Chancellor John Healey announced he will increase the national minimum wage and national living wage by 3.9%, taking the over 21 rate from £12.71 to £13.20 an hour.
He said: "For 2.3 million of our lowest paid workers, I am increasing both the national minimum wage and the national living wage by 3.9%.”
Mr Healey opened his Budget statement by saying it is for “the working people of Britain, for British businesses, big and small”, built on “fiscal discipline”.
He said: “First, by giving Britain some breathing space on the cost of living and the cost of business,
“Second, backing the enterprise of British business to unleash innovation and growth in every postcode
“And third, by tackling the big challenges on energy, on national security, on public service transformation and on housing.”
Real Living Wage vs National Living Wage: what is the difference?
The real Living Wage and the Government’s National Living Wage are often confused, but they are different pay rates with different purposes.
The National Living Wage is the legal minimum employers must pay eligible workers aged 21 and over. The real Living Wage is a voluntary rate calculated independently to reflect the cost of living, with a separate, higher rate for London.
The real Living Wage currently stands at £14.10 an hour across the UK and £15.45 in London.
- National Living Wage: The Government’s legal minimum hourly rate for eligible workers aged 21 and over.
- National Minimum Wage: The legal minimum for younger workers, with rates varying by age and apprenticeship status.
- Real Living Wage: A voluntary hourly rate independently calculated to reflect the cost of essential goods and services.
- London Living Wage: The real Living Wage rate for London, where living costs are recognised as being higher.
The key difference is that the Government’s rates are legal minimums, while the real Living Wage is a voluntary benchmark based on the cost of living.
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Who is entitled to the real Living Wage?
The real Living Wage is a voluntary employer commitment that covers workers aged 18 and over.
Nearly 17,000 employers, including IKEA, KPMG and LUSH, have signed up to pay it, according to the Living Wage campaign. The movement says almost half a million workers receive a pay increase each year as a result.
However, workers do not automatically have a legal right to the real Living Wage. They are entitled to the statutory minimum that applies to them unless their employer has committed to a higher rate or their contract provides for one.
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