National Living Wage rises more than six per cent

The Chancellor has confirmed the National Living Wage will increase from £11.44 to £12.21 an hour from April 2025.  

The 6.7 per cent increase is worth £1,400 a year for an eligible full-time worker. More than three million workers will receive the pay boost, said the government.

The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour – the largest increase in the rate on record. This £1.40 increase will mean full-time younger workers eligible for the rate will see their pay boosted by £2,500 next year.

Business organisations have responded to the news.

John Foster, CBI Chief Policy and Campaigns Officer, 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. That pressure will 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.

“Reviving business investment is the key to unlocking productivity gains and driving sustainable wage rises across the economy. Achieving this shared goal requires business and government to work together to find a long-term solution to inactivity and the wider labour costs undermining competitiveness.”

But the UK's hospitality industry is deeply concerned. Kate Nicholls, Chief Executive of UKHospitality, said: “These wage rises are well above expectations, and make the budget even more important.

“It’s an added £1.9 billion to the hospitality wage bill, on top of the cost of the Employment Rights Bill and, if rumours about the Budget are true, employer NICs and business rate rises. Trying to balance the books from the pockets of high street businesses will simply leave hospitality as collateral damage – threatening jobs, future investment, price increases for consumers, and business viability.

“Our companies desperately want to be able to support higher wages for staff but what is being asked of them is simply unsustainable if taxes are going to shoot up at the same time.

“In light of this, it’s paramount that the Budget includes targeted measures to support the high street and the cost burden it is facing. That must start with addressing the broken business rates system and implementing a lower, permanent and universal level for hospitality.”