MSE News

Budget 2018: National living wage to rise next April

The national living wage paid to workers aged 25 or over will rise from £7.83/hour to £8.21/hour next April, Chancellor Philip Hammond announced today.

The 38p increase represents a 4.9% rise, meaning the UK's lowest paid workers will see their pay rise above current levels of inflation. It amounts to an annual increase of about £690 for a full-time worker.

The Government says by 2020 it wants the national living wage to be 60% of 'median earnings' (that's an average which is the middle amount of what workers earn - ie, half of workers earn less than it and half more). 

What is the national living wage?

Introduced in July 2015 by the then Chancellor George Osborne, the compulsory national living wage is the lowest wage which can legally be paid to employees aged 25 or over. It is adjusted every April.

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

Compulsory living and minimum wages

TABLE_CELL_STYLE National living wage (hourly) National minimum wage (hourly) (1)
  Age 25+ Age 21-24 Age 18-20 Age under 18 Apprentice
Current level £7.83 £7.38 £5.90 £4.20 £3.70
From April 2019 £8.21 £7.70 £6.15 £4.35 £3.90

(1) Applies from school leaving age, which varies around the UK.

However, the campaign group Living Wage Foundation believes employees currently need to earn at least £8.75/hour (£10.20/hour in London) to live and support their families. 

When the national living wage was first announced, MoneySavingExpert.com founder Martin Lewis said: "This is not a living wage. [George Osborne] has naughtily nicked the name from the Living Wage Foundation... By using the valued brand of 'the living wage', even though he's not paying that amount, he hopes to get extra credibility."