Low Pay Commission to take the “cost of living” into account.
The rate of employers’ national insurance (NI) will rise by 1.2 percentage points, from 13.8% to 15% from April next year and the secondary threshold – meaning the level at which employers start paying the tax on each employee’s salary – will also be reduced from £9,100 a year to £5,000.
The business owner described the changes as “rubbish” and “awful” for sole traders.
“I’m considering selling the business now,” Ms French told the PA news agency.
“It’s just awful. My wage is the lowest. As a business owner, I get £500 a month, and I’ve run that business 18 hours a day for the last 12 years.
“But in order to give my staff work and keep them with a job, I take the hit. Where does it leave me now as an owner and where does it leave my staff?”
She said she is concerned she will need to increase her prices, which could drive away her customers.
“You’ll have sole traders that will be able to charge less so we’re unable to put our prices up,” she explained.
“We’ve already tried that this year to go in line with inflation and it gave us difficult patches.
“I don’t see an outcome of being able to increase my prices so that I can pay my staff.”
She added she may lose loyal customers and fears they might “start searching around for people who are cheaper and this is where you’re going to have a reduction in standards”.
Ms French said she is “passionate about having apprenticeships”, but felt disappointed the Chancellor did not mention the support for apprentices in the Budget.
“It’s rubbish because I’ve created jobs and apprenticeships for the last 12 years, and now that’s not going to be an option for us,” she said.
“The one I’ve got at the moment will be the last apprentice that I can take, so it’s pretty sad.”
She fears small businesses offering apprenticeships “are not going to provide that opportunity” and believe it will become “more difficult” for people to get into skilled work.
“I get so many applications for apprenticeships because there’s just not enough jobs out there as it is,” she said.
“It’s all good and well increasing the minimum wage, but then businesses aren’t going to be able to help to provide those jobs, so it’s going to be a vicious circle.”