Rachel Reeves expected to raise UK national minimum wage by 6% in 2025
Tom Ambrose and Jessica Elgot
Mon 28 October 2024
THE GUARDIAN
The announcement expected from the chancellor, Rachel Reeves, is even higher than what had been predicted last month.Photograph: Leon Neal/Reuters
The national minimum wage is to increase by up to 6% next year, with more than 1 million low-paid workers in line for a pay rise, the Guardian understands.
Rachel Reeves is expected to announce an increase above inflation and even higher than what had been predicted last month. Ministers, who will herald the rise as good news for working people, said that 18- to 20-year-olds ought to eventually be paid the same as older workers, according to a recommendation first reported in the Times.
About 1.6 million people are in line to receive the “national living wage” of £11.44 an hour, the minimum wage for those 21 and over – rising to more than £12.12 after ministers promised to “raise the floor” on wages.
However, businesses are warning that the expected rise will be announced alongside an increase in the national insurance contributions they must pay on wages.
The national living wage must not drop below two-thirds of median earnings, ministers have told the Low Pay Commission. The target was set by the Tories and achieved this year after almost 10 years of above-inflation increases.
The commission said last month that it expected to recommend an increase of 5.8% but a source confirmed that the final figure could be up to 6%.
Nye Cominetti, the principal economist at the Resolution Foundation, said: “Millions of low earners are set for good news in the budget when the chancellor announces the latest rise in the minimum wage.
“A bigger surprise is the expected increase in employer national insurance contributions. As a result of the two together, some businesses will legitimately say that their wage costs have gone up quite a bit as a result of this budget,” he added.
Tina McKenzie of the Federation of Small Businesses said: “It is businesses that pay people’s wages, plus all the tax government charges on top, which must be factored in when deciding on the living wage rate.”
However, Paul Nowak, general secretary of the TUC, said: “At a time when the cost of living is still very high the lowest paid would really benefit from a decent increase in the minimum wage. We know that low-paid workers spend more of their cash in their local economies. So any increase in their spending power will benefit local firms too.”
He added: “Every time the minimum wage goes up there are some voices who predict this will drive up unemployment. Every time they are wrong.”
A Treasury spokesperson said: “We do not comment on speculation around spending decisions or tax changes outside fiscal events.”
Boost for low-paid as minimum wage set to rise by 6% in Budget
Archie Mitchell
Tue 29 October 2024
Rachel Reeves will become the first woman to deliver a Budget (PA Wire)
The minimum wage, or national living wage for over-21s, will rise from £11.44 to between £12.12 and £12.20 from next year, The Times reported.
The Low Pay Commission, which advises the government on the national living wage, said last month it expected the level to rise to £12.10, but stronger earnings growth has fuelled a bigger increase.
The government’s existing target is for the national living wage to be two thirds of the hourly median income, but ministers have suggested they want to exceed this.
Resolution Foundation principle economist Nye Cominetti said “millions of low earners are set for good news in the budget when the chancellor announces the latest rise in the minimum wage”.
He added that businesses should be used to above-inflation increases to the national living wage and that Labour’s plans were actually “less ambitious than the previous government’s record” of increases.
But he warned that, combined with expected increases to employer national insurance contributions, “some businesses will legitimately say that their wage costs have gone up quite a bit as a result of this Budget”.
The separate Real Living Wage was last week set by the Living Wage Foundation, which claims it takes into account “actual living costs”. The rate was set at £12.60 for the next year, rising to £13.85 for London-based workers.
But, unlike the national minimum wage and living wage set by the government, the Real Living Wage is voluntary, with only around half a million people working for over 15,000 employers currently receiving the wage.
Those paying the rate include: IKEA; Aviva; KPMG; Oxfam; LUSH; Nationwide; Burberry; and Liverpool, Everton and Chelsea football clubs.
The national living wage was increased by Jeremy Hunt last November, alongside a promise to “end low pay” in Britain. He handed the rise to £11.44 an hour to nearly three million workers.
Archie Mitchell
Tue 29 October 2024
THE INDEPENDENT
Rachel Reeves will raise the minimum wage by 6 per cent at Wednesday’s Budget, handing a pay rise to more than a million workers on low incomes.
The chancellor is due to announce the inflation-busting hike when she delivers her first financial statement, with the increase higher than predicted in September.
The boost will benefit young people the most, as the government will ensure 18 to 20-year-olds are paid the same rate as older workers - closing the current gap.
Rachel Reeves will raise the minimum wage by 6 per cent at Wednesday’s Budget, handing a pay rise to more than a million workers on low incomes.
The chancellor is due to announce the inflation-busting hike when she delivers her first financial statement, with the increase higher than predicted in September.
The boost will benefit young people the most, as the government will ensure 18 to 20-year-olds are paid the same rate as older workers - closing the current gap.
Rachel Reeves will become the first woman to deliver a Budget (PA Wire)
The minimum wage, or national living wage for over-21s, will rise from £11.44 to between £12.12 and £12.20 from next year, The Times reported.
The Low Pay Commission, which advises the government on the national living wage, said last month it expected the level to rise to £12.10, but stronger earnings growth has fuelled a bigger increase.
The government’s existing target is for the national living wage to be two thirds of the hourly median income, but ministers have suggested they want to exceed this.
Resolution Foundation principle economist Nye Cominetti said “millions of low earners are set for good news in the budget when the chancellor announces the latest rise in the minimum wage”.
He added that businesses should be used to above-inflation increases to the national living wage and that Labour’s plans were actually “less ambitious than the previous government’s record” of increases.
But he warned that, combined with expected increases to employer national insurance contributions, “some businesses will legitimately say that their wage costs have gone up quite a bit as a result of this Budget”.
The separate Real Living Wage was last week set by the Living Wage Foundation, which claims it takes into account “actual living costs”. The rate was set at £12.60 for the next year, rising to £13.85 for London-based workers.
But, unlike the national minimum wage and living wage set by the government, the Real Living Wage is voluntary, with only around half a million people working for over 15,000 employers currently receiving the wage.
Those paying the rate include: IKEA; Aviva; KPMG; Oxfam; LUSH; Nationwide; Burberry; and Liverpool, Everton and Chelsea football clubs.
The national living wage was increased by Jeremy Hunt last November, alongside a promise to “end low pay” in Britain. He handed the rise to £11.44 an hour to nearly three million workers.
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