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National Living Wage to rise 6% in Budget

The National Living Wage may rise to as much as £12.20 an hour by April 2025

Finance economics economy money inflation cost of living crisis bills fuel debt

The National Living Wage will be increased by more than 6% to approximately £12.21 an hour in the Autumn Budget, it has been reported. The changes are expected to come into effect on 1 April 2025.

Chancellor of the exchequer Rachel Reeves is due to announce the above-inflation pay rise on 30 October.

The current National Living Wage, of £11.44 per hour, is the threshold for workers aged over 21, with lower rates applied to those aged 18 to 21. The lowest rate is £8.60.

Despite the Labour Party pledging to remove “discriminatory” age bands for the National Living Wage, in July the government asked the Low Pay Commission to establish a separate pay rate for 18-to-20-year-olds in 2025, but with a view to removing age bands for the minimum rate in the future.

Fed calls on government to protect shop owners as living wage rises

Retailer reactions

Prem Uthayakumaran, owner of three Nisa stores in Hertfordshire, told Better Retailing he “supports” his employees with regards to the wage increase, but he is “very nervous” for the Budget.

He said: “I’m on the side of giving better wages to employees that work for us, we need to increase the wages in line with other concerns. Cost-of-living has been thrown at them, and I want to support them.

“My worry is of the continuous intervention by the government. This includes business rates, fuel duties, and other expenses that are going up. how much can we absorb, especially with news that National Insurance Contributions may be increasing too?”

Vidur Pandya, of  Kislingbury Mini Market & Post Office in Northamptonshire, told Better Retailing the move will “hinder growth investment”.

He added: “It’s another blow for us, especially with business rates at the moment. I don’t see positive changes happening there, especially if they eventually get rid of the age brackets, and with employers’ National Insurance Contribution going up. There are just more costs to the employer. We were looking to recruit another member of staff, but have to wait to see the costings to the business.”

Meanwhile, Vikas Sharma, of Thrifty’s in St Helen’s, Merseyside, said the increase is “crazy”, and “will send a lot of small businesses under”.

Ron Patel, of Ron’s News in Droitwich, Worcestershire, said more money in employees pockets “could be a good thing for the wider economy – we just don’t know yet”.

“A wage increase is bound to happen. We’re not sure how this Budget is going to impact us, but at the moment it seems worrying for smaller businesses.”

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