City businesses have criticised a council for recommending all their staff are paid the Living Wage.

Brighton and Hove City Council has won formal Living Wage Foundation accreditation.

This means all future contracts between the council and its contractors must be renewed at the living wage of £7.45 an hour to all in-house employees.

Councillor Geoffrey Bowden, chair of the powerful Economic Development and Culture Committee, said that the Green administration has adopted the new policy to encourage firms to sign up to the living wage campaign.

He said: “This is a policy we are wedded to. We have established the Living Wage commission and we want as many firms as possible to sign up.

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“Firms will say they can’t afford it but they will learn to live with it.

“There was much gnashing of teeth when the minimum wage was introduced but lo and behold companies found they could afford it.”

A statement in the Brighton and Hove Green Party mid-term report says: “The council pays at least a living wage of £7.45 an hour to all inhouse employees and requires a living wage option from all bidders for council contracts.”

Paul Yates-Smith, of the Brighton Business Club, which represents scores of small and medium sized businesses, said: “This shows naivety about howfirms are run. They are living in an idealistic la-la land.”

Soozie Campbell, spokesman for the Tourism Alliance whose members include the Hilton Brighton Metropole and the Sea Life centre, said: “The transient nature of tourism and its workforce means that tourism businesses struggle with the concept of the living wage.

“It would be a shame if the council refused to work with an industry that contributes over £700 million to the Brighton economy.”

Racheal Hughes, boss at Hove-based environmentally friendly cleaning company Green Mop said she would not be able to bid for council contracts under the new rules.

She said: “There will be hundreds of business affected. I’d love to be able to pay all my staff the living wage but I cannot afford to pay my probationers £7.45 an hour.”

The Brighton and Hove Living Wage Campaign is looking into implications before commenting further.