Chancellor Announces Record Minimum Wage Increases

Chancellor Rachel Reeves has announced significant pay increases for millions of workers, including a 6.7% hike in the National Minimum Wage, raising it from £11.44 to £12.21 per hour for those over 21, effective April 2025. Additionally, the wage for 18 to 20-year-olds will see a historic 16% rise, from £8.60 to £10 per hour, translating to an estimated annual increase of £2,500 for full-time workers in that age group. Alongside these changes, the government will end the freeze on income tax thresholds starting in 2028, allowing for inflation-linked increases, which was a shift from earlier expectations of an extension. However, benefit increases will be modest, with a 1.7% rise translating to an annual boost of £253 for many claimants. Industry leaders have expressed concern that these wage increases may undermine competitiveness and reduce business investment. The government maintains that these changes fulfill their promise of a genuine living wage and are necessary for supporting low-income families amidst rising living costs.