Chancellor John Healey has today increased the National Minimum Wage and the National Living Wage by 3.9 per cent, a rise which includes 2.3 million workers on the lowest pay.
The current rate is £12.71 an hour for workers aged 21 and over and £10.85 for those aged 18 to 20.
Healey told MPs he had kept Labour’s manifesto promise not to raise taxes on working people, describing his choice as “no tax rises on wages or dividends”.
other employment measures
Single fathers and their partners will be eligible for paid parental leave for the first time, which Healey called “down payment for change” after paternity leave representation.
He said the government had heard calls for pay transparency in job adverts to close the gender pay gap and would “take immediate action to ensure women are paid and promoted fairly”.
Carers will not lose all Carer’s Allowance when they earn more than the income threshold. Healey also raised the higher mileage rate from 25p to 35p per mile for those who rely on their car for work, making the increase permanent this year to the standard mileage rate.
The budget includes £100m for a local apprenticeship service to match young people with local companies, which Healey says will be funded from savings in welfare fraud and error. Non-compete clauses in contracts will also be amended.
From 2029, self-assessed income tax will move to smaller, more regular payments rather than large bills.
Healey said in July that the cost of doing business worries him as much as the cost of living.
The reaction
Warren Abbey, chief executive of 365 Finance, said: “The danger of higher wages is that businesses respond not by growth, but by delaying recruitment, reducing hours, or passing on more fees to customers.”
Lucy Mangan, partner and head of tax services at Menzies, said: “Leaving the National Insurance threshold at £5,000 and freezing it until 2031 means that every increase in the National Living Wage pushes the employer’s contribution on every salary, and with the Employment Rights Act set to limit the flexible contracts associated with labor-intensive companies in all companies at the gambling level.
Lee Biggins, chief executive and founder of CV-Library, said: “It is encouraging that there are no major new costs placed on employers in this Budget. However, there appears to be relatively little that directly improves the situation for hiring one.”