Chancellor Rishi Sunak has announced that the national living wage will be raised from April.
It will go up to £8.91 from its maximum current level of £8.72 an hour.
The Chancellor did not reveal which age groups would benefit from the change, but the existing £8.72 total is paid to those aged 25 and over.
Sunak unveiled the plan as part of a three-part strategy for the UK economy in a bid to move forward from the damage caused by Covid.
He told MPs it will take the UK and the whole world a “long time to recover from this extraordinary economic situation”, telling MPs: “But we will recover.”
The Chancellor said more than 700,000 people have lost their jobs since March 2020 and the economy has shrunk by 10%, the largest fall in more than 300 years.
He told the Commons: “First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.”
He also said Covid-19 has “fundamentally altered” our way of life, telling the Commons: “Much has changed, but one thing has stayed the same: I said I would do whatever it takes – I have done and I will do.”
His three-part plan will focus on:
- offering support to those who need it through schemes such as furlough, which has been extended until the end of September
- begin fixing the public finances
- rebuilding the economy
He said Covid-19 has done “profound damage” to the economy and the forecasts make clear that “repairing the long-term damage will take time”.
He told the Commons: “The OBR still expects that in five years’ time, because of coronavirus, our economy will be 3% smaller than it would have been.”
He added: “The OBR forecast that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.”
