Robert Peston: UK living wage set to rise to £9.50 in upcoming Budget
Political Correspondent Carl Dinnen reports on the increase in the National Living Wage to be announced in the Wednesday's Budget.
The national living wage is set to be increased from £8.91 per hour to £9.50 I understand, on the advice of the Low Pay Commission.
The recommendation has been put to the business secretary, Kwasi Kwarteng , who is the minister responsible for the Commission.
The 6.6% increase in what is the minimum wage for all those over 23 years old has been accepted by Kwarteng.
It will be formally announced by Chancellor Rishi Sunak in the Budget on Wednesday.
Political Editor Robert Peston on how this rise might be outpaced by the cost of living
He said: "This is a government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.”
The rise is inflation-busting, and will go some way to compensating the low paid for recent significant rises in the price of energy, petrol and food, at a time when the £1,000 a year top-up to Universal Credit has been (controversially) removed.
The rise will increase employers' costs directly and probably also via an upward ratchet, the wage rates of higher paid staff.
So companies may feel under greater pressure to increase prices, which in turn would increase the likelihood of the Bank of England putting up interest rates, perhaps at the next meeting of its Monetary Policy Committee on Thursday.
There will also be increases to the minimum wage rate for younger people and apprentices.
If they are raised 6.6% too, in line with the main headline rate, a 21-22 year old would receive £8.91, and an 18-20 year old would receive £6.99 an hour. The rate for apprentices would increase to £4.58 per hour.
The pay rises would take effect from April 1 next year, so they won't absorb the impact of the current cost-of-living surge for some months to £4.58.
The living or minimum wage for 21 and 22 year olds will in fact go up faster than the adult living wage, by 9.8% to £9.18. And the rate for apprentices will rise 11.9% to £4.81.
As I said earlier, the adult minimum will rise 6.6% to £9.50. I would expect the next rise, to be announced in a year, to go through £10 an hour, given what is happening to the cost of living.