The national minimum wage paid to workers aged 25 or over will rise from £7.20 to £7.50 next April, Chancellor Philip Hammond has announced.

The 30p boost amounts to a 4% rise, meaning the UK's lowest-paid workers will see their pay rise well above current levels of inflation. It amounts to an annual increase of around £500 for a full-time worker.

The Government has previously said it plans to raise the what it calls the 'national living wage' - the compulsory minimum rate that can be paid to employees age 25 and over - to £9/hour by 2020.

What is the national 'living' wage?

Introduced in July last year by then-Chancellor George Osborne, the compulsory national 'living' wage is the lowest wage which can legally be paid to employees aged 25 or over. In reality, it is another name for the minimum wage, as it is not based upon an assessment of the cost of living. Its rates are adjusted every April.

It's higher than the pre-existing compulsory national minimum wage, which is also rising and continues to apply at varying rates to employees aged under 25 (as the table below illustrates).

Compulsory Minimum and Living Wages

  National 'living' wage National minimum wage*
  Age 25+ Age 21-24 Age 18-20 Age under 18 Apprentice
Current level: £7.20 £6.95 £5.55 £4.00 £3.40
From April 2017: £7.50 £7.05 £5.60 £4.05 £3.50
*Applies from school-leaving age, which varies around the UK

A £7.50 national living wage still falls far short of what the Living Wage Foundation has called for – it believes employees currently need to earn at least £8.45/hour (£9.75/hour in London) to live and support their families.

When the national 'living' wage was first announced, founder Martin Lewis said: "This is not a living wage... [George Osborne] has naughtily nicked the name from the Living Wage Foundation."

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