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Three million workers to get £1,400 a year pay rise in days, Rachel Reeves confirms in Spring Statement
Three million workers to get £1,400 a year pay rise in days, Rachel Reeves confirms in Spring Statement
Published on March 26, 2025 at 04:37 PM
LIVE: Rachel Reeves delivers the spring statement to the House of Commons
MILLIONS of workers will get a pay rise of £1,400 a year from next week.
The Government announced in October it is hiking the National Living Wage by 6.7% from next Tuesday (April 1), and today's Spring Statement has not altered that promise.
Chancellor of the Exchequer Rachel Reeves
It comes after the Treasury stated there would be no policy announcements, with speculation about potential changes given the current economic climate.
The Chancellor is under increasing pressure to address slow economic growth, high inflation and concerns about tax rises.
Inflation surged to 3% in January, marking its highest level in 10 months and significantly exceeding the Bank of England‘s 2% target.
At the same time, economic growth remains subdued, with the Bank of England forecasting the UK economy to expand by just 0.75% in 2025 – down sharply from an earlier estimate of 1.5%.
Growth is only expected to pick up in 2026.
What does this Spring Statement mean for Rachel Reeves?
RACHEL Reeves is trying to shift any blame away from herself and the Labour government as it grapples with the sluggish economy.
The Chancellor is telling MPs that the “world had changed”; meaning she has to take drastic action when it comes to spending and welfare.
The trouble for Ms Reeves and Sir Keir Starmer is that they put growth as their “number one”; mission and that, to put it mildly, is stalling.
The independent watchdog say growth forecasts has halved for this year and the financial headroom wiped out – hence the savings to be made elsewhere.
But for Ms Reeves all this puts her in a very tight spot insisting she will stick to her iron clad rules – with her looking to find up to £15 billion of savings.
The Tories and commentators are aiming their fire over how she hasn’t helped herself as growth has fallen.
They point out that she was the person who decided to go on a £40 billion tax raid at October’s Budget – with £25 billion of it falling on the shoulders of business.
The upcoming Donald Trump-led tariff war ledcould easily throw the government off course again unless a limited trade deal can be struck.
Rachel Reeves will be pushing every leaver possible to get that over the line before it kicks in next week to give her some breathing space.
But we could be back at square one come the autumn with the Budget to balance the books – with speculation there could be tax rises and Whitehall departments scratching around for more savings.
During the Autumn Budget in October last year, Ms Reeves said: “It was the Labour government that introduced the National Minimum wage in 1999.
“It had a transformative impact on the lives of working people.
“As promised in our manifesto, we asked the Low Pay Commission to take account of the cost of living for the first time.
“I can confirm that we will accept the Low Pay Commission recommendation to increase the National Living Wage by 6.7% to £12.21 an hour.”
Cheaper pints, surprise wage boost & fuel duty freeze in Budget â but £40BILLION tax blitz will pay for it
Meanwhile, the National Minimum Wage for 18 to 20-year-olds will be hiked from £8.60 to £10 an hour â a 16.3% rise and biggest increase in the rate on record, the Chancellor confirmed.
It will see eligible youngsters in full-time employment earn an additional £2,500 a year.
Both new rates are less than the £12.60-an-hour rate calculated by the Living Wage Foundation and paid by 15,000 employers.
The Real Living Wage is paid voluntarily to staff by bosses and is not a legal requirement unlike the Minimum Wage.
In Budget documents, the Government also said it plans to create a single adult wage rate for workers across the UK “over time”.
Rachel Reeves is delivering the Spring Statement – nearly fifty years after the first such “mini-Budget”; was delivered.
The statement, which over the years has been delivered in both autumn and Spring, was started in 1976 at the end of the year.
The law changed in 1975 to ensure there were two economic forecasts every year as opposition MPs and the public could keep track of government plans.
Rachel Reeves has insisted there will only be one major fiscal event each year with a Budget planned for the autumn – so no tax hikes or reductions this year.
Her Labour predecessor Gordon Brown held the Budget in the the autumn and each autumn he would deliver a Pre-Budget Report giving an update on the state of the country’s finances.
Fast forward to 2010 and George Osborne, Chancellor until 2016, set up the Office for Budget Responsibility, to provide an independent forecast.
They were also there to dissect the state of the economy – producing five-year forecasts twice a year.
But the OBR weren’t asked for a forecast by short-lived Prime Minister Liz Truss in 2022 despite their mini-Budget containing an array of tax cuts causing a market meltdown.
But while the increase in National Minimum Wage is good news for workers, it will pile pressure on businesses.
Robert Salter, director at Blick Rothenberg, said after the Autumn Budget: “The increase in the National Minimum Wage from April 2025 to £12.21 means that small businesses have seen a 37% increase in the National Minimum Wage since the 2020/21 year.
“This is a significant real increase on the costs faced by businesses and could easily result in increased unemployment over time.”
MINIMUM WAGE SHAKE-UP
There are currently two different minimum rates all workers are supposed to get across the UK – National Minimum Wage and the National Living Wage.
The National Minimum Wage (NMW) is the minimum pay per hour for workers who have left school.
As it stands, those who have left school and are aged under 18 must get a minimum of £6.40 an hour.
Meanwhile, the National Living Wage is the minimum wage for those over 21 and is slightly higher.
It was previously only available to those over 23, but this was adjusted to 21 and over in November 2023.
What's the Real Living Wage?
Unlike the National Minimum Wage and National Living Wage, the rate is not a legal requirement and is voluntary.
Over 15,000 UK businesses voluntarily pay it because they believe their staff deserve a wage that meets everyday needs.
Those working for employers subscribed to the scheme can expect to earn £12 an hour or £13.15 an hour is they're based in London
The National Minimum Wage (NMW) is the minimum pay per hour for workers who have left school.
As it stands, those who have left school and are aged under 18 must get a minimum of £6.40 an hour.
Meanwhile, the National Living Wage is the minimum wage for those over 21 and is slightly higher.
It was previously only available to those over 23, but this was adjusted to 21 and over in November 2023.
It's currently worth £11.44 an hour but this will change from April 1, 2025.
Both the National Living and Minimum Wage rise each year so workers' pay keeps up with the cost of living.
Who gets the National Minimum Wage?
You qualify for the National Minimum Wage if you are of school leaving age, which is usually above 16.
You are eligible to receive the pay rate if you work full-time or part-time.
Apprentices also qualify for a National Minimum Wage, as well as trainees and staff still in their probationary period.
The rates also apply to disabled workers.
Those who are self-employed, voluntary workers, company directors, and family members who live in the home of the employer and do household chores do not qualify for the minimum wage.
Au pairs, members of the armed forces, and people on a government employment programme are also not entitled to the payment.