From April 2026 the National Living Wage jumps to £12.21 an hour – a 6.7 % increase. For the largest cash rise ever. For a small café with ten full-time staff that means an extra £19,000 a year on the payroll. A care home with thirty workers faces £60,000. The Low Pay Commission itself warns that the cumulative effect of recent hikes is now “pushing some smaller employers towards the margin of viability”.
Large corporations can absorb the cost or automate. Small firms cannot. 38 % of SMEs in hospitality and retail say they will cut hours or jobs (British Chambers of Commerce Q4 2025 survey). Another 22 % plan price increases that risk losing customers. This is not scaremongering; it is basic arithmetic.
We are not asking to freeze the minimum wage. Workers deserve a decent income. But the government cannot keep loading the entire burden onto small employers while giving supermarkets and multinationals a free pass.
The answer is a simple, targeted, temporary subsidy:
- Every business with fewer than 50 employees receives £1,000 per full-time equivalent worker paid at or just above the National Living Wage in 2026/27, tapering to £500 in 2027/28.
- Paid automatically via PAYE – no forms, no applications, no bureaucracy.
- Cost to the Treasury: £1.8 billion in year one – less than half the £4 billion corporations saved from the recent NIC threshold freeze.
This is not unprecedented. In 2016 the government introduced the Employment Allowance to offset the first £3,000 of employer NICs. It worked. Do the same again, but bigger and faster, for the businesses that actually create most private-sector jobs.
Without help, thousands of cafés, shops, and care homes will simply close. With help, they can keep staff, keep prices stable, and keep communities alive.
Give small employers a fighting chance to pay the living wage without living in fear.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
Join today from just £5/month or £40/year and help to support pro-SME candidates.
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