Millions of low-income workers in the UK will see a significant pay rise from next week as the National Living Wage increases by 6.7%, Chancellor Rachel Reeves confirmed today.
Beginning April 1, the minimum wage will rise from £11.44 to £12.21 per hour, translating to an annual increase of £1,400 for full-time workers. The National Minimum Wage for younger workers (aged 18-20) will also see a 16.3% jump, rising from £8.60 to £10 per hour.
The Chancellor, speaking during her Spring Statement, emphasized that the wage hike aligns with Labour’s broader economic strategy to support working people and tackle cost-of-living challenges. She highlighted the government’s £1 billion investment to boost employment and pledged further welfare reforms.
“This Labour government was elected to bring change,” Reeves told Parliament. “We are increasing the National Living Wage to give three million people a pay rise from next week.”
While the increase outpaces the 3.2% inflation rate forecasted by the Office for Budget Responsibility (OBR), some business groups warn that higher labour costs could strain small businesses.
Tina McKenzie, policy chair of the Federation of Small Businesses (FSB), urged the government to provide tax relief for employers, stating, “Raising employer National Insurance Contributions at the same time as increasing the National Living Wage could push some small businesses to the brink.”
Additionally, the Resolution Foundation noted that this is the smallest increase in three years, following a 10% rise last year. Principal economist Nye Cominetti described the move as “sensible” given the upcoming increase in employer tax contributions but urged the government to adopt a more ambitious approach in future wage reviews.
The government also hinted at plans to introduce a single adult wage rate across the UK, ensuring wage growth remains in line with the cost of living. Labour’s directive to the Low Pay Commission now requires it to factor in living costs when recommending future wage adjustments.
With wages set to rise next month, workers stand to benefit from higher earnings, but small businesses face mounting financial pressures—fueling ongoing debates about the economic impact of Labour’s wage policies.
