Minimum wage to rise by almost 7 per cent as chancellor puts final touches on tax rise budget

The minimum wage for those aged 21 and over will increase by 6.7 percent to £12.21, while the minimum wage for those aged 18-20 will increase by 16.3 percent to £10 per hour.

Chancellor Rachel Reeves He confirmed the increases ahead of Wednesday’s budget and they will come into force from April 2025.

The government says a full-time worker aged 21 and over will earn an extra £1,400 a year with the increase, known as the national living wage.

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Minimum wage workers (aged 18 to 20) are getting a larger proportional increase as part of the government’s efforts to create a single minimum wage for all adults in the future, rather than the current tiered system.

The government says the increase in wages from £8.60 to £10 per hour means a full-time employee will receive an extra £2,500 a year.

Ms Reeves said: “This government promised a real living wage for workers. This pay rise for millions of workers is an important step towards delivering on that promise.”

Deputy Chancellor Angela Rayner said: “A decent day’s work deserves a decent day’s pay.

“Our changes will help millions of low-income people meet their basic needs, while also providing a pay rise for 18-year-olds that will be the biggest increase in history.”

The announcement of the increases, based on recommendations from the Low Pay Commission, comes ahead of a budget which the government said would ensure “workers do not face higher taxes on their payslips”.

Sir Keir Starmer confirms there will be tax increases in budget to prevent “a devastating return to austerity” and to rebuild public services.

The Low Pay Commission is an independent body that makes recommendations to the government, although its remit is determined by the government of the day.

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The jump and expected increase in base wage rates employers’ national insurance contributions Changes to the budget have raised concerns about how businesses will be affected by new demands on wage bills.

Many people think the national insurance increase will result in less take-home pay for workers.

John Foster, head of policy and campaigns at the Confederation of British Industries, said pressure to increase minimum wage rates “will make it increasingly difficult for firms to find the opportunity to invest in the technology and innovation needed to boost productivity and deliver sustainable increases”. in wages”.

The increase in the national living wage is lower than in the last two years; Wages for those 21 and over appear to be increasing by more than 9% each year.

But the increase in younger members of the workforce is much greater.

Apprentices and under-18s will receive an 18% increase, with pay increasing from £6.40 to £7.55 per hour.

Business Secretary Jonathan Reynolds said: “Good work and fair wages are in the interests of British business as well as British workers.

“This government is changing people’s lives for the better because we know that investing in the workforce leads to better productivity, better resilience and ultimately a stronger economy that is poised for growth.”

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The government says the pay rises mean 3.5 million people will get a pay rise next year.

Baroness Philippa Stroud, chair of the Low Pay Commission, said: “The government has been clear about its ambitions for the national minimum wage and its importance in supporting workers’ living standards.

“At the same time, employers have had to deal with the challenges created by the adult rate increasing by over 20% in two years, among other pressures on their cost bases.

“It is our job to balance these considerations, ensuring that NLW pays the lowest-paid workers a fair wage while taking economic factors into account.

“These rates secure real-term wage growth for the lowest-paid workers. Young workers will see significant increases in their pay base, making up some of the ground lost to the adult rate over time.”

Paul Nowak, general secretary of the Trades Union Congress, said: “The government is delivering on its promise to get paid for work.

“This increase will make a real difference to the lowest paid in this country at a time when rents, bills and mortgages are high.”

“Young workers deserve fair wages for the work they do,” he added.

“But hundreds of thousands of young workers are now facing a huge wage penalty due to an outdated and discriminatory system,” he said.

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