The Chancellor of the Exchequer, Jeremy Hunt, has announced that the next increase in the National Living Wage will be to at least £11.00 per hour.
National Living Wage
Currently, the National Living Wage is £10.42 per hour. This is £0.48 below the rate of the Real Living wage, which is currently £10.90 per hour, and £1.53 below the London Living Wage, which is £11.95 per hour.
The Government has a target to increase the National Living Wage to two thirds of median earnings by April 2024. In its projections, the Low Pay Commision estimate that the National Living Wage will need to rise to £11.08 per hour in April 2024 to hit that target, an increase of 6.3% on the rate of £10.42 that has applied since the 1st April 2023.
In his speech to the Conservative Party Conference on the 2nd October 2023, Jeremy Hunt, the Chancellor of the Exchequer, confirmed that the National Living Wage will rise to at least £11.00 per hour.
The Chancellor is ultimately due to confirm what the precise increase in the National Living Wage (along with the rates in relation to the National Minimum Wage) will be in his upcoming 2023 Autumn Statement, which he will deliver on the 22nd November 2023.
Nevertheless, increases in the National Living Wage and National Minimum Wage are usually based upon recommendations made by the Low Pay Commission, and in his announcement on the 2nd October 2023, the Chancellor confirmed that he would approve whatever recommendation is made by the Low Pay Commission so long as it is at least £11.00 per hour.
According to Sky News, given the rate at which wages have been growing, the new rate for the National Living Wage is likely to be around £11.10 per hour. That is just above the £11.08 required to hit the target of two thirds of median earnings
In his speech to the Conservative Party Conference, the Chancellor stated: "Today I take a step forwards towards completing another great...reform, the National Living Wage. We promised in our manifesto to raise the National Living Wage to two thirds of median income – ending low pay in this country. At the moment it is £10.42 an hour and we’re waiting for the Low Pay Commission to tell us next year’s recommendation. But I confirm today, whatever that recommendation, we will increase the National Living Wage to at least £11 an hour next year. That’s a pay rise for 2 million workers."
Reaction
Responding to the announcement, the director of the Living Wage Foundation, Katherine Chapman, stated: "A rise in the statutory National Living Wage from next April is welcome news for low paid workers, but may fall short of the real Living Wage next year, the only rate that is independently calculated based on the cost of living. The new real Living Wage rates will be announced later this month on the 24th October, where we expect a significant increase."
Autumn Statement
It used to be case that there was just one annual Budget in the UK, which normally took place in March of each year, just ahead of the new financial year (which begins on the 1st April each year). However, since 2017, the Budget has been split into two, with an Autumn Statement (the main Budget - which usually takes place in November each year to provide time for the subsequent Finance Act to be passed before the commencement of the new financial year) and a Spring Statement / Budget (which normally takes place in March of year, and which is designed to provide an update on progress made since the previous year's Autumn Statement)
Hence, given that the upcoming Autumn Statement will be the main Budget, the announcements in relation to the new rates for the National Living Wage and National Minimum Wage will be one of many.
In its submission in relation to the 2023 Autumn Statement, the CBI have called upon the Chancellor to focus upon growth. They argue that: "The best action we can take is to create an environment that unlocks business investment in service of sustainable growth and set out a vision for the UK on a global stage. To do this, it’s critical we give firms policy certainty and confidence to increase investment and capacity in our economy."
In our opinion, the best way to promote growth would be to reduce corporation tax for the reasons we set out in an article we published last March.
