Minimum wage to rise by 6.7% as Labour seeks to use Budget to tackle poverty pay
Chancellor Rachel Reeves has announced a rise of 6.7% in the minimum wage. The hike will result in an increase for over three million workers in the UK and 200,000 people on low incomes in Scotland.
Younger workers will get an even bigger increase as Labour believes 18 to 20-year-olds should eventually be paid the same as older workers.
Under the plan, the “national living wage” will rise from £11.44 to £12.21 an hour from April for people who are 21 or over. The boost is worth £1,400 a year for an eligible full-time worker. The rate 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.
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Reeves, who delivers her first Budget on Wednesday, 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.”
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.”
Scotland Secretary Ian Murray said: "Labour's plans to make work pay will deliver a pay rise for Scotland, with the biggest increase for young workers on record, as well as more rights and security at work for everyone. These changes will help 200,000 of the lowest paid workers in Scotland. This is the change Scotland voted for and the beginning of the change Scotland needs to see. The budget tomorrow will herald an era of growth for Scotland.”
However, the rise may antagonise businesses already worried about Budget tax rises.
Reeves is widely expected to raise national insurance contributions for employers, a move blasted by firms. She will also use her Budget speech on Wednesday to make “difficult decisions on spending, on welfare and taxation” and change the way national debt is measured to give her more flexibility to borrow.
She is also expected to announce a big rise in NHS spending.
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