A SALARY review is set to take place at Essex County Council after the Chancellor of the Exchequer introduced his version of the living wage.

During the Budget speech George Osborne announced plans for a minimum hourly rate of £7.20 for the over 25s from April.

That means Essex County Council will have to pay its lowest paid staff more money.

In February the council refused to do this.

Leader David Finch claimed it would cost more than £40million and the council could not afford it, despite having record numbers of high earners.

The £40.3million was the estimate if the council was to introduce the £7.85 living wage for all, as proposed by the Living Wage Foundation and the Labour Party group for Essex.

The rate proposed by the Chancellor, of £7.20 for the over 25s from April would cost less, but still require the council to spend millions of pounds more on salaries.

Further rises of up to £9 an hour by 2020 will also cost the council.

A spokesman said: “The council is currently undertaking further work to understand the implications of this announcement.”

Labour group leader Julie Young, who called for the living wage earlier this year, will table a motion at the meeting on Tuesday for the introduction of the £7.85 living wage for council and Essex Cares staff.

She said: “The living wage has been a priority for the Labour group since 2013 and I presume the motion will now have the support of the ruling Conservative group.”

Mrs Young said she will be asking if the Government will be funding the extra pay or if it will come from existing county council finances.

Colchester Council has already adopted the living wage model.

The Essex Federation of Small Businesses is also looking into what the wage increase will mean for its members.

Chairman David Bell said: “It will pose significant challenges for many small firms, particularly those in the hospitality, retail and social care sectors.

“We have been supportive of gradual increases in the National Minimum Wage in recent years, in order to reflect the improvement in the economy.

“However, we believe annual increases should be set according to the recommendations of the independent Low Pay Commission.”