Charities fears as new Living Wage looms

James Shipp

James Shipp - Credit: Archant

Local charities are facing one of their greatest challenges in decades with the introduction of the National Living Wage next month.

James Shipp, pictured, partner at accountants Lovewell Blake and a trustee of the Great Yarmouth charity Centre 81, said the impact of its introduction would be significant, with many services being stripped to the bone or, worse still, some local charities closing.

“In principle it’s a sensible move by the chancellor. The new measures will raise many working families out of poverty and, in theory at least, encourage people into work. For commercial employers the increased wage bill should be partly offset by a reduction in the rate of corporation tax, which is due to fall to 18pc by the end of the current parliament. But what about the impact on organisations like charities that don’t pay corporation tax?”

The current National Minimum Wage is £6.70 per hour for those 21 and over. On April 1 the new National Living Wage will increase this minimum to £7.20 an hour for those aged 25 and over. The rate will increase over the next four years with estimates of a rate of £9 an hour by 2020.

Mr Shipp said: “The impact on charities will be a game-changer. The Centre 81 trustees pledged some time ago to work towards the Living Wage and we have always paid above the Minimum Wage. The new legislation makes our pledge compulsory. The news will, of course, be welcomed by our hard-working and dedicated staff who truly deserve to be paid as much as the centre can afford. But the trustees are under no illusion that with increased pressures on our members’ social care budgets and demands on routine funding we have a major financial threat to manage.”