Millions of low-paid workers across the UK are set for a significant pay rise next year after the Government confirmed an increase to the National Minimum Wage and National Living Wage.
Chancellor Rachel Reeves announced the move, accepting the recommendations from the independent Low Pay Commission. The changes are scheduled to take effect from April next year.
Breaking Down the New Wage Rates
The most substantial increase is for younger workers. The National Minimum Wage for 18 to 20-year-olds will jump by 8.5% to £10.85 an hour. This is a key step in the Government's plan to eventually phase out separate wage bands for this age group and establish a single adult rate.
For those aged 21 and over, the National Living Wage will see a 4.1% increase, rising to £12.71 an hour. According to government calculations, this will boost the gross annual earnings of a full-time worker on this rate by approximately £900, benefiting an estimated 2.4 million people.
Other rates are also rising. The National Minimum Wage for 16 to 17-year-olds and apprentices will increase by 6%, reaching £8 an hour.
Government and Industry Reaction
Chancellor Rachel Reeves stated that addressing the cost of living was her top priority. "I know that the cost of living is still the number one issue for working people," she said. "Too many people are still struggling to make ends meet, and that has to change. That’s why today I’m announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work."
The Treasury estimates that a total of 2.7 million workers will be better off as a result of these changes.
Paul Nowak, TUC General Secretary, welcomed the news, saying, "With living costs stubbornly high, an above-inflation pay rise will make a real difference to the lowest paid." He added that putting more money in people's pockets is good for the economy as it gets spent in local businesses.
A Note of Caution from Business
While the move was praised by worker representatives, some industry voices expressed concern. Kate Nicholls of UKHospitality warned that the increases represent "yet another cost for hospitality businesses to balance." She urged the government to take action in the upcoming Budget to reduce the sector's tax burden, suggesting that otherwise, these costs "will simply all be passed through to the consumer, ultimately fuelling inflation."
Baroness Philippa Stroud, Chair of the Low Pay Commission, emphasised that the recommended rates were the product of "diligent study" and were designed to be "fair and realistic" for both workers and the economy.
Katherine Chapman from the Living Wage Foundation noted that while the government's increase is positive, it still falls short of the voluntary Real Living Wage, which is currently £13.45 across the UK and £14.80 in London.
