Legal and education experts say a planned increase in the minimum wage will damage staff morale, particularly among management.

Plans to pay over 25s at least £7.20 an hour from April will put a strain on many sectors across Kent as companies struggle to retain mid-level skilled workers who are disillusioned their pay is not much higher than workers on the bottom of the scale.

The squeeze in the gap between low-paid staff and team leaders poses a threat to recruitment in sectors like hospitality and retail, according to the principal of East Kent College.

The institution has invested almost £10 million of Government cash in a four star training hotel in Broadstairs to teach students in the travel, tourism and hospitality industries.

Mr Razey said: “The service sector will be hit the most. It will become more attractive for people on the first level, but many people may drop out as the earning potential will not be worth training for.

“No business wants to have a huge turnover of staff because companies want to retain knowledge, experience and skills.

“On balance, I’m all for an increased minimum wage because it will make the service industries more attractive to those entering the sector, but in reality it could have an impact on the total number of jobs.

“We understand the consequences for business.”

Described as the flagship policy of the Chancellor’s summer budget, George Osborne outlined ambitions to raise the National Living Wage to more than £9 by 2020.

Research by the Resolution Foundation found 2.7 million employees set to benefit from that increase – 46% of all those affected – work in just three industries: wholesale and retail, hospitality (accommodation and food services) and support services (administrative and support services).

Andrew Griggs, senior partner at accountancy Kreston Reeves, based in Canterbury, Chatham and Sandwich, said: “Certain industry sectors will find the living wage a challenge.

“While the government has proposals to reduce corporation tax and increase the investment allowance, the living wage will knock sectors like healthcare, retirement homes and farming, where paying low wages is really important.

“The whole living wage thing could fall down because businesses could stop recruiting as many people.

“Their business plan might say staffing costs can only reach a certain level of turnover and they might not want to pass that bill over to customers.”

Accountants at Maidstone-based Crowe Clark Whitehill said the low morale among skilled staff threatened to jeopardise the economic recovery.

Partner Darren Rigden said: “It is likely to be bad for many businesses as it runs the risk of pushing up the wage rates of more senior and skilled staff who will demand a pay scale that differentiates them from those on the minimum.

“We recognise the Chancellor has the difficult job of getting the deficit under control, but many businesses in Kent are already struggling to retain and recruit skilled people.

“There is fear the arrival of the National Living Wage will exacerbate the situation, and the wage inflation will increase costs, and hold back growth at a time when we really need it.”

If the National Living Wage rises to more than £9 an hour as planned by 2020, six million workers – or 23% of all employees – stand to benefit.

“That is what the government wants because it will help push inflation up, which will enable them to increase interest rates..." - Graham Razey, East Kent College

It would add £4.5 billion to the wage bill of British firms, according to the Resolution Foundation.

The smallest businesses – those that employ fewer than 10 workers – are likely to feel the greatest impact on average.

Across all such firms, which make up more than 90% of Kent’s economy, the National Living Wage is expected to add 1.5% to total wage bills in 2020.

Graham Razey, principal of East Kent College, said small businesses in service sectors are being forced to suffer to help the government ease the path for interest rates to increase.

“If I’m paying 15% extra in wages, I need 15% more activity from my workforce,” he said.

“The reality is that can’t happen in many sectors, therefore the impact will be on prices for consumers in sectors like retail and hospitality.

“That is what the government wants because it will help push inflation up, which will enable them to increase interest rates.

“The knock on effect is a smaller workforce in areas like catering, hospitality, health, social care and many service industries as they try to save money with a growing wage bill.”