FARMA: “The chancellor’s decision has made many of our members wince”

We have had a few days to contemplate the impact of the first Conservative budget for 19 years, and the decision by the chancellor to increase business costs for food, retail and hospitality businesses has made many of our members wince.

A new national living wage will be introduced of £9 per hour for people aged 25 and older by 2020. It will start at £7.20 per hour in April 2016, an 11% rise from the £6.70 National Minimum Wage in October 2015.

Sally Jackson, chair of FARMA and owner of Pink Pig Farm Shop in Lincolnshire said, “The rise in the minimum wage combined with the employers’ pension contributions coming in to play, for us, next year will inevitably result in us weeding out the staff that are not our highest performers. My worry is that this move will result in more unemployment for the lowest paid and least educated. We will undoubtedly become a more commercial businesses, but at what cost?”

The Office for Budget Responsibility suggests that it will have a small impact on jobs – about 60,000. However, many businesses will be reviewing their staffing strategies and remuneration packages to ensure that the staff they employee are the most able and productive.

The starting point to developing a staffing strategy is to understand the costs and value of the staff. Last year FARMA lunched their farm shop benchmarking programme, enabling members to compare performance in key areas such as staffing costs. The data captured has been helping businesses to identify areas where staffing costs are high and times of the year were cost needs to be better managed. Data is currently being collected for the second year of analysis, and over time we will be able to see the impact of these legislative changes on business performance, while also coaching the businesses through a period of business improvement.

John Sinclair of Craigie’s Farm Shop in Edinburgh said, “The upside to legislation like this is that everyone will have to comply, so perhaps it will weed out the inefficient businesses and allow more room for the good operators to flourish. Scottish farmers are currently feeling the pain as legislation is not consistent across the country. The abolition of the English Wages Board has seen Scottish farmers having to compete on an uneven playing field as they battle with the Scottish Wages Board.

“Within our business, we have been discussing for the last couple of years how we could get ourselves up to being a ‘Living Wage company’. We see this as a real opportunity to get our engaged staff onto a decent wage. Yes, there will be casualties along the way, as we will no longer be able to afford to keep staff just because they are nice people. I am confident that this piece of legislation will help build better teams which will in turn deliver better hospitality businesses, in turn attracting new talent.

“It is perhaps unfortunate that this has come at the same time that businesses are having to deal with auto enrolment, so if I could send one request to the Chancellor of the Exchequer it would be: have a look at the VAT rate, and give small business a bit of a helping hand through this period of change.”