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.
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.”
More on Labour
Related Topics:
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.”
Advertisement
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”.
The Low Pay Commission is an independent body that advises the government, although its remit is set by the government of the day.
Image: 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
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.”
Follow Sky News on WhatsApp
Keep up with all the latest news from the UK and around the world by following Sky News
Spreaker
This content is provided by Spreaker, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Spreaker cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Spreaker cookies.
To view this content you can use the button below to allow Spreaker cookies for this session only.
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.
Health Secretary Wes Streeting has defended “unpopular” policies such as the cut to the winter fuel allowance despite Labour’s poor performance at the local elections.
Mr Streeting denied the government had made any mistakes when asked whether the policy was partly to blame for the party losing 189 council seats less than a year since the General Election.
Since coming into government last July, Labour has enacted a number of policies that were not in its manifesto.
Asked what mistakes his government had made so far that had led to its drubbing at the ballot box, Mr Streeting told Sunday Morning with Trevor Phillips: “Well, we will make plenty of mistakes.”
Pressed again on whether he believed “mistakes” had been made, the health secretary replied: “No. When we made those choices, we knew they would be unpopular. And we knew that they would be opposed.
“The reason we made those choices is because we genuinely believe they’re the right choices to get the country out of the massive hole it was left in. And right across the board. Whether it’s the NHS, whether it’s schools, whether it’s prisons, whether it’s our defence and security, whether it’s crime and policing, there were enormous challenges facing this country when we came in.
“And we’ve had to make big and sometimes unpopular decisions so that we can face those challenges and deal with them. People might thank us if we just kind of go for the easy but we want to make the right choices.”
Some Labour MPs have urged the government to change direction, with one telling Sky News the cut to winter fuel was a “catastrophic error” that must be “remedied” if the party is to see any improvement in public opinion.
Others have warned that in courting Reform voters, the party risks fracturing its coalition of voters on the left who may be tempted by the Liberal Democrats and Green Party.
However, in the aftermath of the local elections, Sir Keir Starmer suggested the poor results meant he needed to go “further and faster” in delivering his existing agenda.
Please use Chrome browser for a more accessible video player
6:11
Inside Reform’s election success
The real victor to emerge from Thursday’s local elections was Reform UK, which won control of 10 councils and picked up 677 council seats largely at the expense of the Conservatives in the south.
However, Reform also won the Runcorn by-election from Labour by just six votes, as well as control of Doncaster Council from Labour – the only local authority it had control of in this set of elections – in a significant win for Nigel Farage and his party.
The Reform UK leader declared that two-party politics was now “finished” and that his party was now the official “opposition” to Labour.
Asked whether the results meant that Labour would now treat Reform as “your most serious opposition”, Mr Streeting said: ” I certainly do treat them as a serious opposition force.”
“As I say, I don’t know whether it will be Reform or the Conservatives that emerge as the main threat,” he added.
“I don’t have a horse in that race, but like alien versus predator, I don’t really want either one to win.”
Please use Chrome browser for a more accessible video player
1:50
Reform UK are ‘fighting force’
Tory Party chairman Nigel Huddleston said Reform UK was not just a protest party and that Mr Farage was “a force in British politics”.
He told Trevor Phillips: “But the one thing about Nigel Farage is, and we’re seeing this again and again and again, he is a populist.
“He is increasingly saying everything that anybody wants to hear. He’s trying to be all things to all men.”
“We are establishing ourselves as a credible alternative government based on sound conservative principles and values and our values and our principles, and therefore our policies, will define the future of our party,” he added.
Kemi Badenoch has admitted it is “feasible” that Nigel Farage could become the next prime minister.
The Tory leader told the BBC’s Sunday With Laura Kuenssberg programme Mr Farage’s party was “expressing the feeling of frustration that a lot of people around the country are feeling” – but added it was her job to “come up with answers and solutions”.
Asked if it was feasible that Mr Farage could be the next prime minister, she cited how Australian Prime Minister Anthony Albanese had won re-election this weekend.
“As I said, anything is feasible,” she said. “Anthony Albanese: people were writing him off. He has just won a landslide, but my job is to make sure that he [Farage] does not become prime minister because he does not have the answers to the problems the country is facing.”
Please use Chrome browser for a more accessible video player
0:54
Could Nigel Farage be prime minister?
Asked what Mr Farage was doing right, Ms Badenoch said: “He is expressing the feeling of frustration that a lot of people around the country are feeling.
“But he also doesn’t have a record in government like the two main parties do. Now he’s going to be running some councils. We’ll see how that goes.”
Mr Farage was the undoubted winner of Thursday’s local elections, in which 23 councils were up for grabs.
His party picked up 677 council seats and took control of 10 councils.
By contrast, the Conservatives lost 677 council seats as well as control of 18 councils in what was their worst local elections performance on record.
Mr Farage said the outcome spelt the end of two-party politics and that his party was now the official “opposition” to Labour – with the Tories having been rendered a “waste of space”.
Ms Badenoch said she believed the vote for Mr Farage on Thursday was partly down to “protest” but added: “That doesn’t mean we sit back. We are going to come out fighting.
“We are going to come out with the policies that people want to see, but what we are not going to do is rush out and tell the public things that are not true just so we can win votes.
“This is not about winning elections; this is about fixing our country. Yes, of course, you need to win elections to do that, but you also need a credible plan.”
Please use Chrome browser for a more accessible video player
10:39
‘Farage is a force in British politics’
Conservative co-chairman Nigel Huddleston sought to play down the threat from Reform UK, telling Sky News: “When they’re in a position of delivering things, that’s when the shine comes off.”
He told Sunday Morning with Trevor Phillips: “The one thing about Nigel Farage is, and we’re seeing this again and again and again, he is a populist.
“He is increasingly saying everything that anybody wants to hear. He’s trying to be all things to all men.”
“We are establishing ourselves as a credible alternative government based on sound conservative principles and values and our values and our principles, and therefore our policies, will define the future of our party,” he added.
Asked whether the results meant that Labour would now treat Reform as “your most serious opposition”, Health Secretary Wes Streeting told Trevor Phillips: ” I certainly do treat them as a serious opposition force.”
“As I say, I don’t know whether it will be Reform or the Conservatives that emerge as the main threat,” he added.
“I don’t have a horse in that race, but like alien versus predator, I don’t really want either one to win.”
A group of US Senate Democrats known for supporting the crypto industry have said they would oppose a Republican-led stablecoin bill if it moves forward in its current form.
The move threatens to stall legislation that could establish the first US regulatory framework for stablecoins, according to a May 3 report from Politico.
Per the report, nine Senate Democrats said in a joint statement that the bill “still has numerous issues that must be addressed.” They warned they would not support a procedural vote to advance the legislation unless changes are made.
Among the signatories were Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester and Andy Kim — all of whom had previously backed the bill when it passed through the Senate Banking Committee in March.
The bill, introduced by Senator Bill Hagerty, is formally known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
The Senate is expected to begin floor consideration of the bill in the coming days, with the first vote potentially taking place next week.
The bill has been championed by the crypto industry as a landmark step toward regulatory clarity. However, the Democrats’ about-face reflects growing unease within the party.
Although revisions were made to the bill after its committee approval to address Democratic concerns, the lawmakers said the changes fell short. They called for stronger safeguards related to Anti-Money Laundering, national security, foreign issuers, and accountability measures for noncompliant actors.
The statement was also signed by Senators Raphael Warnock, Catherine Cortez Masto, Ben Ray Luján, John Hickenlooper and Adam Schiff.
Senator Kirsten Gillibrand and Senator Angela Alsobrooks were absent from the list, who co-sponsored the bill alongside Hagerty.
Despite their objections, the Democratic senators emphasized their commitment to shaping responsible crypto regulation. They reportedly said they “are eager to continue working with our colleagues to address these issues.”
On April 27, Caitlin Long, founder and CEO of Custodia Bank, criticized the US Federal Reserve for quietly maintaining a key anti-crypto policy that favors big-bank-issued stablecoins, despite relaxing crypto partnership rules for banks.
The guidance, according to Long, blocks banks from engaging directly with crypto assets and prohibits them from issuing stablecoins on permissionless blockchains.
However, Long noted that once a federal stablecoin bill becomes law, it could override the Fed’s stance. “Congress should hurry up,” she urged.