Workers to receive extra £900 a year from living wage increase

Rachel Reeves has announced an increase in the National Minimum Wage and National Living Wage ahead of a Budget she says will aim to cut the cost of living.

From April 1, the National Living Wage will rise by 4.1% to £12.71 per hour for those aged 21 and over, benefitting around 2.4 million low-paid workers – in line with recommendations from the Low Pay Commission.

A full-time worker will see their gross annual earnings increase by £900 as a result of the uplift.

The National Minimum Wage for 18-20 year-olds will rise by 8.5% to £10.85 per hour, providing an annual earnings increase of £1,500 for full-time workers and marking further progress towards the government’s goal of establishing a single wage band.

For 16 and 17-year-olds and those on apprenticeships, the National Minimum Wage will rise to £8 an hour.

READ MORE: What do MPs, trade unions and think tanks want from Reeves in Budget 2025?

The Chancellor said: “I know that the cost of living is still the number one issue for working people and that the economy isn’t working well enough for those on the lowest incomes.

“Too many people are still struggling to make ends meet. And that has to change.

“That’s why today I’m announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work.

“These changes mean that from April, the National Minimum Wage and the National Living Wage will boost the pay packets of around 2.7 million workers.

“We also need to support businesses while protecting jobs and the economy. And that’s why we’ve secured trade deals with the US, with the EU and with India.

“It’s why we’re committed to economic stability – to help interest rates fall further.

“It is why we have capped corporation tax, and why we’re reforming business rates, particularly so that they help the high street.

“In this week’s Budget, I’m going to deliver our mandate for change, and I’m determined to cut the cost of living for everyone.”

The announcement comes the evening before the Chancellor unveils this year’s Budget, with measures including extending the sugar tax to milkshakes and scrapping the two-child benefit cap among the policies set to feature.

Reeves has promised Labour MPs that tomorrow’s Budget will be “progressive” but warned the Budget would be “a package not a pick and mix… you can’t say I like the cola bottles but not the fruit salad”.

Amid a slump for Labour in the polls and speculation of a possible leadership challenge to Keir Starmer, the Budget has been branded as “make-or-break” by trade unions, think tanks and MPs alike.

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