A report from the British Chamber of Commerce (BCC) and Middlesex University has found four in every five businesses have seen their costs increase this year through changes to the national living wage, pension auto enrolment and the apprenticeship levy


The survey of more than 1,400 businesses found that pension auto-enrolment, the national living wage and the apprenticeship levy have increased the cost base of businesses, which the BCC warns could lead to reduced opportunities for investment and wage growth.

The national living wage has increased costs for half of companies in the UK, with a North/South divide evident as firms in the North of England (55%) and the Midlands (51%) are more likely to be affected by the national living wage than firms in the South (43%).

With the national living wage forecast to increase to £8.75 per hour by 2020, 38% of respondents said they would raise prices of products and services in response, with a further 25% expecting to reduce pay growth.

A quarter of businesses said they would respond to future planned increases to the national living wage by reducing pay growth for staff, 21% by reducing staff benefits and 20% by scaling back recruitment

Meanwhile, three quarters (75%) of respondents reported an increase in costs as a result of pensions auto-enrolment, with nearly a quarter (23%) indicating a significant increase

A fifth (20%) of businesses said they had seen costs increase from the introduction of the apprenticeship levy, and 8% from the immigration skills charge.

Jane Gratton, head of business environment and skills at the BCC said: ‘Businesses are under increasing pressure from the burden of employment costs, and this will influence the choices they make and outcomes for employees. Higher employment costs impact on the bottom line and reduce the resources available to invest in the business and its people.

‘At a time when employers across the country are facing acute skills shortages, it is vital that they have the resources and flexibility to invest in their workforce and the future needs of the business.’