Living Wage 2021: How much will the Living Wage increase in Rishi Sunak's Autumn Budget?

Ahead of the UK Autumn Budget announcement from Chancellor Rishi Sunak, an end to the public sector pay freeze has been confirmed with increases to the National Living Wage and Minimum Wage

Living Wage 2021: How much will the Living Wage increase in Rishi Sunak's Autumn Budget? (Image credit: Getty Images/Canva Pro)

Millions of workers are in line for a Budget pay rise as the Chancellor announced the UK's economy is "firmly back on track" after the coronavirus pandemic.

Rishi Sunak has confirmed he will scrap the year-long public sector pay freeze in his fiscal statement, with increases in the UK’s ‘National Living Wage’ and Minimum Wage paving the way for a possible wage increase next year for those such as teachers, nurses, police and armed forces personnel.

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According to the latest available data from the Office for National Statistics, there were 5.68 million public sector workers registered June.

The Chancellor last November "paused" public sector pay increases for 2021/22, with the exception of the NHS and those earning less than £24,000, after heavy borrowing during the Covid-19 crisis.

But Mr Sunak on Monday said that, with the economy bouncing back following the lifting of virus restrictions, it was "right" that frontline workers would "see their wages rise".

Here’s how much the Living Wage will increase by in the Autumn Budget 2021.

What is the Living Wage in Scotland 2021?

The ‘National Living Wage’ is the minimum hourly pay rate that workers in England, Northern Ireland, Scotland and Wales are entitled to if they are aged 23 and over.

As such, the Living Wage is higher than the National Minimum Wage – which is reserved for those in employment who are under the age of 23 and enrolled on apprenticeship schemes.

In Scotland, it is currently in line with minimum pay rates across the UK for those aged 23 and over at £8.91 per hour.

This follows the rise in hourly pay announced by the Chancellor in last year’s Budget, which came into effect on 1 April 2021.

How much is the Living Wage increase?

Rishi Sunak has confirmed that from 1 April 2022 the Living Wage will rise from £8.91 to £9.50 an hour.

The Chancellor is set to make the announcement formally in the Autumn Budget this week – with similar rises in place for the UK Minimum Wage.

The 59p Living Wage increase for April 2022 sees minimum hourly pay rise by almost seven percent on the current rate for those aged 23 and over.

Is the Living Wage increase enough to offset costs of living?

The 59p hourly boost to the so-called "national living wage" will mean a full-time worker on the lowest pay will receive a rise of more than £1,000 per year, according to the Government, in an inflation-busting 6.6% hike.

But critics questioned how much better off workers will be considering the Chancellor has already hiked National Insurance and cut Universal Credit as inflation rises, with the consumer price inflation rate currently standing at 3.1%.

The cost of living in the UK has spiked to new highs recently, with the cost of gas and electricity reflected in spiking energy bills for UK consumers and average UK petrol prices soaring to 142.94p a litre on Sunday.

Along with rising costs of food, fuel and climbing inflation, Scottish politicians in Westminster have called upon the UK Government to introduce a ‘real Living Wage’ which accounts for spiking petrol prices and reduced financial support following the phasing out of the £20-a-week Universal Credit uplift and furlough.

Graham Griffiths, Director of the Living Wage Foundation which campaigns for a ‘real Living Wage’ said: “The rise in the National Living Wage is a positive step for workers, this is a significant increase and will go some way to easing the pressure on households feeling the squeeze.

"However, there is still a substantial gap between the government’s 2022 rate and the rising cost of living.“The past 18 months has been a perfect storm for us all, with fuel and energy costs rising and cuts to household incomes meaning many workers and their families are trapped in low pay.

Mr Griffiths added: "On the 15th November, as part of Living Wage Week, the new real Living Wage rates will be announced and take effect to reflect the steep rise in living costs.

"The Living Wage Foundation’s real Living Wage remains the only rate that’s based on what workers and their families need to get by: the weekly shop, energy bills, a school uniform for growing kids; even a trip to the dentist."

Additional reporting by PA Political Correspondent Patrick Daly

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