Forecourt operators are bracing themselves following a report that the minimum wage for employees aged 21 and over will increase to £13.20 an hour next April. They warn that without help in tomorrow’s Budget to reduce other employment costs, it could jeopardise the jobs of the people it is intended to protect.
The expected 49p an hour increase, likely to be announced by Chancellor John Healey tomorrow and reported in The Times on Monday, takes the payment from the current £12.71 National Living Wage. It represents a 3.9%, above-inflation uplift at a time when there is already intense pressure on costs in the industry.
Naz Zokiuddin, director of Refuel Forecourts, warns that while “hardworking staff deserve fair wages and financial security”, there is “a wider concern about employment opportunities”.
“For a full-time employee working 40 hours per week, that [49p increase] represents approximately £1,019 in additional annual wages, before employer National Insurance, pension contributions and other associated costs,” he says.
“If operating costs continue to rise without corresponding support, some independent businesses may have to reconsider recruitment, staffing levels, investment and expansion plans.”
He pays staff at his six sites a £12.71 an hour starting rate, rising after three months of service to £13. He says the increase will present “another financial challenge at a time when businesses are already under significant pressure”.
To offset the increase he would like to see the Chancellor take action elsewhere. “Targeted business rates relief, support with National Insurance costs and measures to reduce energy expenses would help independent forecourts manage higher wages without compromising their long-term sustainability,” he says.
“We must ensure that in trying to improve wages, we do not unintentionally put the jobs themselves at risk.”
Penny Petroleum’s head of people, Tim Coid, also wants other support for employment costs. “I’d really like to see the government balance this [the minimum pay upift] by increasing the employer National Insurance threshold, helping businesses like ours manage some of that additional cost while continuing to invest in our people,” he says.
He is evaluating what this could mean for the Top 50 Indie, which already pays above the National Living Wage at £12.80 an hour. He says the issue is that, while the uplift would be “great news” for lower paid staff, it could also have an impact across the company’s pay structure.
And he adds that it would represent “another significant increase in employment costs, particularly for a labour-intensive industry like forecourt retail”.
Gordon Balmer, executive director of the Petrol Retailers Association, warns that “already hard-pressed” forecourt retailers will have to pass the increased cost on to customers.
“With prices rising, it’s right that pay keeps up for all workers. But the National Living Wage has already risen by 45.7% since 2020, and the Chancellor is now reportedly set to announce a further 3.9% increase in Wednesday’s Budget, taking the rate for those aged 21 and over from £12.71 to around £13.20 from April 1, 2027. With [Consumer Prices Index] inflation at 3.5% in the 12 months to September, up from 3.1% in August, that would be another above-inflation rise,” he says.
ACS chief executive Ed Woodall agrees that the increase is too high for operators to absorb: “Retailers have faced an unprecedented rise in employment costs over recent years and many have had no choice but to respond by reducing paid hours, delaying investment and becoming more cautious about recruitment,” he says. ”Local shops will welcome a more restrained approach to minimum wage increases, helping to protect jobs, maintain opportunities for younger workers and support the government’s growth ambitions.”
