UK Chancellor Trails Minimum Wage Rise to £9.50 Ahead of Budget

Chancellor of the Exchequer Rishi Sunak has trailed a rise in the minimum wage ahead of his budget on Wednesday.

The National Living Wage — which applies to all employees aged 23 and up — will rise from £8.91 per hour to £9.50.

The lower National Minimum Wage rate for those aged 21 to 22 will also rise by a bigger margin from £8.36 to £9.18 per hour, while for apprentices the basic wage will go up from £4.30 to £4.81.

But no increase was announced for under-18s not on apprenticeships and 18-20-year-olds, currently on £4.62 and £6.56 minimum rates.

Other budget details trailed included £14 billion for attracting overseas investment to the post-Brexit UK, and £700 million on a new border and immigration system and maritime patrol boats.

"This is a government that is on the side of working people", Sunak said. "This wage boost ensures we're making work pay and keeps us on track to meet our target to end low pay by the end of this parliament".

Living Wage Foundation director Graham Griffiths welcomed the rise in headline rate to the level of its own definition of a living wage — for those living outside London — as "positive" and "significant".

But he warned the cost of living could continue to rise before the policy is implemented next April, with the foundation set to publish a new benchmark next month as part of its Living Wage Week. The foundation currently defines a living wage for those in the capital as £10.85 per hour.

"These rates will see a substantial gap remain between the real Living Wage and next year's government minimum wage", Griffiths said. "If we're to recover and rebuild over the coming months and years, we'll need to see more employers commit to go beyond the government minimum, do the right thing now, and commit to pay a real Living Wage".

Today's announcement of a 'National Living Wage' rise is a positive step for workers facing rising costs.

But the real #LivingWage, unlike the government minimum is calculated annually on the cost of living. We announce new rates on 15 Nov.

Statement⬇️https://t.co/VFqNBIwj7w pic.twitter.com/dfnPjBmFGs

— Living Wage Foundation (@LivingWageUK) October 25, 2021

But the opposition Labour Party was quick to attack the chancellor's rise as inferior to its promise of £10 per hour — already condemned by the party's affiliated trade unions as nowhere near their demand of a £15-per-hour minimum.

And Labour claimed the 1.25 percent rise in the National Insurance (NI) social security tax to bolster the NHS and pay for elderly care, along with the end of the £20 bonus to Universal Credit (UC) during the COVID-19 pandemic — amounting to around £1,000 per year for unemployed or low-paid recipients — would also eat into the extra wages.

This works out at £1,000/year less than Labour’s existing plans for at least £10 an hour for people working full-time.

Much of it will be swallowed up by the Tory’s tax rises, UC cut & failure on energy bills.

Only Labour is serious about improving the lives of working people. https://t.co/dcUBb7ijzI

— Labour Press (@labourpress) October 25, 2021

However, those earning £20,000 a year — more than the living wage for those working full-time — will pay an extra £130 per year in NI from next April — a small fraction of the £1,000 rise they stand to receive. Part-timers working up to 19 hours per week at the minimum rate would still be below the current threshold for making contributions.

And the budget preview prompted an angry intervention in the House of Commons by Speaker Sir Lindsay Hoyle, who said it was "not acceptable" for ministers to "ride roughshod" over rules against announcing policy outside of the house.

"Ministers will be called to account to this chamber at the earliest possible opportunity", Hoyle said. "At one time ministers did the right thing if they breached before a budget — they walked — absolutely, they resigned".

He added: "It seems to me we have got to a position where if it's not put out five days before, it's not worth it".