PLANS for a National Living Wage will have a major impact on small family businesses, say rural leaders.

Chancellor George Osborne set out plans for a new compulsory National Living Wage in the Budget on Wednesday (8 July).

It will see workers older than 25 be paid a minimum of £7.20 an hour from April next year, rising to £9 by 2020.

The government says this will mean a direct pay rise of about £5,000 for 2.5m workers by 2020.

But the Country Land and Business Association said it had major concerns about the inflationary pressure of the National Living Wage on employment costs.

This was especially so without any government action to reduce the burden of tax on small unincorporated businesses, it warned.

CLA President Henry Robinson said: "Rural businesses are presented with significant inflation in their wage costs and the cut in corporation tax that is supposed to pay for it will not benefit them.

"We now need an urgent plan for how to ensure rural businesses are not left behind and jobs in rural communities are not put at risk.

"The Chancellor stated in the Budget that the new compulsory National Living Wage will be paid for by decreases in corporation tax.

There are hundreds of thousands of family businesses in rural England and Wales that are unincorporated and therefore are taxed on higher tax rates."

Mr Robinson also commented on the extension of Right to Buy to Housing Association tenants.

Ministers must exempt homes in rural communities from new powers or risk a catastrophic drop in affordable homes for local people, he said.

Mr Robinson said: "The housing crisis is most acute across rural England and Wales.

"Extending Right to Buy to Housing Association tenants would turn a challenging situation into a catastrophe and it is vital Ministers put in place a specific exemption from the policy for homes in rural communities."

Landowners across the countryside wanted to provide land for affordable housing - and understood that this meant selling it at less than market value for this purpose.

"They will not do this if they know the homes will eventually be sold off into the open market and not kept for those in most need within their communities," said Mr Robinson.

A rural-specific housing strategy was needed to deliver much-needed affordable social housing, he added.

Such a strategy should tackle "major barriers" to affordable housing such as the slow and inconsistent adoption of local plans.

Mr Robinson said: "We will work with government to ensure that well designed rural homes are delivered in the right places."