NLW increase will ‘eliminate low pay altogether’, NI contributions down 2%

By Gary Lloyd

- Last updated on GMT

Big day: Conservative Chancellor Jeremy Hunt (credit: UK Parliament 2023)
Big day: Conservative Chancellor Jeremy Hunt (credit: UK Parliament 2023)

Related tags Legislation Autumn Statement Finance Government Jeremy Hunt

UK Government Chancellor Jeremy Hunt said the rise in national living wage from £10.42 to £11.44 from April next year will “eliminate low pay altogether”.

Speaking at the Houses of Parliament today (Wednesday 22 November) as part of his Autumn Statement, Hunt said: “People who get up early, put in the hours and work hard for their families deserve to be paid fairly.”

He stated that since since 2010, the national living wage hourly wages has risen from £5.80 to £10.42, which represented a 20%-plus increase and because the tax threshold had also risen, pay for workers is actually by 25%.

And with the hourly wage now going up to £11.44, Hunt said: “This is the largest ever cash increase in the national living wage, worth £1,800 for a full-time worker.

“Since the national living wage was introduced, the proportion of people on low pay – those earning less than two thirds of national median hourly income has halved.

“It delivers our manifesto commitment to eliminate low pay altogether. We have helped lift 1.7m people out of absolute poverty since 2010.”

NI contributions reduced

Hunt also announced he would reduce national insurance contributions for workers from 12% to 10% for those earning between £12,570 and £50,270.

This, he said, would put £450 back into the pocket of the average worker earning £35,400 a year thanks and would help 27m working people from 6 January 2024.

Hunt said: “People can see the benefit in their pay slips at the start of the new year.

“This will lead to the equivalent of 94,000 full-time employees in our economy because lower tax means higher growth.”

Hunt also said the Government wants to increase the number of apprentices so productivity in the UK could be increased.

He pledged to invest a further £50m for apprenticeships in engineering and “other key sectors”.

Fears on NLW increase voiced

On the NLW increase, some sector and trade body bosses voiced their opinions on the rise ​overnight with one fearing the uplift in wages could push many on-trade businesses “over the edge”.

Loungers founder-chairman Alex Reilley said: “Don’t get me wrong this is great news for millions of people (it’s more than the 2m the Govt suggests as this has a knock-on effect in the labour market). But, without targeted tax cuts [in the Autumn Statement today], this will force countess small hospitality businesses over the edge.”

Vaulkhard Group director Ollie Vaulkhard argued: “[The Government] inflicts a 10% wage increase on us, but won’t give the same to their doctors, nurses, train drivers, police, etc because the treasury can’t afford it... can we?”

While UKHospitality chief executive Kate Nicholls added: “This is a significant increase in the national living wage, rising 10% and 28p more than originally forecast. Such a rise will have significant knock-on impacts on costs as businesses struggle to maintain appropriate wage differentials across all of their staff, including at more experienced levels.

“If businesses are expected to deliver these wage levels, there must be action to drive down costs in other areas.”

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