MILLIONS of workers are set for a pay rise after Rishi Sunak confirmed the national living wage will increase to £8.91 an hour.
The Chancellor announced the wage boost as part of his Spending Review in the House of Commons this afternoon.
The national living wage is currently £8.72 an hour and will rise by 19p – an increase of 2.2% – from April next year.
The increase will also apply to those 23 and 24 year olds. Previously, the national living wage was only available to those aged 25 or above.
Announcing the increase today, the Chancellor said full-time workers above the age of 23 will see their wages rise by £345 next year.
Payslips were expected to rise from £8.72 to £9.21 in April next year, but the increase is less than expected due to the coronavirus crisis.
The Chancellor also announced:
- £2.9bn to help unemployed back to work
- NHS staff to get a pay rise
- Millions of public sector workers face pay freeze
- Pay rise of up to £250 for public sector workers earning under £24k
- National living wage to rise by 19p in April
- Foreign aid spending cut to 0.5%
- New £4bn local area fund
- £2.2bn for schools next year
There were fears that struggling businesses wouldn't be able to afford a bigger rise in wages, according to the Low Pay Commission.
The national minimum wage for workers below the age of 23 will also be increased from April.
People aged 21 and 22 will see their wages boosted from £8.20 to £8.36,while 18 to 20 year olds will see their pay go up from £6.45 to £6.56.
Those aged 16 and 17 will see wages increased from £4.55 to £4.62, while pay for apprentices will be £4.15 instead of £4.30.
Speaking today, Mr Sunak said: "We are accepting in full the recommendations of the Low Pay Commission to increase the National Living Wage by 2.2% to £8.91 an hour.
"A full-time worker on the National Living Wage will see their annual earnings increase by £345 next year.
"Compared to 2016 when the policy was first introduced, that’s a pay rise of over £4,000."
What is the national living wage?
The national living wage is the government’s minimum rate employers are allowed to pay employees for each hour worked.
It was introduced by Tony Blair's New Labour government in 1999 and was originally called the national minimum wage.
In 2011, a campaign group called the Living Wage Foundation was founded to persuade employers to voluntarily pay what it called the national living wage.
The national living wage was an independently-calculated estimate of the rate workers needed cover their basics needs, and was higher than the national minimum wage.
In his 2015 budget, George Osborne re-branded the national minimum wage as the national living wage, though did not raise the rate to match the Living Wage Foundation's recommended rate.
Speaking today, Chancellor Rishi Sunak said the national living wage will apply to 23 and 24 year olds. Previously, the national living wage was only available to those aged 25 or above.
The minimum rate for those under 23 continues to be known as the national minimum wage.
Here are the new wage rates that will come into play from April 2021:
- Rate for people aged 23 and older and above to increase by 2.2% from £8.72 to £8.91 per hour
- Rate for people aged 21 to 22 years old to increase by 2% from £8.20 to £8.36 per hour
- Rate for people aged 18 to 20 years old to increase by 1.7% from £6.45 to £6.56 per hour
- Rate for people aged 16 to 17 years old to increase by 1.5% from £4.55 to £4.62 per hour
- Rate for apprentices to increase by 3.6% from £4.15 to £4.30 per hour
- Daily accommodation offset rate to increase by 2.0% from £8.20 to £8.36.
The Sun first reported back in September how the Chancellor was considering a smaller national living wage rise.
The national living wage was raised to £8.72 from £8.21 on December 30 last year.
The hike was part of Boris Johnson's pledge to "level up" the country.
Meanwhile plans were announced for the minimum wage for all employees aged 21 or over to rise to £10.50 by 2024.
Those aged 25 and over are eligible for the national living wage, while those younger receive the national minimum wage.
The minimum wage is £4.15 for apprentices, £4.55 for under 18s, £6.45 for 18 to 20s and £8.20 for 21 to 24-year-olds.
The national living wage is different to the real living wage, which is a is a voluntary amount that companies choose to pay their workers.
On November 9, 2020, it increased by 20p to £9.50 per hour for workers outside London.
In London, the real living wage has been boosted by 10p to £10.85.
In total, the real living wage is paid by almost 7,000 employers in the UK, including two-fifths of FTSE 100 companies.
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