THE biggest increase ever in the national living wage could have a negative impact on Cumbrian firms, a business leader has warned.

Prime Minister Boris Johnson has praised the increase which will come into effect next April.

The National Living Wage for over-25s is increasing by 6.2 per cent to £8.72 an hour and the National Minimum Wage for 21 to 24-year-olds by 6.5 per cent to £8.20 an hour.

Rob Johnston, chief executive of Cumbria Chamber of Commerce, said: “These increases are well above inflation, which is 1.5 per cent, and are yet another cost piled on businesses on top of business rates, sterling depreciation and auto-enrolment pension contributions, which also go up in April.

“Some sectors are more vulnerable than others. The hospitality industry, which is a major employer in Cumbria, has a large number of staff on the minimum.

“The sector that worries us most is retail. Retailers are already struggling with online competition and this will add to their woes. It will accelerate the rate of store closures on the high street – there’s no doubt about that.”

He added: “There’s a knock-on effect too. When the lowest paid get a big pay rise, it erodes the differential between them and higher-skilled workers so the employer comes under pressure to raise their pay too.

“There is a real risk that jobs will go and that employers will shelve plans to expand and to hire additional staff.”

Stuart Klosinski, project manager for Furness Economic Development Forum said: “I think that it is not a bad thing that the living wage is going to rise in the sense that it is now enabling people to be rewarded for the work they do. It may also encourage more people to stay in the area long term."