SOME of the region’s business leaders have warned against plans to increase the minimum wage.

Last week the Chancellor George Osborne said the country was now in a position to put up the minimum wage, which currently stands at £6.31 an hour for over-21s, by more than the rate of inflation.

However, the policy has been criticised as one that could harm businesses still struggling with the effects of a sluggish economy.

The Chamber of Commerce says that any excessive increases in the minimum wage would harm smaller firms.

Clair Prosser, a Policy Executive at the Swindon Chamber of Commerce said: “Although it is clear that there is an increased disparity between the highest and lowest earners, arbitrarily raising the floor isn’t necessarily the solution and could in fact make the UK economy uncompetitive in the long term.

“The adverse effects of an unaffordable minimum wage hike would also be predominantly concentrated among SMEs, young people and graduates.”

The organisation believes that if the minimum wage is raised then the Chancellor will need to take action elsewhere to offset the effects.

“If we want to spread the wealth around as the economy recovers, we need a long-term plan to create a high-skill, high-wage economy, including action on infrastructure and access to finance,” said Clair.

“Certain sectors will be more affected by any change such as domestic services, healthcare and hospitality. Increases in wages would ultimately lead to higher prices for the consumer if the change is not mitigated by other initiatives such as reducing tax or National Insurance.”

Ian Larrard, director of the Initiative in Swindon & Wiltshire, part of Business West, while he would encourage businesses to pay a fair wage he has concerns about the government interfering in wages.

He said: "We recognise both the everyday challenges for those on the lowest wages and the business challenge to recruit and retain the best people. It is for both these reasons that Business West encourages our 16,000 members to consider the Living Wage concept as a part of a sustainable business strategy.

“However, despite early economic recovery signs, we also appreciate the tough trading conditions and margin pressures still faced by many companies, particularly on the High Street, and any obligatory increases in the minimum wage may well have other consequences.

“Business West is concerned by politicians trying to set private sector wage levels. The low pay commission has been set up to objectively evaluate the minimum wage and we should leave it to them.”