Issued by: Department for Business and Trade and HM Treasury

Over 3 million eligible workers set for a pay rise of up to £1,400 a year as new National Minimum Wage and National Living Wage rates take effect.

• Pay rise worth an extra £1,400 per year for an eligible full-time worker delivered from today.

• New rates put more money back into the pockets of working people, boosting productivity and ending low pay.

• More money to be spent in Britain’s high streets, kickstarting growth as part of the Plan for Change.

Eligible full-time workers are set for a pay boost of up to £117 from this month thanks to the Government’s increase in the National Living Wage, which comes into effect today.

The move – which delivers the Government’s pledge to increase living standards in the Plan for Change - will put more money straight into working people’s pockets.

Thanks to the decision made in the Autumn Budget, the uplift means more money can be spent on the high street to boost the local economy and help kickstart economic growth – the Government’s central mission in its Plan for Change.

The changes will also see a pay boost for Britain’s young people – with the National Minimum Wage for younger workers and apprentices seeing a record cash increase.

This is the first step towards removing the unfair minimum wage age-bands that see a 21-year-old getting paid more than a 20-year-old for doing the same job.

Already, the UK is second in the G7 in terms of the minimum wage relative to average wages for a full-time worker – ahead of the US, Germany and Japan. This makes it one of the most financially secure countries in the world for workers.

Deputy Prime Minister Angela Rayner said:

"This pay rise for over 3 million of the lowest paid workers was a priority for this government and means we’re already giving hard working people more money in their pockets and a proper wage increase worth over twice the rate of inflation.

"These changes are part of our Plan for Change – to raise living standards for people across the county, including apprentices and young people, giving them more job security and the huge pay boost they deserve too."

Chancellor of the Exchequer, Rachel Reeves, said:

"In the last Parliament, living standards were the worst on record and sky-high inflation was crushing working people’s finances.

"Today we have raised the national minimum and living wages, meaning the lowest paid will receive an annual pay boost of up to £2,500 – something that wouldn’t have happened without my Budget last year.

"Making work pay is good for workers, will strengthen businesses’ workforces, and will grow our economy for years to come. It’s a key milestone on my number one mission to get more money in people’s pockets as we deliver our Plan for Change."

Business Secretary Jonathan Reynolds said:

"We promised to make low pay a thing of the past. Now, as part of our Plan for Change and the biggest upgrade to worker’s rights in a generation, we are delivering that.

"Low pay is not only bad for workers, it prevents them from spending on our high streets and allowing local businesses to achieve their full potential.

"By ensuring that everyone gets a fair wage for the hours they work, we’re delivering the financial stability needed to kick-start economic growth and ensure our country is fit for the future."

The Government is spending billions to support people suffering with the cost of living pressure that were inherited by the previous administration. This includes:

• £7.8 billion on State Pension spending, in line with the Triple Lock commitment so pensioners don’t get left behind

• £3 billion to freeze the fuel duty – to help Britain’s drivers

• £1 billion, including Barnett impact, to extend the Household Support Fund in England and Discretionary Housing Payments in England and Wales in 2025-2026

• £460 million on Warm Homes – to help the poorest households heath their homes

• £25 million boost for the carers allowance to better support people caring for a loved one.

This is on top of the additional £7.8bn that the government is spending in 25/26 to protect the value of the state pension and to reflect changes in the population.

The Government is clear that the mission to grow the economy and raise living standards is a top priority and a strong economy can only be built when people have financial security whilst in work.

Recent research from ReWAGE and the University of Warwick (https://shorturl.at/tzE5Z) shows that low pay can lead to mental health issues including depression, meaning more lost days and crippling productivity, leaving employers carrying the cost burden as well increasing costs to public services such as the NHS.

By putting more money into the pockets of the lowest paid, this increases workers’ financial security instead offering stability to help increase staff retention and lowering recruitment costs for businesses in the long run.

This uplift is an essential part of the Government’s plan for long-term national renewal and growth.

To ensure workers get the fairest deal, this rise is also the first that has taken into account the cost of living and inflation.

The uplift sits alongside the Employment Rights Bill, the most significant upgrade to workers’ rights in a generation, and commitments to improve economic stability, get Britain building again, kickstart a skills revolution and bring forward a modern industrial strategy, and a plan to tackle inactivity.

The Government recognises that businesses will need more support next year. Ahead of permanently lowering tax rates for high street retail, hospitality, and leisure (RHL) from 2026/27, we have prevented the current RHL relief from ending this April, extending it for one year to ensure that over 250,000 RHL properties see a full 40 per cent reduction on their liability, and we have frozen the small business multiplier.

Julian Richer, founder of both retailer Richer Sounds and the Good Business Charter said:

"One of the best ways to increase living standards and productivity in the UK is to put more money straight into people’s pockets with a National Minimum Wage increase that can be spent in shops and the economy to boost growth.

"From this increase we can expect to see employee morale, productivity and retention all going up and hopefully will benefit millions of workers."

TUC general secretary Paul Nowak said:

"This increase in the national minimum wage will make a real difference to the lowest paid in this country and setting out a path to end the outdated and unfair youth rates will give young workers a boost up and down the country.

"More money in working people’s pockets means more spend on our high streets – that’s good for workers and good for local economies."

Debbie Crosbie, CEO, Nationwide said:

"The Government’s Plan for Change is a welcome and clear plan for growing the economy, strengthening businesses and supporting employees.

"Eliminating low pay will make sure that everyone shares in the progress the country makes.

"Nationwide has long championed the national minimum and living wage and we welcome this focus on improving living standards and boosting productivity."

Peter Jelkelby, Chief Executive and Chief Sustainability Officer, IKEA UK and Ireland said:

"People are at the heart of IKEA’s success, and we recognise the challenges they face from inflationary pressures and rises in the cost of living.

"Businesses rely on a skilled, engaged and committed workforce, so ensuring that wages reflect the cost of living is the right route to providing that."

Centrica Group Chief Executive, Chris O’Shea, said:

"A strong, sustainable economy needs wages that rise in line with productivity and needs to ensure people can live well.

"As a Real Living Wage employer, we applaud this uplift in the National Minimum Wage for the millions of workers who will power the country’s economic growth. Government and business need to work together to drive prosperity to ensure workers get their fair share and to reduce inequality and raising living standards.

"With the right policy choices—particularly in our energy sector—we have a vital opportunity to unlock billions of pounds of investment, boost growth and productivity, while creating thousands more well-paid jobs across the UK."

Danielle Harmer, Chief People Officer, Aviva said:

"We’re proud to be a real Living Wage Employer in the UK, including for our contractors and suppliers who work on our sites.

"Supporting our colleagues to thrive is good for them, our business, and our customers."

Nicola Ryan, Director of Colleague Support at One+All in Greater Manchester, said:

“We are very pleased with the increase to the National Minimum and Living Wage.

“This is great news for the millions of lower paid workers, as we know far too many working parents and their children are in poverty.

“We know that employees who have less financial stress do a much better job which leads to higher productivity and customer satisfaction.”

Notes to editors:

• The changes from 1 April mean:

• The National Living Wage for those aged 21 and over will rise from £11.44 per hour to £12.21 per hour.

• The National Minimum Wage for 18- to 20-year-olds rises from £8.60 to £10.00 per hour.

• The apprenticeship rate, and for 16- to 17-year-olds rises from £6.40 per hour to £7.55 per hour.

• If someone is concerned that they’re not being paid the correct wage, they should speak to their employer. If the problem is not resolved, they can contact Acas (the Advisory, Conciliation and Arbitration Service) by phoning 0300 123 1122, or complain to HMRC in confidence using the link www.gov.uk/minimum-wage-complaint. HMRC looks into every single complaint.

• You can report possible underpayment of the National Minimum Wage to the ACAS Helpline (https://shorturl.at/0Ep1M) and also online to HM Revenue and Customs (HMRC):

• https://www.gov.uk/pay-and-work-rights

• https://www.gov.uk/government/publications/pay-and-work-rights-complaints

• Workers and employers in Northern Ireland can contact the Labour Relations Agency helpline on 03300 555 300 (Monday to Friday, 9am to 5pm) or their website: www.lra.org.uk.

• As of 2023, the UK had the second highest minimum wage bite of the G7 countries, that is the ratio of the minimum wage relative to median wages for a full-time worker. The OECD estimate that the bite of the minimum wage in the UK was around 60%, behind France (62%), and ahead of Germany (52%), Canada (50%), Japan (46%) and the USA (26%).

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