National Living Wage to rise to £9.50 an hour from April 2022
The National Living Wage is to increase to £9.50 an hour from 1 April 2022, the Treasury has confirmed.
It will rise from £8.91 for those aged 23 and over, a 59p an hour boost which the government said would give full-time workers a pay rise of more than £1,000 a year.
Chancellor Rishi Sunak is to announce the move, alongside other wage rises, in the Budget on Wednesday (27 October).
The National Minimum Wage, which applies to those aged 21-22, will also increase from £8.36 an hour to £9.18.
And the minimum hourly rate for apprenticeships is also being boosted nearly 12% from £4.30 to £4.81 an hour for those aged 16-18 or aged 19 or over in the first year of their apprenticeship.
Those aged 19 or over who have completed the first year of their apprenticeship are entitled to the National Minimum Wage or National Living Wage rate for their age group.
Chancellor Rishi Sunak said: "This is a government that is on the side of working people. 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."
The government said it remained committed to meeting its target of the National Living Wage reaching two-thirds of median earnings and expanding it to include workers over the age of 21 by 2024, providing economic conditions allow.
However Jane Gratton, head of people policy at the British Chambers of Commerce, warned businesses were facing a "cashflow squeeze".
"While businesses support the minimum wage, the size of this increase – with less than six months' notice - will cause significant concern, especially with so many smaller firms already struggling," she said.
"There is a limit to how much more firms can continue to absorb rising costs before they have to raise their own prices adding to inflationary pressures. It is therefore vital that companies are not faced with any further up-front costs for the remainder of this Parliament."
UKHospitality chief executive Kate Nicholls called on the government to introduce wider reforms around business rates and a permanent VAT cut to support the industry.
She said: "People lie at the heart of any hospitality business and the industry is committed to good and fair pay for its highly-valued staff. As a result, wages in the sector are already increasing steadily – approximately 20% over the last five years, with further growth since post-Covid reopening.
"This is against a backdrop of massive post-pandemic challenges for businesses in the sector, many of which have had to take on huge debts in order to survive and now face soaring inflation costs of 13%. Further support is therefore vital if the sector is to be able invest in its people, drive job creation and contribute to wide economic recovery.
"The most powerful measures the government can now take to further support the industry in this, include immediate root and branch reform of business rates and to permanently maintain the current 12.5% rate of VAT."
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