Two prominent figures in the Manx hospitality sector have called on government to rethink its approach to the planned minimum wage rise, and consider an alternative model that, they say, would boost take-home pay for workers without crippling local employers.

The issue was discussed at length at Monday night’s meeting of the newly formed Local Economy Forum, held at the Palace Hotel in Douglas, where dozens of business owners gathered to debate what they described as a ‘destructive’ policy for the island’s private sector.

The forum’s leaders, chaired by former MHK Chris Robertshaw, have proposed a lower gross hourly rate of £12.70, combined with a targeted tax credit that would still see minimum wage workers take home more than under the government’s approved plan.

The proposal, they say, would ease pressure on employers while improving conditions for lower-paid staff.

Among those urging government to listen were Brett Martin, chief executive of the Palace Group, and Andy Saunders, owner of Quids Inn in Douglas.

Mr Martin said he was ‘mystified’ by Treasury Minister Dr Alex Allinson’s continued defence of the current policy.

‘After the presentation, I was mystified to hear Alex Allinson defending the current position because it helps the low paid,’ Mr Martin said.

‘If he studies our proposal, he’ll see it gives the low paid more take-home pay, the equivalent of the living wage, without the heightened risk of job losses inherent in the current approach.

‘He said publicly that the minimum wage is not about raising tax revenue, so why would he baulk at a tax credit to help the low paid, particularly when government is also a net winner - through reduced inflation and higher local spend?

‘There’s only one reason not to adopt it, and that’s entrenchment.’

Mr Saunders, who has long been a vocal advocate for small businesses, said the current system was ‘broken’ and called for a broader rethink of how workers are taxed and supported.

‘It’s always a pleasure being portrayed as an evil robber baron because I had the audacity to own a small business and offer a low-cost option to local consumers, and a pretty good place to work,’ he said.

‘But ask yourself this, if minimum wage increases solve anything, why are more of us in poverty now than ever before? It’s gone up 63% in five years, yet our people are suffering from the worst take-home pay in the British Isles, even at median wage levels.’

He added: ‘That’s not unscrupulous employers stealing from workers, that’s a broken government who can’t control its own spending and bloat.

‘At no point have I said I don’t want the minimum wage to rise, I support it increasing yearly, but we must also see higher National Insurance thresholds, lower employee contributions and higher tax allowances.

‘That’s what will take lower earners out of poverty and help small businesses survive.’

The Local Economy Forum said it now hopes to open ‘constructive discussions’ with government over its proposal in the coming weeks.