Millions of UK workers set to receive £1,400 boost as Rachel Reeves raises minimum wage

The minimum wage will rise to £12.21 an hour from April next year after Chancellor Rachel Reeves announced a 6.7 per cent rise ahead of Wednesday's Autumn Budget.

Ms Reeves said the move is a “significant step” towards delivering on Labour’s manifesto promise to provide a “genuine living wage for working people”.

The 6.7 per cent increase to the national living wage, recommended by the Low Pay Commission, means that full-time workers on minimum wage will receive an extra £1,400 a year from April 2025.

READ MORE: 'I've done it. I've smashed her head in. Oppsie xx!': The NWAS worker who tried to murder her boss

As well as increasing the national living wage, the Chancellor also announced that minimum wage for 18-20 year olds will rise to £10 an hour, a rise of £1.40 - the highest increase on record.

Deputy Prime Minister Angela Rayner, one of the key supporters of Labour’s Employment Rights Bill, 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 18-20-year-olds on record.”

Minimum wage for apprentices and those aged 16-17 will also increase to £7.55 an hour, an increase of 18 per cent. In total, around 3.5 million Brits will receive a pay rise in April 2025 as a result of the increases announced by the Chancellor today.

Paul Nowak, general secretary of the Trades Union Congress (TUC), said the Government was “delivering on its promise to make work pay”.

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

“Low-paid workers spend more of their earnings in their local economies – so boosting their pay packets will benefit local businesses too.”

He also welcomed plans to bring the minimum wage for younger people into line with the adult rate, saying younger workers faced a “huge pay penalty” thanks to an “outdated and discriminatory system”.

But the Low Pay Commission is concerned that some businesses are struggling with increases in the minimum wage, which has risen faster than inflation over recent years.

Baroness Philippa Stroud, chairwoman 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.”

She added: “The data show some signs of employers finding it harder to adapt to minimum wage increases.”

John Foster, chief policy and campaigns officer at the CBI, 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”.

He said: “Politicians and businesses are united in wanting to ensure people have access to well paid, fulfilling work. The only sustainable path to achieving that aim – not only for those earning the minimum wage, but right across the economy – is higher growth and productivity.

“The National Living Wage has proven to be a valuable tool for protecting the incomes of the poorest in society and has supported equality in the lower half of the income distribution.

“But with productivity stagnant, businesses will have to accommodate this increase against a challenging economic backdrop and growing pressure on their bottom line.”

Wednesday’s Budget is also expected to bring an increase in employers’ national insurance contributions, adding extra costs for businesses in what the Conservatives have described as a “tax on jobs”.