Over a million workers 'to get 6% pay rise' in Budget minimum wage announcement
by Catherine Addison-Swan · ChronicleLiveMore than a million workers are set to receive a substantial pay rise next year following an announcement in the upcoming Budget, according to reports.
Chancellor Rachel Reeves is expected to confirm on Wednesday that the minimum wage will increase by more than 6% in April 2025, according to The Times, after ministers vowed to "raise the floor" on wages. This would see the hourly rate for minimum wage workers over the age of 21, also known as the National Living Wage, rise from £11.44 to more than £12.12.
However, this will be a smaller increase than the previous boost to the minimum wage seen in April this year, which was the largest in more than a decade as the previous Government increased the hourly rate by more than 10% from £10.42 to £11.44. Another major change implemented alongside this rise was that workers aged 21 and over were entitled by law to the National Living Wage from April, whereas previously it only had to be paid to those aged 23 and older.
Workers aged under 21 must be paid at least the Government's National Minimum Wage, which is currently £8.60 an hour, while there is a rate of £6.40 an hour for workers under 18 and apprentices - rates which would also rise proportionally if the National Living Wage increases. According to the Low Pay Commission, there were around 1.6 million workers paid at or below the minimum wage in April 2023.
It comes after the new Real Living Wage rates were confirmed last week, spelling a 5% pay rise for nearly half a million employees as the hourly rate increased to £12.60 an hour or £13.85 for workers in London. The Real Living Wage is a wage rate based on living costs that is paid voluntarily by more than 15,000 businesses in the UK, and now works out at £2,262 a year more than what an employee on the National Living Wage would earn.
Other measures expected to be announced in Wednesday's Budget include an increase of at least one percentage point on employer contributions to National Insurance. Labour has said it will stick to its manifesto promise not to raise the major taxes on "working people", including National Insurance, income tax and VAT.
However, Reeves is reportedly considering changes to inheritance tax, which could include extending the number of years someone has to stay alive after passing on wealth as a gift from seven to 10 years. And other reports suggest capital gains tax, paid on the proceeds from selling an asset, could go up.
Billions of pounds are expected to be pumped into the NHS, including £1.5 billion for new surgical hubs and scanners and £70 million for radiotherapy machines. But some changes could hit millions of people in the pocket, including the first fuel duty rise for more than a decade, and the increase in the bus fare cap from £2 to £3.
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