Chancellor Rachel Reeves on Wednesday increased the national minimum wage (NMW) to give more than one million UK workers a pay boost.
Ms Reeves announced the move — and an increased national living wage — in her Autumn Budget 2024.
“This Government promised a genuine living wage for working people,” she said. “This pay boost for millions of workers is a significant step towards delivering on that promise.”
Last week, it was announced that the city’s “real living wage” — the London living wage — had increased by 70p an hour.
Here’s all you need to know about the national minimum wage, the national living wage, the London living wage — and the planned increases.
What is the national minimum wage in the UK?
The national minimum Wage (NMW) is the legally mandated lowest hourly pay rate employers must pay most workers. Established in 1999, the NMW aims to protect workers from exploitation, ensure a basic standard of living, and reduce in-work poverty.
Purpose of the national minimum wage
- Preventing exploitation: The NMW sets a base pay level to protect employees, especially in low-paid jobs, from unfairly low wages.
- Promoting fairness and dignity: It supports workers' rights, aiming to provide a fair income that can improve quality of life, reduce reliance on welfare, and foster dignity in work.
- Reducing poverty and income inequality: By raising the income floor, the NMW seeks to help workers achieve a sustainable living standard, address poverty and help reduce the gap between high and low earners.
- Boosting economic activity: The NMW puts more income into workers’ hands, which can increase consumer spending and stimulate the economy.
- Encouraging workforce participation: It makes low-paid work more attractive, drawing more people into employment by ensuring that work pays better than benefits alone.
How much is the national minimum wage?
As of April 1, 2024, the rates are:
As of April 2025, Ms Reeves said the national minimum wage will increase from £8.60 to £10 per hour for 18 to 20-year-olds –— the largest increase in the rate on record.
This £1.40 increase will mean full-time younger workers eligible for the rate will have a pay boost of £2,500 next year
How is the national minimum wage increase calculated?
In the UK, the Government determines minimum wage increases based on recommendations from the Low Pay Commission (LPC), an independent body that reviews key economic indicators. The LPC considers the cost of living, inflation, wage growth, and overall economic productivity to ensure that minimum wage adjustments help workers maintain their purchasing power.
Labour market conditions including employment and unemployment rates also play a role; stronger job markets may allow for larger increases, while challenging times may call for moderation.
The LPC balances worker support with employer affordability, considering especially the needs of small businesses. Government policy goals, such as aiming for the national living wage to reach two-thirds of median earnings by 2024, guide these adjustments.
The LPC also evaluates how wage hikes affect younger workers and apprentices to avoid unintended impacts on employment opportunities. The Government reviews recommendations and implements them each April to support workers’ livelihoods and economic stability.
What is the national living wage in the UK?
The national living wage (NLW) is the legally required minimum hourly wage for workers aged 23 and over. Unlike the national minimum wage, which applies to younger workers and apprentices, the NLW is set at a higher rate to support a basic standard of living for adults.
Introduced in 2016, the NLW is reviewed annually and adjusted based on recommendations from the LPC.
Before the Autumn Budget, the Treasury confirmed the NLW would rise from £11.44 to £12.21 an hour from April 2025.
The 6.7 per cent increase is worth £1,400 annually for an eligible full-time worker.
What is the London living wage and how much is it?
The London Living Wage is an hourly wage rate calculated to reflect the higher cost of living in London compared with the rest of the UK. It’s set by the Living Wage Foundation, an independent organisation, rather than the Government.
This rate is updated annually and is higher than the national living wage and the minimum wage to help workers in London meet the city's elevated expenses for housing, transportation, and other essentials.
While the London Living Wage is not legally enforced, many employers voluntarily adopt it to support fair pay and help their employees achieve a basic standard of living in London.
In October 2024, the Living Wage Foundation raised its hourly wages by 5 per cent, bringing the rate to £12.60 nationwide and £13.85 for London. The foundation said the increase will positively impact more than half a million workers, with employers required to implement the new rates by no later than May 1, 2025.
