The UK’s Living Wage will increase to £12.71 per hour and the Minimum Wage for 18-20-year-olds will rise to £10.85, Rachel Reeves has announced.
A day before she delivers her much anticipated Autumn Budget, she said the government has accepted the latest recommendations of the Low Pay Commission to increase the rates from April 2026.
The National Living Wage (NLW) applies to workers aged 21 and over, and the National Minimum Wage (NMW) rate is for 18–20-year-olds. The NLW rise is a 4.1% increase and for NMW, it’s up 8.5%.
The NMW for 16–17-year-olds and those on apprenticeships will increase to £8 per hour, a 6% rise.
In a video message, Reeves said:
“I know that the cost of living is still the number one issue for working people and that the economy isn’t working well enough for those on the lowest incomes.
“Too many people are still struggling to make ends meet, and that has to change.
“That’s why today I’m announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work.
“These changes are going to benefit many young people across our country, getting their first job and I’m pleased to be here at Primark talking to workers about these announcements.
“These changes mean that from April, the National Minimum Wage and the National Living Wage will boost the pay packets of around 2.7 million workers.
“For a full-time worker on the National Living Wage, that means an increase in pay of £900 a year, and for someone on the National Minimum Wage, working full time, it will mean a £1500 increase.
“We also need to support businesses while protecting jobs and the economy, and that’s why we’ve secured trade deals with the US, with the EU, and with India.
“It’s why we’re committed to economic stability, to help interest rates fall further. It is why we have capped corporation tax, and why we’re reforming business rates, particularly so that they help the high street.
“In this week’s Budget, I’m going to deliver our mandate for change, and I’m determined to cut the cost of living for everyone.”
Youth Employment UK said it welcomed the increase as “a vital and necessary step in the government’s ongoing journey to make work pay for everyone”, and GMB Union’s Ross Holden said the “much-needed pay rise keeping pace with cost of living is fantastic news for millions of low-paid workers across the country”.
Business groups said the move means more costs for businesses.
Jane Gratton, deputy director of public policy at the British Chambers of Commerce, said:
“People are at the heart of every thriving business, and employers want to ensure their workforce is happy, engaged and well paid.
“However, every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities for individuals. Making employment more expensive risks deepening the jobs crisis among young people.
“Our research shows that labour costs remain the biggest cost pressure for SMEs, cited by 72% of businesses in Q3. There’s a limit to how much additional cost employers can bear without something having to give.
“With unemployment rising, the government needs to use tomorrow’s Budget to ease cost pressures for business. Crucially, there must be no new tax increases for businesses.
“Instead, the chancellor must invest in growing the economy, enable firms to create more opportunities, and tackle the ongoing skills crisis.”
Daniel Woolf, head policy at Enterprise Nation, said:
“Enterprise Nation represents more than 150,000 small businesses, many of whom both earn and pay the National Living Wage, so we recognise how important this rise will be for low-paid workers.
“But for sole traders and micro employers who have already absorbed sharp increases in wage bills, energy, borrowing and premises costs in recent years, another above-inflation uplift is only sustainable if it is matched by real support to boost productivity and cut other costs.
“If the Budget couples higher minimum wages with targeted relief and practical help on digital adoption and skills, small firms will be far better placed to keep creating and sustaining good jobs.”
Tina McKenzie, policy chair of the Federation of Small Businesses, said:
“The government has backed workers with the National Living Wage rise, so tomorrow’s Budget needs to back growth for the small employers creating those jobs. Raising the Employment Allowance so it’s in line with the NLW is the best way to do that.
“With National Insurance contributions rising, employment costs climbing and hiring becoming riskier, small employers are thinking twice about taking people on – and it is young people who’ll miss out.
“In fact, our latest Small Business Index shows that 34 per cent say labour costs are among their three biggest barriers to growth, and 20 per cent planned to cut staff between October and December of this year.
“Give businesses the capacity to hire and they will – it’s that simple.”