Minimum wage to rise by nearly 4% for millions of Britain's lowest paid workers, Healey confirms

The national minimum wage and national living wage will rise by 3.9% in April for more than 2.3 million working Brits, Chancellor John Healey has confirmed. The ‘National Living Wage’, which applies to people aged 21 and over, will rise from £12.71 to around £13.20. The 'National Minimum Wage', applying to workers aged 18-20, will go from £10.85 to £11.27. Confirming the increases at the Budget today, Chancellor John Healey said: “For pensioners, I am delivering the new pension tax allowance – so that pensioners with income up to the value of the full new state pension will not pay income tax in this Parliament.

"For 2.3 million of our lowest paid workers, I am increasing both the National Minimum Wage and the National Living Wage by 3.9%." Read more: The minimum wage is still not enough to live on even with the recent increase Read more: More than a third of Neets living in nine largest cities, research finds Labour’s previous two Budgets saw large hikes to the national minimum wage, with the party vowing to scrap “discriminatory” youth rates in its manifesto by increasing them faster than the adult rate.

Instead, the rate for younger workers is increasing at the same rate as older workers. It marks a slowdown in wage rises for the youth and signals no movement on Labour's manifesto pledge to narrow the minimum wage gap between older and younger workers. This comes following recommendations from the Low Pay Commission, which advises the government on the minimum wage and the living wage. The independent body said in March it was likely to recommend an increase in the minimum wage for those aged 21 and over of up to five percent in 2027.

The minimum wage rose by 26 percent between 2025 and 2026. Economists, employers and think tanks warned ahead of the Budget that further increases to minimum wage rates could price young people out of entry into the labour market. Critics also say that wage increases could lead to a surge in unemployment, as recruiters may decide to hire older, more experienced candidates. Some 940,000 young people are now classed as Neets - young people not in education, employment or training in the UK - with the figure having risen by 195,000 in the past two years.

Figures released earlier this month revealed that youth unemployment is at 15.6 percent, with 54,000 more young people out of work than a year ago. In a report on Tuesday, the Resolution Foundation think tank urged the Government to change course to stop young people being "priced out of entry into the labour market". Nye Cominetti, principal economist at the think tank, said: “The UK now has one of the highest minimum wages of any advanced economy.

While there may be scope to go further, the current weaknesses in the labour market and record number of Neets mean that now is not the right time for pushing rates up faster than typical earnings.” In a bid to tackle youth unemployment, the government this month unveiled plans to create 100,000 additional jobs in the retail sector by the end of the parliament. As part of this, the Department for Work and Pensions announced a new work experience programme, Opening Shift, which will offer 11,000 18-24 year-olds two-to-four-week placements at retailers including John Lewis, Tesco and Costa Coffee.

Pat McFadden, the work and pensions secretary, told LBC’s Nick Ferrari that the placements will help “give [a] chance to thousands of young people” while also “getting people off benefit and into work”.