The chancellor of the exchequer has confirmed the national living wage will increase from £11.44 to £12.21 an hour from April 2025.

The 6.7 per cent increase – which is worth £1,400 a year for an eligible full-time worker – is a step towards delivering the Labour Party’s manifesto commitment to make sure the minimum wage is a genuine living wage.

Jonathan Reynolds, business secretary, said, “Good work and fair wages are in the interest of British business as much as British workers.

“This government is changing people’s lives for the better because we know that investing in the workforce leads to better productivity, better resilience and ultimately a stronger economy primed for growth.”

According to the government, the move builds on its commitment to be pro-business, pro-worker and pro-growth. It delivers a key plank of the ‘Plan to Make Work Pay’, which is already set to boost the pockets of the lowest-paid workers by up to £600 a year through the Employment Rights Bill.

The government has said the plan will boost productivity, creating a workforce that is fit and ready to help deliver its mission to kickstart economic growth, with good jobs and growth in every part of the country making everyone better off.

Rachel Reeves, chancellor of the exchequer, said, “This government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”

The national minimum wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour, the largest increase in the rate on record. This £1.40 increase will mean full-time younger workers eligible for the rate will see their pay boosted by £2,500 next year. This marks the first step towards aligning the national minimum wage and national living wage to create a single adult wage rate, which would take place over time.

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