Jeremy Hunt confirms National Living Wage to rise next year

Watch live: Jeremy Hunt delivers Autumn Statement

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The Chancellor outlined plans to increase the country’s living wage from an hourly wage of £9.50 to £10.42 an hour. Experts believe this will benefit around two million workers and represent a pay rise of 9.7 percent This comes amid the nation’s ongoing cost of living crisis which is placing unprecedented pressure on the general public’s finances.

Who gets National Living Wage?

This wage is the minimum amount all businesses have to pay their workers if they are aged 23 or over.

Anyone younger than 23 could be paid the National Minimum Wage instead, which is slightly less than the National Living Wage.

While the latter is £9.50 per hour under 2022 payment rates, those aged between 21 and 23 can get a minimum of £9.18 an hour.

Notably, anyone working between the ages of 18 and 20 could get a minimum wage of £6.83 hourly.

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Prior to today’s Autumn Statement, Jeremy Hunt warned spending cuts and tax rises were on the horizon to mitigate the rise in the cost of living.

Earlier this week, it was revealed the UK’s Consumer Price Index (CPI) rate of inflation for October reached a 41-year high of 11.1 percent.

Even with the Government’s price guarantee in place, the average bill for a household of normal usage has risen by 27 percent since October.

While a wage rise would appear to remedy this difficult financial situation, experts are warning about the dangers of “fiscal drag” in light of other announcements in Mr Hunt’s Budget.

Connor Campbell, a personal finance expert at NerdWallet, warned the announcement of a National Living Wage rise in the Autumn Statement may not be enough for some who are struggling.

Mr Campbell said: “The living wage increase might be of some comfort to workers, but a pay rise may not be enough to plug the gap on household finances.

“If income tax thresholds are frozen, many wage increases are likely to be taxed higher than they were previously due to fiscal drag.

“This is when people earn more, but end up paying more tax as a result of inflation, rather than being wealthier in real terms.”

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However, this 92 percent increase to the National Living Wage has been heralded as the biggest rise since its rollout six years ago.

Bryan Sanderson, the Low Pay Commission Chair, said: “The rates announced today include the largest increase since its introduction in 2016.

“It will provide a much-needed pay increase to millions of low-paid workers across the UK, all of whom will be feeling the effects of a sharply rising cost of living.

“For a full-time worker, today’s increase means nearly £150 more per month. The tightness of the labour market and historically high vacancy rates give us confidence that the economy will be able to absorb these increases.

“Businesses also have to navigate these economically uncertain times and by ensuring we remain on the path to achieve our 2024 target, employers will have greater certainty over the forward path.

“These recommendations have the full support of the business, trade union and academic representatives who make up the Commission.”

Despite this wage rise, Real Household Disposable Income per person is to drop to more than seven percent over next two years, according to the latest OBR report.

This would be the biggest fall on record and would incomes fall to 2013 levels, prior to the introduction of the National Living Wage.

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