Chancellor John Healey is poised to announce a pay rise of nearly 4 per cent for low-wage workers in Wednesday's Budget, according to reports. An increase of 3.9 per cent in the main adult national living wage will take the hourly rate from £12.71 to around £13.20 from next April, the FT reported.
The lower rate for 18 to 20-year-olds will also rise by 3.9 per cent to around £11.27, despite a previous Labour manifesto pledge to equalise it with the adult rate as soon as possible. The shift reflects widely voiced concerns by businesses and economists that young people are being priced out of the jobs market.
Pay boost for over a million workers
More than a million low-paid workers are set for a pay boost on April 1 2027. Businesses have been concerned at the rise of the wage, and have blamed cost increases for low employment opportunities for the young. Earlier this year Simon Emeny, executive chairman of Fuller's, previously said Government policy to improve pay is having the "opposite effect" as businesses are hiring fewer workers.
Ministers made the announcement as they set out a series of "everyday fixes" to help people with the cost-of-living crisis, which are expected to feature in Wednesday's Budget. They also plan to make a higher tax-free mileage allowance of 55p permanent, and to slash tariffs on a range of popular foods, including chocolate, beans and gherkins, to make them cheaper for shoppers.
Everyday fixes and parental pay
The tariff cut is also aimed at bringing down the price of fertiliser for farmers, and kerosene for households which use the fuel for heating. Elsewhere, ministers plan to extend parental pay to more than 150,000 parents each year, including self-employed fathers who had previously missed out.
Prime Minister Andy Burnham said: "We are taking on the big challenges facing the country but that doesn't mean losing sight of the everyday problems that cost people money or simply aren't fair. If you're a nurse driving for work, a parent spending those precious first weeks with your new baby, or an unpaid carer picking up an extra shift, these changes will make life a little easier and put more money back in your pocket."
Further measures at the Budget
Mr Burnham, who is now in his 100th day in office, has announced a series of steps to help people and businesses with living costs since he came to power. These include cutting VAT on energy bills this winter, and slashing business rates for pubs and clubs. The Prime Minister said the Government will "go further to give families and businesses the breathing space they need" at the Budget on Wednesday.
One of the steps Mr Healey is to announce is an increase in the minimum wage by nearly 4%, according to the Times. The national living wage is expected to rise from £12.71 to £13.20 at the Budget, the newspaper reported. But in a manifesto-breaking move, the Chancellor is expected to end the trend of hiking the national minimum wage for those aged 18 to 20 by more than the rate for older workers. It will instead rise roughly in line with the national living wage, the Times said.
The Sun meanwhile reported that Mr Healey will freeze fuel duty, as a means of protecting motorists from an extra cost at the petrol pump. The tax was due to be unfrozen for the first time in 16 years, but Mr Healey is to keep it at 52p per litre amid concerns about the impact of the Iran war, the Sun said.
On Monday, it was disclosed that the Budget will deliver a £432 million boost to help ensure homeless people are off the streets by Christmas. Mr Burnham said he wanted to give "every single person" sleeping on the streets an offer of help by the end of this year.
