Millions could get 'huge pay increase' next year

The national living wage could rise to £11.46 an hour next year - well above what the government has announced.

The minimum rate for adults over 23 is pegged to median hourly pay - and stronger-than-expected wage growth means April's increase could exceed the £11 an hour recently suggested by the chancellor.

Average weekly earnings grew by 7.8% in the three months to August, and according to the Resolution Foundation think tank, this could lead to a £1.04 boost to the national living wage - up from the current £10.42.

Nye Cominetti, senior economist at the Resolution Foundation, said: "The chancellor has announced that the national living wage would rise to at least £11 an hour next April.

"This looks to be a rare case of a politician underpromising, as the actual rate is more likely to be around £11.46. This would be a huge pay increase that will help millions of low earners as they navigate the cost of living crisis.

"However, a higher minimum wage alone cannot deliver higher living standards for everyone. Over the past decade, cuts to working-age benefits have offset the gains from the national living wage for many.

"Low-paid families with children in receipt of benefits will have experienced next to no, or even negative, income growth over this period, despite their hourly pay rising by 27% in real terms.

"A strategy to boost the living standards of low earners must combine a higher minimum wage with better conditions at work and a stronger social security safety net as well."

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The Resolution Foundation says about 1.7 million workers benefit directly from increases to the national living wage - and this would be the third biggest annual increase in percentage terms.

The government has pledged to accept the Low Pay Commission's recommendations on what the national living wage should be, and the size of April's increase will be confirmed later this month.