Major increase to National Living Wage and its impacts

Two million people will receive a pay rise next year when the National Living Wage increases to at least £11 an hour.

It means the annual earnings of a full-time worker on the National Living Wage – currently set at £10.42 an hour ­– will rise by more than £1,000.

It will be welcome news for the lowest paid, but some commentators have pointed out the burden of the rise will land on businesses, many of which are already struggling with rising costs.

The Government has already set a target for the National Living Wage to reach two-thirds of median hourly pay by next October.

The rate is decided each year, based on the advice of independent advisory group, the Low Pay Commission, which said it should be between £10.90 and £11.43 to meet the Government’s target.

Wages for lowest paid are £9,000 higher than in 2010

Chancellor of the Exchequer, Jeremy Hunt, committed to accept the commission’s recommendations at the Conservative Party Conference speech in Manchester.

He said: “We promised in our manifesto to raise the National Living Wage to two-thirds of median income – ending low pay in this country.

“At the moment it is £10.42 an hour and we are waiting for the Low Pay Commission to confirm its recommendation for next year. But I confirm today, whatever that recommendation, we will increase it next year to at least £11 an hour.

“The wages of the lowest paid are over £9,000 a year higher than they were in 2010 – because if you work hard, a Conservative government will always have your back.”

‘Slap in the face’ for many businesses

The National Living Wage is the lowest amount workers aged 23 and over can be paid per hour by law and is currently £10.42 an hour. Younger workers have lower rates.

Michael Kill, chief executive of the Night Time Industries Association (NTIA), is reported as saying the news was a “slap in the face” for many struggling businesses.

“The night-time economy has been battered by the pandemic, with our venues facing closures, restrictions, and crippling financial losses,” he said.

“Now, just as we're trying to get back on our feet, the Chancellor decides to unload the burden of a wage increase squarely on to the shoulders of operators.

“While we support fair wages, the timing couldn't be worse. It's a cynical attempt to score political points at our expense.”