Tag: National Living Wage

Reeves Budget ‘tackles cost-of-living and backs Scottish industry’

Scottish families will benefit from a Budget to cut the cost-of-living, create more high skilled jobs and invest in public services, as the Chancellor reaffirmed her commitment to drive economic growth.

  • Chancellor announces fair deal for working families with removal of two-child benefit cap, energy bill saving and fuel duty freeze 
  • Scottish industry backed by investments in Grangemouth, Greenock, Leith and Fife 
  • Public services backed with extra £820 million for Scottish Government

Rachel Reeves recognised Scotland’s huge £204 billion annual contribution to the UK economy with investments in Grangemouth, Greenock, Leith and Kirkcaldy, and provided long-term certainty to the oil and gas industry to support North Sea jobs and investment. 

Despite wages growing more in the first year of this government than at any point in the 2010s, the Chancellor was clear too many families are still struggling with the cost of living which is why the Budget included a range of measures to cut bills and boost pay packets.   

Saying that the fairest way to help people with the cost-of-living was to cut inflation and increase wages, Reeves announced £150 off energy bills, a fuel duty freeze, and national minimum and living wage rises. 

The Chancellor announced the removal of the two-child limit. 95,000 children in Scotland will benefit from this change. Funded by tackling welfare fraud and long-overdue reforms to the Motability scheme, it will result in the biggest reduction in child poverty at any Budget this century.

The Chancellor’s Budget also ensured that Scottish public services are fairly-funded, with an extra £820 million for public services in Scotland through the Barnett Formula, on top of a record settlement in June.

Secretary of State for Scotland, Douglas Alexander MP said: “This is a Budget which delivers for Scotland – raising children out of poverty and helping tackle the cost of living for working families with action on energy bills.

“Scrapping the two-child benefit cap will lift thousands of Scottish children out of poverty. Funded by raising online gambling taxes and tackling welfare fraud, it will result in the biggest reduction in child poverty at any Budget this century.

“The UK Government has backed Scotland’s public services with an extra £820 million — on top of the extra annual £9.1 billion already committed at the Spending Review.

“The £14.5 million announced for Grangemouth is also vital investment in Scotland.”

Ms Reeves also announced reforms to modernise the tax system, asking those with broader shoulders to contribute more through long-overdue fair reforms.

Backing Scottish industry 

  • £14.5 million will back Grangemouth’s transition to a hub for low carbon technologies as the UK Government cements Scotland’s place as the home of the UK’s clean energy revolution. 
  • A further £20 million for Inchgreen near Greenock will upgrade the port’s dry dock, creating up to 1,750 jobs.  
  • Up to £20 million will transform Kirkcaldy town centre and waterfront, including the creation of ‘Adam Smith Growth Works’, boosting local business and tourism.
  • £25 million will be released following the full sign-off of Forth Green Freeport – spanning Leith, Grangemouth and Fife.
  • To support oil and gas workers, the UK Government is introducing ‘Transitional Energy Certificates’ to manage existing North Sea fields for the entirety of their lifespan, and a new Jobs Brokerage Service – offering end-to-end career transition support.

Tackling child poverty, the cost-of-living and economic inactivity

  • 95,000 children in Scotland will benefit from the removal of the two-child limit. 
  • Raising the National Living Wage by 4.1% and the National Minimum Wage by 8.5% —building on April 2025 increases to the National Living Wage and National Minimum Wage that already directly benefitted 220,000 workers in Scotland. 
  • Uprating Universal Credit Standard Allowance by 6.1%, the first ever permanent real terms increase.
  • Increasing the State Pension by 4.8% from April 2026, directly raising incomes for 1.1 million pensioners in Scotland. 
  • Extending the fuel duty freeze and 5p cut, saving the average car driver £49 next year. 
  • Unleashing talent and opportunity with a Youth Guarantee package. This will include ensuring every eligible 18-to-21-year-old who has been on Universal Credit and looking for work for 18 months in Great Britain will get a six-month paid work placement.

Public services investment 

  • The Budget provides an extra £820 million for the Scottish Government to spend on its priorities such as education and tackling NHS waiting times— on top of the extra £9.1 billion already committed during the Spending Review.   
  • The Scottish Government continues to receive over 20% more funding per person than equivalent UK Government spending across the rest of the UK reflecting the real costs of delivering services across Scotland’s diverse geography, from the Highlands to the central belt.

Holyrood: ‘Chaotic’ UK Budget fails to deliver for Scotland

Finance Secretary responds to Chancellor’s statement

The UK Budget “fails to deliver” for Scotland and will not move the dial on the cost of living for squeezed households, according to Holyrood’s Finance Secretary Shona Robison.

Responding to the Chancellor of the Exchequer’s statement, Ms Robison said: “This Budget has been absolute chaos from start to finish. Westminster has been consumed with leaks, briefings and out and out incompetence – with Scotland left as an afterthought and families left to pay the price.

“We needed a step change from the UK Government with investment in public services, support for jobs and industry in Scotland and serious action on energy bills. Instead, we got a chaotic mess and the increase in funding for the Scottish Government will not even cover half the cost of the employer’s national insurance contributions brought in this year.

“With UK energy bills £340 higher than the Prime Minister promised even after today’s announcement, the UK Government are not even trying to deliver on the their promises. It is insulting to see the UK Government stand up and trumpet a proposed reduction that does not even cover the increase since they came to office.

“It does not come close to meeting the Prime Minister’s pledge on energy bills – they have not even attempted to keep their promises.

“The electric vehicle tax is the wrong decision for motorists, the climate and for Scotland given its disproportionate impact on rural drivers.

“And there is no serious support for jobs and industry in Scotland. The Energy Profits Levy is to remain in place – risking thousands of jobs in Scotland and in the North East in particular. Yet again, Scotland is an afterthought.

“And while the moves on the two child cap are welcome, they are long overdue and the UK Government has been forced into this position by the Scottish Government and other campaigners. And without a simultaneous change to the benefit cap it falls well short of the bold anti-poverty measures we have been calling for from the UK Government.

“But the complete chaos around this Budget gets to the heart of the fact that we should not be leaving crucial decisions around the economy, public finances and household bills in the hands of a deeply incompetent Westminster UK government.  We should take these decisions for ourselves with the fresh start of independence.” 

The impact of the increase Employers National Insurance contributions on public services is forecast to cost the Scottish Government at least £2 billion over the next five years.

Responding to the UK Government’s Budget, Poverty Alliance Chief Executive Peter Kelly said: “The Chancellor’s decision to fully scrap the unjust two-child limit is the right thing to do.

“For eight years, this cruel policy has severed the link between what families across the country need and the support they are entitled to, pushing children into poverty and limiting their potential. Our children deserve better.

“Campaigners across Scotland have been unified in their demand to scrap the two-child limit and we are pleased that the UK Government has listened, sending a strong message that every child in this country matters. The end of this policy must be the starting point of reform which ensures that our social security system truly provides security.

“This decision also frees up money earmarked for the mitigation of the policy in the Scottish Budget. Coupled with the additional £820 million allocated to the Scottish Government in this UK Budget, this will allow further investment in the action we know is needed to meet our child poverty targets, including increases to the Scottish Child Payment.”

Commenting on the UK Government’s Budget response, Debbie Horne, Scotland Policy and Public Affairs Manager for Independent Age said: “The Autumn Budget was an opportunity to address pensioner poverty across the UK. However, the UK Government has sadly missed the chance to take action on an issue that now affects almost two million older people across the UK, including 160,000 pensioners in Scotland. 

“While we welcome the retention of the Triple Lock, this measure alone does not go far enough for older people on the lowest incomes who are living across Scotland in cold homes and with not enough money to live on. 

“We continue to call on the UK Government to increase the Warm Home Discount to ease the burden of escalating bills, to support older private renters by uprating Local Housing Allowance so no one has to make dangerous sacrifices to pay their rent, and to boost income through a comprehensive take-up strategy for entitlements, including Pension Credit. 

“The absence of meaningful action to address later-life poverty will leave many older people on a low income in Scotland feeling forgotten and many will be worried about losing more of it in tax, because of the extension of the freeze on personal tax allowances to 2031, a year longer than was expected. 

“We estimate that without decisive government intervention almost 190,000 pensioners in Scotland could be in poverty by 2040. Worryingly, nothing in this Budget suggests we are being steered away from this frightening outcome.” 

Mary Glasgow, Chief Executive of Children First, Scotland’s national children’s charity said: “We welcome the UK Government’s decision to scrap the two-child limit as outlined in the Office for Budget Responsibility report. This is long overdue and frees up Scottish Government budget for other crucial support for children and families.  

“Poverty has a devastating impact on children’s mental and physical health, development, happiness and ability to learn that can last a lifetime.   

“Both governments must now work together to build on progress and meet the legal target to reduce child poverty in Scotland. Families need a stronger social security offer, for example, through the Scottish Child Payment and whole family support across Scotland to give every family the financial, practical and emotional help they need to tackle the root causes of poverty.  

“Children can’t wait. The Scottish Government must use this opportunity to go further and faster in their stated mission to eradicate child poverty.”  

Children First’s manifesto for the 2026 Holyrood elections calls on the next Scottish Government to deliver a comprehensive offer of whole family support to tackle child poverty and give every family the emotional, practical and financial support they need. 

Read the manifesto here: 2026 Holyrood Election Manifesto | Children First 

Helen Barnard, director of policy at Trussell, said: “Trussell is delighted to see the Chancellor take this bold step which will protect hundreds of thousands of children from growing up facing hunger and hardship. She has listened to the families and food banks across the UK who have been imploring her to act.

“The cruel two-child limit has driven countless families into hardship, forced to turn to food banks to survive. Today’s announcement of its full and swift removal will help ensure all our children have the best possible start in life, ease pressure on public services, and help to boost our economy.  

“This government came to power promising to end the need for emergency food and reduce child poverty. Removing the two-child limit will make a vital and significant contribution towards delivering on those manifesto commitments.

“This move will pull 470,000 children out of severe hunger and hardship by 2027 and ease pressure on food banks throughout the UK.

“The government has built on positive steps in strengthening support for people facing severe hunger and hardship. But this cannot be the end. Food bank need remains well above levels five years ago and many people are still struggling to afford the essentials.

“We need more bold choices to transform lives across our communities.”

The End Child Poverty Coalition commented:

UK Government moves to end unfair pay and discriminatory age bands

The Government’s manifesto commitment to deliver a genuine living wage for working people took a step closer today as it set out new considerations for the Low Pay Commission when recommending next year’s National Living Wage and National Minimum Wage.

  • Discriminatory age bands to be removed as new Low Pay Commission remit delivers progress towards a single wage rate for adults.
  • Government places cost of living at the heart of the remit a year on from its first inclusion, meaning more money is being put into the pockets of hardworking people – delivering the Plan for Change.
  • Low Pay Commission to continue longstanding approach of assessing the impact of wage reforms on different sectors, ensuring recommendations support both economic growth and fair pay.

The Westminster Government’s manifesto commitment to deliver a genuine living wage for working people took a step closer today (5 August) as it set out new considerations for the Low Pay Commission (LPC) when recommending next year’s National Living Wage and National Minimum Wage.

Around 3 million workers benefitted from last year’s decision to include the cost of living in the LPC’s remit for the first time. This led to a record cash increase in the Minimum Wage for apprentices and those under 18, and a £1,400 annual boost for full-time workers on the National Living Wage from April.

Higher wages for the lowest-paid workers not only provide greater financial security for families but also mean more money in the pockets of working people to spend on the things they need – supporting businesses and driving economic growth across the country as part of the Plan for Change.

With younger workers being held back by discriminatory age bands, the updated LPC remit will drive forward the Government’s commitment to delivering a single adult pay band.

The LPC will consult with employers, trade unions and workers on narrowing the gap between the 18–20-year-old rate of the National Minimum Wage and the National Living Wage and will put forward recommendations on achieving a single adult rate in the years ahead.

The remit will also ensure that the LPC continues to actively consider the cost of living in its recommendations for National Living Wage rates to apply from April 2026.

Business Secretary Jonathan Reynolds said: “Low pay drags down living standards for our workers and in turn hurts our high streets and local businesses.

“This Government’s Plan for Change will put money back in people’s pockets, with this new remit marking the next step in considering how we ensure a fair deal for our lowest paid workers while maintaining a competitive economy that boosts businesses and their employees alike.”

Deputy Prime Minister Angela Rayner said: “We promised to make low pay a thing of the past, and deliver a wage people can live on, and that is exactly what this government is determined to deliver.

“We have already taken bold action to Make Work Pay with more than 3 million workers seeing a huge boost in their pay following our increase to National Minimum and Living Wage.

“This remit is the next milestone in our plan to get more money in working people’s pockets, raise living standards in every part of the UK, and get our economy growing.”

Chancellor of the Exchequer Rachel Reeves said: “We are delivering on our promise to make sure every worker receives a fair wage.

“Fair pay which supports working families is integral to our Plan for Change, because when working people are properly rewarded with more money in their pockets, businesses thrive and our entire economy benefits.

“To ensure the right balance is struck between the needs of workers, business affordability, and the wider economy, the LPC is being asked to consult on several issues before recommending the new rates.”

Baroness Philippa Stroud, Chair of the LPC, said: “We are pleased to receive our remit from the Government. Already, since the beginning of the year, we have spent significant time speaking with workers and employers, to understand the pressures in the economy and the effects of the most recent increases in the minimum wage. We have held a successful call for evidence and received detailed submissions from all sides.

“Our recommendations on the minimum wage are always finely balanced. More than ever, it is important that we draw on first-hand evidence from those affected by our decisions.

“I look forward to working with the rest of the Commission over the autumn to reach a shared view on this evidence and deliver our advice to the Government in October”

TUC General Secretary, Paul Nowak said: “Boosting the minimum wage isn’t just good for workers – it’s good for business too. When low-paid workers have more money in their pockets they spend it locally – supporting shops, cafés and high streets. 

“That’s why the government is right to set out its ambition to raise the floor of the minimum wage and end the outdated and unfair youth rates. 

“The minimum wage has been one of the big success stories of the last 25 years – lifting pay at the bottom and proving the doom-and-gloom merchants wrong. But it’s important that it keep rising so that it better reflects what it actually costs to get by in Britain today.

“A bolder, more ambitious minimum wage isn’t a risk. It’s the next step in building a fairer, stronger economy where hard work is properly rewarded.”

A New Deal for young workers?

New TUC analysis for our 2024 Young Workers Conference shows that more than 700,000 workers aged 18-20 across the UK are set to be left out of pocket as they are paid a lower rate of the minimum wage (writes TUC’s ALICE ARKWRIGHT).

On 1 April, the National Living Wage will go up to £11.44 per hour and be extended to workers aged 21 and over. But workers under 21 will still be paid less for the same work, simply because of their age and as many as seven in ten workers aged 18-20 could lose out. 

Over 700,000 18-20 year olds are paid less than this rate and they miss out on a huge £2,438 per year, or £47 per week, at a time when the cost of living is still sky high. This is completely unfair.  

Young workers have been let down time and time again by this Tory government.  

They have entered the labour market at a time when insecure work has exploded. Insecure work is characterised by low pay, less training and development, uncertainty in hours and fewer employment rights.    

16-24 year olds are over five times more likely to be on a zero hours contract than workers aged 25 and over.  

Despite only making up 11 per cent of the total workforce, young workers make up 40 per cent of the 1.18 million workers employed on a zero hours contract. 

And young women and young BME workers are more likely to be on them. 

Some young workers are not even being paid – a quick search of recruitment sites finds multiple internship adverts with no mention of pay, including one asking for 3 years’ experience.  

And three quarters of employees aged 16-24 miss out on key employment rights that most of us take for granted, such as protection from unfair dismissal and the right to statutory redundancy pay.   

Imagine working hard in a job for nearly two years – only to be let go with no recourse.   

Young people are always hit hardest during times of uncertainty, which they’ve faced time and time again in the last 14 years. Youth unemployment rose dramatically after the financial crisis and more recently during the pandemic. And we are seeing it rise again. The unemployment rate is highest for young BME and young disabled workers. 

A lack of decent work, training opportunities including good quality apprenticeships and careers services are keeping unemployment rates higher than they need to be and increases the risk of longer-term unemployment, which has significant scarring effects on young people’s future living standards and wellbeing. 

Since 2016/17 there has been a 37 per cent fall in the number of under 19s starting an apprenticeship. Many young people are put off them by the high incidence of low pay, low quality training and poor employment conditions. 

Every day we hear stories about sexual harassment in our workplaces. 2 in 3 young women have experienced harassment at work and they are particularly at risk of harassment from third parties such as clients, customers and patients.  

Last year, ministers promised to bring in a new law to put the onus on employers to keep their staff safe from this type of abuse. 

But instead, they buckled to Tory backbenchers, massively watered down the legislation and let down young women across the country. 

Alongside this failure to protect workers, this government have also introduced new anti-strike laws which mean a generation of young people could lose their right to strike.  

We must give young people a good start at working life. 

Labour’s New Deal for Working People stands in stark contrast to the Conservatives’ dire record on workers’ rights. It would: 

  • Ban zero-hours contracts to help end the scourge of insecure work.  
  • Ensure all workers get reasonable notice of any change in shifts or working time  
  • Give all workers day one rights on the job, scrapping qualifying time for basic rights, such as unfair dismissal, sick pay, and parental leave for all workers.  
  • Remove the discriminatory age bands from the minimum wage to ensure every adult worker benefits from fair pay.  
  • Ban unpaid internships; and  
  • Require employers to ensure workplaces are free from harassment, including by third parties. 

And Labour have committed to reform the National Careers Service and the failed Apprenticeships Levy into a ‘Growth and Skills Levy’ that works across all nations and regions. 

At Young Workers Conference, members from across our movement will debate what a better future for young people looks like and the need for this transformative New Deal. 

Festive bonus as UK Government progresses on workers’ rights package

Government sets out the next stages for a number of new Workers’ Rights Acts to support UK workers

  • UK Government sets out next steps to improve the lives of workers across the UK
  • Benefits include tips worth £200 million a year in the pockets of hardworking people and more say over working patterns
  • Government ‘also backing British workers’ by introducing the biggest ever increase to the National Living Wage

Millions are set to benefit as the Westminster government sets out the next stages for a number of new Workers’ Rights Acts – giving more money and more say back to UK workers.

Benefits range from £200 million more back in the pockets of hard-working people, to greater flexibility over when, where and how you work.

Business and Trade Minister Kevin Hollinrake said: “As we approach Christmas, it’s more vital than ever that we do what we can to support workers and families across the country.

“I’d like to encourage businesses to be as flexible as possible and give their hard-working employees the tips they deserve.

“I want to thank the MPs who brought forward this legislation to support hard working families and shape the UK’s outstanding workers’ rights record.”

The Employment (Allocation of Tips) Act 2023, which became law in May this year, requires employers to pass all tips on to workers.

Most employers already pass on tips to the staff who earn them. However, there are still some unacceptable tipping practices by unscrupulous employers, which must be stopped.

Christmas is an incredibly busy season for hospitality workers, and usually a time of year when customers are more generous with their tips. All employees deserve to receive their fair share of tips, so the Government has launched a public consultation on the Tipping Act’s Code of Practice to gain feedback from employers, workers and other stakeholders on the fair and transparent distribution of tips.

Acas Chief Executive Susan Clews said: “The shift in recent years towards increased use of flexible working by organisations has allowed more people to better balance their working lives and enabled employers to attract and retain skilled staff.

“Acas has recently consulted on a new draft Code of Practice which outlines good practice around requests for flexible working and explains the forthcoming changes in the law to employers and employees.”

New rights to protect new parents from redundancy, give carers extra support and help all employees work flexibly are also a step closer as government has laid legislation with plans for the measures to come in next spring.

These measures will improve the lives of hard-working families across Britain, aiding workers who have caring responsibilities or parents at risk of redundancy and ensuring everyone is able work as flexibly as needed into the new year.

An extra 2.6 million workers across the UK will benefit from the removal of the 26 week qualifying period that is currently required before making a flexible working request.

Those with caring responsibilities will also be entitled to a brand new employment right to a week’s leave to care for a dependent.

Redundancy protections are also being extended to cover pregnancy, as well as to new parents.

The UK Government is are also backing British workers by introducing the biggest ever increase to the National Living Wage, worth over £1,800 a year for a full-time worker, fulfilling the pledge to end low pay.

When this increase comes into effect in April, the National Living Wage will be worth nearly £21,000 a year for a full time worker – almost double, in cash terms, the amount which a full time worker on the National Minimum Wage earned in 2010.

For the first time, 21 years olds will be legally entitled to the National Living Wage, which is set to reach two-thirds of average earnings.

Record wage boost for nearly 3 million workers from next April

  • Biggest ever increase to the National Living Wage, worth over £1,800 a year for a full-time worker, fulfils manifesto pledge to end low pay.
  • Since 2010 the National Living Wage will have doubled in cash terms from around £10,500 to nearly £21,000 a year for a full-time worker.
  • For the first time, 21-year-olds on the National Living Wage will always earn two-thirds of average earnings.

The Chancellor will deliver a pay rise of more than £1,800 a year for a full-time worker, as he confirms that the National Living Wage will increase by over a pound an hour from April.

The almost 10% pay boost, from £10.42 to £11.44 an hour, is the biggest cash increase in the National Living Wage in more than a decade and fulfils the government’s manifesto pledge to end low pay for those on the National Living Wage.  

Eligibility for the National Living Wage will also be extended by reducing the age threshold to 21-year-olds for the first time.  A 21-year-old will get a 12.4% increase, from £10.18 this year to £11.44 next year, worth almost £2,300 a year for a full-time worker. 

National Minimum wage rates for younger workers will also increase. 18-20-year-olds will also get a wage boost to £8.60 per hour – a rise of £1.11.

The Department for Business and Trade estimate 2.7 million workers will directly benefit from the 2024 National Living Wage increase.

Chancellor of the Exchequer Jeremy Hunt said: “Next April all full-time workers on the National Living Wage will get a pay rise of over £1,800 a year. That will end low pay in this country, delivering on our manifesto promise.

“The National Living Wage has helped halve the number of people on low pay since 2010, making sure work always pays.”

The minimum hourly wage for an apprentice is boosted next year, with an 18-year-old apprentice in an industry like construction seeing their minimum hourly pay increase by over 20%, going from £5.28 to £6.40 an hour.  

The National Living Wage was introduced in 2016 and currently sets the minimum hourly pay a person over the age of 23 earns when working. The new rate will now apply to 21- and 22-year-olds, and means that the government has met its ambitious target of lifting the National Living Wage to two-thirds of median earnings by 2024, ending low hourly pay for those on the National Living Wage.  

Since 2010, the proportion of workers on low hourly pay has more than halved from 21.3% to 8.9%, supported by increases to the National Living Wage. Personal tax thresholds have been doubled, meaning a working person can now earn £1,000 a month tax-free for the first time.  

Bryan Sanderson, Low Pay Commission Chair, said: “The National Living Wage has delivered an improved standard of living to thousands of people who care for our children and elderly, work in farms and shops and at many other essential jobs.

“These efforts over the lifetime of the NLW mean over £9,000 p.a. more to a full time worker without any increase in unemployment.

“This hasn’t been easy for employers, with the economy facing a range of unprecedented challenges in recent years. The high degree of political and economic uncertainty has made assessing and forecasting the performance of the economy, and therefore our task, very difficult. It is a tribute to my fellow Commissioners that we have continued to achieve consensus.

“Our new recommendation of a National Living Wage of £11.44 attempts to steer a path through this uncertainty and achieve the government target of two-thirds of the median wage, an outcome which if accepted would position the U.K. at the forefront of comparable economies.”

Getting more people into work and ensuring work pays is ‘a priority for the UK government’. The Chancellor will set out further measures in today’s Autumn Statement.

National Insurance cut reaches key milestone

  • Bill to deliver £330 national insurance contributions cut announced by the Chancellor at the Spring Statement gets Royal Assent
  • Change means threshold at which individuals start to pay NICs will rise by almost £3,000 and align with the income tax personal allowance from July
  • 70% of workers who pay NICs will pay less, even after accounting for the introduction of the Health and Social Care Levy

The UK government’s measures to tackle the cost-of-living crisis reached a key milestone this week, after a bill to raise NICS thresholds by almost £3,000 and deliver a tax cut worth over £330 for a typical employee in the year from July became law.

The National Insurance Contributions (Increase of Thresholds) Act, which received Royal Assent on Thursday, raises the threshold at which individuals start to pay NICs, aligning it with the income tax personal allowance at £12,570 from July 2022.

Around 2.2m working age people will be taken out of paying Class 1 NICs, applying to employees, and Class 4 NICs, for the self-employed, altogether. From July, around 70% of workers who pay NICs will be better off, even accounting for the introduction of the Health and Social Care Levy.

At the Spring Statement the Chancellor set out a tax plan that will help families with the cost of living, support growth in the economy, and ensure the proceeds of growth are shared fairly. As well as the NICs threshold rise it included a 12-month-long 5p cut to fuel duty and a cut in the basic rate of income tax, to 19p in the pound, taking effect in 2024.

Chancellor of the Exchequer Rishi Sunak said: “I know people are worried about making ends meet, with global supply chain challenges and Russia’s invasion of Ukraine driving up the cost of living for families across the UK.

“That’s why this tax cut for almost 30 million people is so important. And it’s part of further support worth over £22 billion in 2022-23 to help with the cost of living, by helping people with their energy bills and ensuring people keep more of their money.”

Thanks to above inflation increases in the income tax personal allowance and the NICs Primary Threshold since 2010-11, a typical basic rate taxpayer earning £24,000 in 2022-23 will pay £1,140 less in income tax and NICs than they otherwise would have, even after accounting for the Health and Social Care Levy.

That comprises £760 less income tax and around £380 less NICs in 2022-23 compared to what they otherwise would have paid.

The July threshold rise is a tax cut for a typical employee worth over £330 in the year from July 2022; the equivalent saving for a typical self-employed person, who pay lower NICs rates, would be worth over £250.

The UK Government has taken action worth over £22 billion next financial year to help with the cost of living including the fuel duty cut, increases to the NICs thresholds and an extra £500 million for the Household Support Fund to help those most in need.

They say they’re also helping low-income families keep more of what they earn by reducing the Universal Credit taper rate, boosting incomes by £1000 per average full time worker by increasing the National Living Wage and providing over £9 billion to help with rising energy bills.

Pay boost for millions as National Minimum and Living Wage rates go up from today

  • Around 2.5 million UK workers will receive a pay rise, as the National Minimum Wage and National Living Wage increase today 
  • £1,000 a year pay rise for full time workers following the largest ever uplift to the National Living Wage for workers aged 23 and over.
  • Business Secretary Kwasi Kwarteng: “While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs.”

Millions of UK workers will receive a pay rise from today (Friday 1 April), as the National Minimum Wage and National Living Wage rise comes into effect.

The uplift in wages, which will benefit around 2.5 million people, includes the largest ever increase to the National Living Wage. It will put £1,000 a year more into full-time workers’ pay packets, helping to ease cost of living pressures.

With today’s rise, the yearly earnings of a full-time worker on the National Living Wage will have increased by over £5,000 since the introduction of the National Living Wage by the Government in April 2016.

As a direct result of government action, the current number of employees on the payroll is over 600,000 more than pre-pandemic levels – and unemployment has fallen to 3.9%.

Business Secretary Kwasi Kwarteng said: “We have never been more determined to make work pay, and by providing the biggest cash increase ever to the National Living Wage from today, we are giving a boost to millions of UK workers.

“While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs.

“With more employees on the payroll than ever before, this government will continue to stand up for workers.”

Today’s uplift will particularly benefit workers in sectors such as retail, hospitality and cleaning and maintenance. Apprentices will also get a large 11.9% increase to their minimum hourly pay, with 21-22 year-olds seeing an immediate 9.8% rise. The National Living Wage, the minimum wage for over 23-year-olds, will now move up to £9.50 an hour.

Last year, the age threshold for the rate moved from age 25 to 23, meaning that more young workers are now eligible for a higher wage.

The new National Minimum Wage and National Living Wage rates are both statutory minimums, and businesses are encouraged to pay workers above these whenever they can afford to do so.

Recent studies show significant benefits for employers who pay their staff higher wages, which includes higher job retention and staff productivity.

In full, the increases from 1 April 2022 are:

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With the rates going up from today, workers across the UK are being urged to check they are being paid properly. This can be done by visiting the Check Your Pay site, which also offers advice on what to do if you are being underpaid.

The Government also today announced it will be launching a communications campaign in the coming weeks to help increase understanding among minimum and living wage earners around the wages they are legally entitled to, as well as the steps they can take if they are concerned they are being underpaid.

Record increases in global gas prices this year saw the Energy Price Cap, set by the independent regulator Ofgem, rise by 54%. While a worrying time for households, the price cap continues to insulate millions of households from high wholesale gas prices.

Today’s uplift comes alongside further government measures worth over £9.1 billion to support people across the UK with rising energy bills, with the majority of households receiving £350 in total. This will help over 28 million households affected by the large spike in global energy prices, protecting them from half of the average forecast bill rise.

The package includes a £150 rebate in Council Tax bills for all households in Bands A-D in England – 80% of households – with payments being made from today (1 April 2022), and a £200 reduction in energy bills for all households from October 2022 through the Energy Bills Support Scheme.

This contributes to wider government support to ease cost of living pressures worth £22billion next financial year as well as government plans to drive £6 billion into making homes more energy efficient over the next ten years, which is vital to keeping household energy costs down.

The government is also announcing further help for low-income households to meet energy costs with the publication of consultation responses on the extension of the Warm Homes Discount and Energy Company Obligation schemes. 

The Warm Homes Discount scheme is being extended until 2025/26 and expanded to reduce the energy costs of around £3 million low-income and vulnerable households every year, while the Energy Company Obligation scheme will see £1 billion annual funding until 2026 to help upgrade energy efficiency measures in 450,000 homes, cutting an average of £300 off energy bills. 

Going even further to ease the cost of living, last week as part of the Spring Statement, the Chancellor Rishi Sunak announced a new Tax Plan, including cuts to fuel duty by 5p per litre, and that energy efficiency measures can be installed in homes VAT free for the first time ever.

The Chancellor Rishi Sunak said: “This historic increase will mean a pay rise for millions of hard-working Brits – with an average full-time worker pocketing an extra £1,000 a year.

“We’re doing everything we can to ensure people keep more of what they earn in these challenging times, with a new Tax Plan that delivers tax cuts for nearly 30 million people as well as £22billion to help with the cost of living.”

Bryan Sanderson Chair of the Low Pay Commission (LPC) said: “The Business Secretary’s strong support is especially welcome at this difficult time. Workers on the minimum wage; care for our elderly and sick, harvest and deliver our food, and do a multitude of other tasks which help us all.

“Many public sector workers including for example teaching assistants will also shortly be included. They all deserve to be properly remunerated and respected as key members of our society.

“The Low Pay Commission met with around a hundred representative bodies last year before making its recommendations. We are frequently their main sometimes even their only advocates. With government support we will continue to try to ensure that they do not suffer from the neglect which was so often characteristic of the past.”

‘Large’ minimum wage increase to boost low-paid workers’ incomes

The National Living Wage (NLW) will rise to £9.50 from 1 April 2022. This represents an increase of 59 pence or 6.6 per cent.

The Low Pay Commission’s recommendations set the minimum wage back on track to reach the Government’s target of two-thirds of median earnings by 2024. The recommendations were unanimously agreed by Commissioners and accepted in full by the Government.

Read the LPC’s recommendations to Government here

The increases announced yesterday will support the wages and living standards of low-paid workers at a time when pay growth is robust across the economy. They come against a backdrop of strong GDP forecasts, employment returning to pre-pandemic levels and businesses advertising record numbers of vacancies.

Bryan Sanderson, Low Pay Commission Chair, said: “The rates we recommended will put money in the pockets of care-workers, food distributors and many other groups of the lowest-paid members of our society up and down the UK. Many of them have made a vital contribution during the last few difficult months.

“The impact on communities is considerable – Blackpool for example will benefit by at least £6.1m from pay increases to its low-paid workers.

“The pandemic has been an exceptionally difficulty period for businesses and workers alike, but the labour market has recovered strongly and the economy is expected to continue to grow over the next year. This is attributable in no small part to comprehensive Government support.

“Our value as a social partnership is to find a consensus recommendation acceptable to both sides of industry.”

Alongside the NLW increase announced yesterday, the Commission recommended significant rises in National Minimum Wage (NMW) rates for younger workers.

The 21-22 Year Old Rate will increase to £9.18, narrowing the gap with the NLW and leaving this age group on course to receive the full NLW by 2024.

NMW rates for 18-20 and 16-17 year olds will increase in line with underlying wage growth, protecting earnings for young workers while recognising their higher risk of unemployment.

The minimum wage for apprentices will increase by 51p, bringing it in line with the 16-17 Year Old Rate.

Rate from April 2022Current rate (April 2021 to March 2022)Increase
National Living Wage£9.50£8.916.6%
21-22 Year Old Rate£9.18£8.369.8%
18-20 Year Old Rate£6.83£6.564.1%
16-17 Year Old Rate£4.81£4.624.1%
Apprentice Rate£4.81£4.3011.9%
Accommodation Offset£8.70£8.364.1%

Commissioners’ advice to the Government this year covers several areas.

The LPC has reviewed minimum wage rules for domestic workers and recommended that an exemption that has prevented au pairs and domestic workers from earning the minimum wage is removed.

Commissioners have also examined the evidence around the NLW’s impacts on different regions of the UK and on groups of workers with protected characteristics.

LPC_summary_of_findings_2021_ADownload

Budget Briefing: Wage boost for millions of low-paid workers

  • The UK’s lowest-paid workers will receive a pay rise next year as the National Living Wage increases from £8.91 to £9.50 an hour – an extra £1000 a year for a full-time worker.
  • From 1 April, young people and apprentices will also see their wages boosted as the National Minimum Wage for people aged 21-22 goes up to £9.18 an hour and Apprentice Rate increases to £4.81 an hour.
  • This builds on the government’s continued action to support people with the cost of living including through the £500 million Household Support Fund, Energy Price Cap, Seasonal Cold Weather Payments and Warm Homes Discount, and keeps the government on track to meet its target to end low pay by 2024-25.

MILLIONS of the UK’s lowest paid workers will benefit from a pay rise next year, as the UK government takes further action to help the country’s poorest households.  

The Chancellor is expected to confirm at Wednesday’s Budget and Spending Review that the National Living Wage will increase from £8.91 to £9.50 an hour – a 59p an hour boost which means a full-time worker on the National Living Wage will see a pay rise of more than £1,000 a year.

The National Living Wage was introduced in 2016 and sets the minimum hourly pay a person over the age of 23 can earn when working.

Rishi Sunak is also set to announce a wage rise for young people under the age of 23. For those aged 21-22 the National Minimum Wage rate increases to £9.18 an hour, up from £8.36 – a 82p increase.

With apprenticeships a key part of our Plan for Jobs, the minimum hourly wage for an apprentice will also see a boost next year, with an 18 year old apprentice in an industry like construction seeing their minimum hourly pay increase by nearly 12%, going from £4.30 to £4.81 an hour.

Chancellor of the Exchequer Rishi Sunak said: “This is a government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.” 

By introducing these changes, which are broadly consistent with previous increases, the government accepts all recommendations made by the Low Pay Commission – an independent advisory board which brings together economists, employer and employee representatives.

“The government remains committed to meeting its ambitious target of a National Living Wage of two-thirds of median earnings and expanding it to include workers over the age of 21 by 2024, provided economic conditions allow.

Since 2010, this government has continuously supported working people on the lowest wages – doubling personal tax thresholds, doubling free childcare for eligible working parents – worth up to £5,000 per child per year. It has also expanded Free School Meals to all five to seven-year-olds – saving families £400 a year.

This builds on recent action to support the lowest earners in the winter months, through measures like the £500 million Household Support Fund to help families with their food and utility costs, the Energy Price Cap, Seasonal Cold Weather Payments, and the Warm Homes Discount to ensure low-income households can keep their homes warm over the winter period.

As we enter the next stage of the Plan for Jobs, an extra £500m will also be invested to give people the skills and support they need to find good work as we build back better from the pandemic.

National Living Wage extended to younger workers

The age threshold for the National Living Wage changes from 25 to 23 as the rate increases today (1 April).

The National Living Wage (NLW) will increase on Thursday 1 April to £8.91, giving a real-terms pay rise to millions of workers. At the same time, the age threshold for the rate will move from 25 to 23, meaning that thousands of young workers will be eligible for a higher wage floor.

These changes follow recommendations made to the Government by the Low Pay Commission (LPC) and are a first step towards the target of the NLW reaching two-thirds of median earnings for workers aged 21 and over by 2024.

In the 3 March Budget, the Government asked the LPC to monitor and evaluate the impact of these changes and recommend the rate that should apply from 2022. They asked the LPC to monitor developments in the labour market and advise on whether the target is achievable in the timeframe. The LPC will make its recommendations to Government on the 2022 National Minimum Wage rates in October.

Bryan Sanderson, Chair of the Low Pay Commission, said: “This has been an extraordinary year for all of us, but particularly for minimum wage workers, many of whom have worked throughout the pandemic in frontline roles or have worked in the sectors that have been hardest hit by lockdown measures.

“This week’s increase in the NLW is our first step towards the Government’s target of two-thirds of median earnings. It is a real-terms increase, meaning that an hour’s work can buy more than it could last year, at the start of the pandemic. The level of the new rate however also reflects the need to protect workers from job losses.

“Importantly, the NLW will now apply to workers aged 23 and over. This is an important change which is strongly endorsed by the Commission. Young people should be fairly rewarded for their work. We will seek to understand how young people’s pay and employment are affected by this in our consideration of a further reduction in the NLW age qualification to 21.”

The LPC has today published a short report which outlines how we will respond to our remit and approach our recommendations on the April 2022 rates, in the context of economic uncertainty and recovery from the pandemic.

The report sets out a pathway to the target of two-thirds of median earnings. Our best current estimate for the on-course NLW rate in 2022 is £9.42, a 5.7 per cent increase. However, this is subject to more uncertainty than usual and is likely to change. We will publish an updated path in the summer.

The other rates of the National Minimum Wage will also increase alongside the NLW.

Previous rateRate from April 2021Increase
National Living Wage£8.72£8.912.2%
21-22 Year Old Rate£8.20£8.362.0%
18-20 Year Old Rate£6.45£6.561.7%
16-17 Year Old Rate£4.55£4.621.5%
Apprentice Rate£4.15£4.303.6%
Accommodation Offset