Minimum wage: Why millions of low-paid workers will get a pay rise on 1 April

Households across Britain are continuing to face the squeeze during the cost of living crisis, with several bills set to rise again.

Millions face a 5% hike in council tax from Saturday (1 April), and many Britons facing higher gas and electricity bills due to the withdrawal of the government's energy support payments.

Households in England and Wales are also looking at the biggest increase in their water bills in almost 20 years from April when they rise to an average of £448 a year, while a record high for supermarket inflation in March – 17.5% – has added a potential £837 to annual household expenses.

But while many households are facing challenging times, some of the lowest paid workers in the country will see a rise in their wages when the national minimum wage (NLW) increases from Saturday.

Watch: Inflation jump deepens UK cost-of-living crisis

Around 1.7 million workers are set for a "significant" pay boost as the minimum wage for workers aged 23 and over rises to £10.42 an hour.

The 92p rise, the equivalent to nearly 10%, has been described by the Resolution Foundation as the biggest annual cash rise in the minimum wage's 24-year history.

The think tank said the scale of the latest increase means lowest-paid workers will enjoy a "rare" real-terms pay boost.

What is the minimum wage?

The national minimum wage is the minimum pay per hour that almost all workers are entitled to. The national living wage is higher than the national minimum wage – workers get it if they’re over 23.

The minimum wage was introduced in April 1999, when it was £3.60 for workers aged 22 and over, and was described as having "transformed" pay inequality across Britain.

The aim of the minimum wage was to combat the issue of poverty pay – where people's earnings don't cover enough to actually live.

All companies have to pay the minimum wage, no matter how small they are.

Minimum wage rates vary by age - the national minimum wage applies to all workers of school leaving age, while the national living wage kicks in for those over 23.

What is the new minimum wage?

Since 1 April 2022, the national living wage has been £9.50 per hour but from Saturday (1 April), it will rise to £10.42.

Around 1.7 million workers currently earning up to 5p above the current minimum wage will directly benefit in full from the increase.

However, it is believed that another five million low-paid workers will benefit indirectly from the rise as employers try to maintain differentials between pay bands.

But workers' unions have argued that the rise still doesn't cover soaring food prices and inflation.

TUC general secretary Paul Nowak said: "A large chunk is going to be wiped out by soaring energy bills, and with food prices shooting through the roof, many low-paid workers will not see a positive difference in their spending power.

"It’s time to put an end to low-pay Britain. That means getting the minimum wage to £15 per an hour as soon as possible, and it means introducing industry-wide fair pay agreements so that all workers have a minimum set of pay and rights – starting with social care and the ferries sector."