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Minimum wage 2021: When will it go up?

Treasury announces increase ahead of chancellor Rishi Sunak’s Autumn Budget

Joe Sommerlad
Wednesday 27 October 2021 10:57 BST
Related video: Chancellor Rishi Sunak defends the rise in taxes to fund health and social care in the UK

Ahead of UK chancellor Rishi Sunak’s Autumn Budget, the Treasury announced that the national minimum wage for those aged 23 and over will rise to £9.50 an hour, an increase of 6.6 per cent on the current £8.91 per hour.

Those aged 21 to 22 will see an 83p rise from the present £8.36 to £9.18, those aged 18-20 will earn 27p per hour more, taking them from £6.56 to £6.83, and those aged 16-17 will receive 19p more, a boost from £4.62 to £4.81.

The government said the increases were “broadly consistent” with previous rises - which usually take place in April - which it said had impacted between 1.5 and 2.5 million workers.

“This is a government that is on the side of working people,” Mr 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.”

The increases will come into effect at the national level, but are distinct from the voluntary Living Wage, which is set by the Living Wage Foundation and currently stands at £10.85 for London-based workers and £9.50 for those living anywhere else in the UK.

Labour has said it wants a minimum wage of at least £10 but Sir Keir Starmer’s leadership has resisted calls from his own members and unions to commit to gradually raising the rate to £15 an hour.

“This underwhelming offer works out at £1,000 a year less than Labour’s existing plans for a minimum wage of at least £10 per hour for people working full-time,” said Bridget Phillipson, the party’s shadow chief secretary to the Treasury.

“Much of it will be swallowed up by the government’s tax rises, universal credit cuts and failure to get a grip on energy bills.”

Liberal Democrat Treasury spokesperson Christine Jardine also said the wage rise would be offset by the national insurance rise and universal credit cut.

“Ahead of the budget, people will be looking to the chancellor’s announcement of a pay rise to help them. Instead they will be bitterly disappointed to see almost half of any rise snatched away by the Treasury before it even reaches their bank accounts,” she said.

Prime minister Boris Johnson previously trailed the increase during his speech to the Conservative Party Conference on 6 October when he said he wanted to move the country towards a “high wage, high skill, high productivity economy” as the gradual recovery from the coronavirus pandemic continues.

Mr Johnson’s speech to colleagues in Manchester - loaded with fruity turns of phrase, knowing historical allusions and jokes at the expense of his Cabinet secretaries but light on new policy - arrived on the same day that his government’s universal credit cut came into effect.

That decision saw an estimated 6m unemployed and low-paid workers losing out on £20 a week in benefits after an “uplift” was introduced at the start of the Covid-19 outbreak last March to support families when lockdown sparked a wave of redundancies, furlough and lost income.

Under pressure to reverse the cut from political rivals and charities, who warned of dire consequences like 500,000 people, including 200,000 children, being driven into poverty, Mr Johnson’s administration remained unmoved, insisting it is employers paying higher wages, not claimants receiving taxpayer-funded benefit rises, that will put Britain back on its feet after being blasted by the “fiscal meteorite” of the coronavirus.

Deputy prime minister Dominic Raab had foreshadowed his boss’s message during an interview with Sky News that morning in which he declared: “As we come through the pandemic, with youth unemployment going down, employment going up, we need to transition. We don’t want to see people reliant on the welfare trap.”

Mr Raab also spoke of a need to wean Britain away from the “cheap drug of unskilled labour from abroad” in the wake of Brexit, suggesting more enticing salaries was the key to making the most of the UK’s native workforce.

A contemporaneous story in The Times suggesting Mr Johnson was only weeks away from signing-off on a minimum wage rise reported that the lowest earners on the National Living Wage, paid to those over the age of 23, could soon receive £9.42 an hour, an increase of just over five per cent, but the Treasury’s new announcement surpasses that.

The Low Pay Commission, which advises the government on the issue, had previously recommended that same £9.42 per hour figure in a report published earlier this year.

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