Minimum wage to go up by almost 7% – as chancellor puts final touches to tax-raising budget
The minimum wage for those aged 21 years and over will rise by 6.7% to £12.21 – with pay for those aged 18 to 20 set to go up by 16.3% to £10 an hour.
Chancellor Rachel Reeves has confirmed the increases ahead of Wednesday’s budget, and they will take effect from April 2025.
The government says a full-time worker aged 21 and older will earn an extra £1,400 a year with the increase to what is known as the national living wage.
Budget latest: Chancellor’s praise leaves Hunt looking stunned
Minimum wage workers – those between 18 and 20 – are getting a greater proportional increase as part of government efforts to create in the future a single minimum rate for all adults instead of the current tiered system.
Their pay bump from £8.60 per hour to a flat £10 means a full-time worker will get an extra £2,500 in a year, the government says.
Ms Reeves said: “This government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”
Deputy Prime Minister Angela Rayner said: “A proper day’s work deserves a proper day’s pay.
“Our changes will see a pay boost that will help millions of lower earners to cover the essentials as well as providing the biggest increase for 18-year-olds on record.”
The announcement of the increases, which are based on recommendations from the Low Pay Commission, comes ahead of a budget in which the government says it will ensure “working people don’t face higher taxes in their payslips”.
Sir Keir Starmer has confirmed there will be tax rises in the budget to prevent a “devastating return to austerity” and rebuild public services.
The Low Pay Commission is an independent body that advises the government, although its remit is set by the government of the day.
Chancellor of the Exchequer Rachel Reeves during a visit to St George’s Hospital, Tooting, London, ahead of the government’s first budget. Pic: PA
Read more on the budget:
New funding promised for two million more NHS appointments
£2 bus fare to increase in 2025
Budget will embrace ‘harsh light of fiscal reality – Starmer
What’s likely to be in the budget?
The jump in the base wage rates and the expected increase to employers’ national insurance contributions in the budget have raised concerns about how businesses will be impacted with the new demands on their wage bills.
Many expect the national insurance rise to filter through to less take home pay for workers.
John Foster, chief policy and campaigns officer at the Confederation of British Industries, said the pressure of rising minimum wage rates would “make it increasingly difficult for firms to find the headroom to invest in the tech and innovation needed to boost productivity and deliver sustainable increases in wages”.
The increase to the national living wage is lower than over the past two years, with those aged 21+ seeing their wages go up by more than 9% each year.
However, the increase for younger members of the workforce is much greater.
Apprentices and those under 18 will be getting an 18% increase, with a pay bump from £6.40 to £7.55 an hour.
Business Secretary Jonathan Reynolds said: “Good work and fair wages are in the interest of British business as much 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 primed for growth.”
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The government says the pay increases mean 3.5 million people will get a pay rise next year.
Baroness Philippa Stroud, the chair of the Low Pay Commission, said: “The government has been clear about their 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 adult rate rising over 20% in two years, and the challenges that has created alongside other pressures to their cost base.
“It is our job to balance these considerations, ensuring the NLW provides a fair wage for the lowest-paid workers while taking account of economic factors.
“These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time.”
Paul Nowak, the general secretary of the Trades Union Congress, said: “The government is delivering on its promise to make work pay.
“This increase will make a real difference to the lowest paid in this country at a time when rents, bills and mortgages are high.”
He added that “young workers deserve to be paid the fair rate for the job”.
“But hundreds of thousands of young workers are currently suffering a huge pay penalty – because of an outdated and discriminatory system,” he said.
Politics
Archbishop of York Stephen Cottrell tells Nigel Farage ‘kneejerk’ migrant deportation plan won’t solve problem
The Archbishop of York has told Sky News the UK should resist Reform’s “kneejerk” plan for the mass deportation of migrants, telling Nigel Farage he is not offering any “long-term solution”.
Stephen Cottrell said in an interview with Trevor Phillips he has “every sympathy” with people who are concerned about asylum seekers coming to the country illegally.
But he criticised the plan announced by Reform on Tuesday to deport 600,000 people, which would be enabled by striking deals with the Taliban and Iran, saying it will not “solve the problem”.
Mr Cottrell is currently acting head of the Church of England while a new Archbishop of Canterbury is chosen.
Pic: Jacob King/PA Wire
The Archbishop of York, Stephen Cottrell in 2020.
File pic: PA
Phillips asked him: “What’s your response to the people who are saying the policy should be ‘you land here, unlawfully, you get locked up and you get deported straight away. No ifs, no buts’?”
Mr Cottrell said he would tell them “you haven’t solved the problem”, adding: “You’ve just put it somewhere else and you’ve done nothing to address the issue of what brings people to this country.
“And so if you think that’s the answer, you will discover in due course that all you have done is made the problem worse.
“Don’t misunderstand me, I have every sympathy with those who find this difficult, every sympathy – as I do with those living in poverty.
“But… we should actively resist the kind of isolationist, short term kneejerk ‘send them home’.”
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What do public make of Reform’s plans?
Nigel Farage at the launch of Reform UK’s plan to deport asylum seekers. Pic: PA
Asked if that was his message to the Reform leader, he said: “Well, it is. I mean, Mr Farage is saying the things he’s saying, but he is not offering any long-term solution to the big issues which are convulsing our world, which lead to this. And, I see no other way.”
You can watch the full interview on Sunday Morning with Trevor Phillips on Sky News from 8.30am
Mr Farage, the MP for Clacton, was asked at a news conference this week what he would say if Christian leaders opposed his plan.
“Whoever the Christian leaders are at any given point in time, I think over the last decades, quite a few of them have been rather out of touch, perhaps with their own flock,” he said.
“We believe that what we’re offering is right and proper, and we believe for a political party that was founded around the slogan of family, community, country that we are doing right by all of those things, with these plans we put forward today.”
Sky News has approached Mr Farage for comment.
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