The Chancellor told delegates at the Conservative Party conference that he plans to increase the hourly national living wage to at least £11 from next April.
This means that the rate for workers over 23 would go up from the current £10.42 an hour to at least £11.
This would mean a pay rise of over £1000 per year for someone who works 35 hours a week.
‘Since introducing the national living wage, I want to make sure that work continues to pay, today I take a step forwards. The current rate is £10.42 an hour and this will be increased,’ Chancellor Jeremy Hunt said.
‘I am waiting for recommendations from the Low Pay Commission and will follow their recommendation, but whatever it is, I will increase the national living wage to at least £11 an hour next year. That’s a pay rise for almost two million workers.’
He did not talk about any tax cuts, stressing that achieving the Prime Minister’s target of halving inflation to 5% was a priority for the Treasury. The current inflation rate is 6.7%.
‘We will always protect public services but we are honest about the taxes that pay for them,’ he said, taking a dig at uncosted Labour policies.
He also pointed to changes to the tax system that mean low earners could earn more money tax-free.
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‘Work must pay, from last year people can earn £1,000 each month without paying tax or National Insurance.’
Living Wage Foundation director Katherine Chapman said: ‘A rise in the statutory National Living Wage from next April is welcome news for low paid workers, but may fall short of the real Living Wage next year, the only rate that is independently calculated based on the cost of living.
The new real Living Wage rates will be announced later this month on 24 October, where we expect a significant increase.’
Chapman added that there were almost 14,000 employers who pay the real Living Wage to ensure that everyone who works for them, including contractors like cleaners and security guards, can earn a wage that meets the cost of living.
He also confirmed that the government would replace work capability assessments, with details to be presented to conference by work and pensions secretary Mel Stride. At the same time, the sanctions regime will be reformed so that people who refuse to search for work will be penalised.
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