Rachel Reeves to give millions pay boost by increasing minimum wage in Budget

Rachel Reeves is reportedly planning to increase the minimum wage by over 6% in a move that would benefit more than a million low-paid workers from next year. The Chancellor is expected to announce the rise in the Budget on Wednesday, following recommendations from the independent Low Pay Commission.

Currently, the national minimum for those aged over 21, known as the "national living wage", is £11.44. Earlier this year, the commission proposed an increase to £11.89, reports the Mirror.

However, according to The Times, it could rise to over £12.12 per hour after ministers pledged to "raise the floor" on wages. Workers aged between 18 and 20, who currently earn £8.60 per hour, could see a larger increase under government plans for a single adult rate.

A Treasury source declined to comment on "speculation" when approached. Critics argue that the proposed minimum wage increase, coupled with other measures such as raising National Insurance rates for businesses, could lead employers to delay or cancel hiring decisions.

Craig Beaumont, the executive director of the Federation of Small Businesses, warned that the NI increase would significantly raise the cost of hiring new workers. He suggested that small businesses could face an additional £600, calling the rise "a tax on pay, hours and jobs which would lead to recruitment freezes – or worse".

The executive remarked: "Small business owners are among the hardest working people imaginable. They are strivers, working long hours to run their business and in many cases create jobs and opportunities."

However, Trades Union Congress (TUC) General Secretary Paul Nowak disagreed, indicating to The Times that businesses could manage the increment, saying: "Every time the minimum wage goes up there are some voices who predict this will drive up unemployment. Every time they are wrong."