Boost for hourly workers as minimum wage to increase by up to £2,500 a year

Pay for 18 to 20 year olds will rise by £1.40 an hour from £8.60 to £10.00 (PA Wire)
Pay for 18 to 20 year olds will rise by £1.40 an hour from £8.60 to £10.00 (PA Wire)

Minimum wage workers will get an inflation busting 6.7% boost in pay, it was announced on Tuesday.

Ahead of Wednesday’s Budget, the Treasury confirmed that the National Living Wage will increase from £11.44 to £12.21 an hour from April 2025.

The rise is worth £1,400-a-year for fulltime workers aged 21 and over.

But pay for 18 to 20 year olds will rise by £1.40 an hour from £8.60 to £10.00 – the largest increase in the rate on record. It will mean an extra £2,500 a year for younger fulltime employees.

Chancellor of the Exchequer Rachel Reeves said: “This Government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”

The Government said over 3 million workers would benefit from the pay boost.

However the rates are still significantly below the London Living Wage, a voluntary salary that some employers have signed up to pay to reflect the higher cost of living in the capital.

It went up to £13.85 per hour, from £13.15, earlier this month.

The move comes as the Chancellor prepares to deliver a Labour Government’s first Budget in 15 years.

Prime Minister Sir Keir Starmer on Monday defended the “tough” tax rises coming in the Autumn Statement as he vowed to get more people into work and get Britain out of a “pay more get less doom loop”.

Business Secretary, Jonathan Reynolds said: “Good work and fair wages are in the interest of British business as much as British workers.

“This government is changing people’s lives for the better because we know that investing in the workforce leads to better productivity, better resilience and ultimately a stronger economy primed for growth.”

TUC General Secretary Paul Nowak said: “The government is delivering on its promise to make work pay.

“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. “The independent Low Pay Commission has looked at a range of economic evidence before making this recommendation.

“They know employers can absorb this increase. “Every time the minimum wage goes up there are some voices who predict this will drive up unemployment. Every time they are wrong.”