The Chancellor used the recent Spending Review to confirm that increased National Minimum Wage and National Living Wage rates will come into effect on 1 April 2021.
From 1 April 2021, the National Living Wage will increase by 19p to £8.91. This represents an increase of 2.2%. The National Living Wage currently applies to those aged 25 and over but from next April will be extended to 23 and 24 year olds for the first time. The threshold will further reduce to 21 by 2024.
The hourly rate of the National Minimum Wage (NMW) for 21-22 year olds will increase to £8.36 (a rise of 16p). The rates for 18-20 year olds will increase to £6.56 (a rise of 11p) and the rate for workers above the school leaving age but under 18 will increase to £4.62 (a rise of 7p). The NMW rate for apprentices increases by 15p to £4.30.
The new rates mirror the recommendations made by the Low Pay Commission (LPC) which have been accepted in full by the Government. The LPC recommended smaller minimum wage increases for those aged under 23 in recognition of the risks to youth employment which the current economic situation poses.
The independent Low Pay Commission (LPC) was established following the National Minimum Wage Act 1998 to advise the government on the NMW. It is made up of representatives from all sides of industry. The increases will come into effect from 1 April 2021, subject to Parliamentary approval.