The UK’s “national living wage” is go up to £9.50 an hour from next April, meaning a pay rise for millions of low-paid workers.
Ministers have accepted the Low Pay Commission’s recommendation for a 6.6% increase from £8.91, which applies to workers aged 23 and over. For those aged 21 to 22, the minimum will increase from £8.36 to £9.18.
The government will say that the rise represents an increase of about £1,000 a year for a full-time worker, arguing this goes some way towards compensating the low-paid who are losing out from the £1,000 a year cut in universal credit, and the effect of inflation on household budgets.
The increase “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”, said, the chancellor Rishi Sunak.
The commission, an independent body that sets the rate, submitted its recommendations to the government last week, and Sunak will confirm the rise at the budget.
In the budget on Wednesday, Sunak is also likely to confirm the government is targeting a rise in the national living wage to more than £10 by the time of the next election.
With inflation running high, he is also set to say that the “pause” on public sector pay that affected 2.6 million teachers, police and civil servants will be lifted in April.
The chancellor imposed the freeze last November and it came into force in April. At the time, he said it was unfair for public sector workers to get a rise while many of their private sector counterparts were being furloughed or losing their jobs.
But with wages in many sectors rising, and the prime minister using his party conference speech to highlight the prospects for a “high-wage economy”, that argument no longer applies.
However, each Whitehall department will have to fund any pay increases from within its own budget, and analysis by the Trades Union Congress shows the pay of many public sector workers has fallen significantly in real terms after years of tight settlements.