The national living wage is set to increase by 6.2% in April, a rise of more than four times the rate of inflation.

The Government is calling it "the biggest cash increase ever" and the rise takes hourly pay for employees aged over 25 to £8.72 from April 2020.

However, the British Chambers of Commerce has warned that a sharp increase in wages would put more pressure on businesses and has urged the Government to reduce costs elsewhere.

From April 2020, the new rates are as follows.

  • The National Living Wage for ages 25 and above will increase by 6.2% to £8.72.

  • The National Minimum Wage for 21 to 24-year-olds will increase by 6.5% to £8.20.

  • For 18 to 20-year-olds hourly pay will rise by 4.9% to £6.45.

  • For under-18s there will be a 4.6% rise to £4.55.

  • For apprentices the hourly rate will rise by 6.4% to £4.15.

The Government has also said it will press ahead with recommendations by the Low Pay Commission to allow workers aged over 21 to receive the national living wage by 2024 when it is set to reach £10.50 an hour.

Meanwhile, nurseries in England will receive an increase of less than 2% to their funding rates for 2020-2021 and the sector is warning that the wage increases in April will threaten the viability of many early years provisions.

Purnima Tanuku OBE, Chief Executive of the National Day Nurseries Association (NDNA), said:

“While today’s announcement is good news for low paid workers it will do nothing to address the workforce crisis in early years. Without tackling the chronic underfunding of early years, this increase will threaten more childcare providers with closure.”

“While the pay rates increase at all ages by at least 4.5% and more than 6% for those over 21, the funding for childcare places has failed to keep pace. The Department for Education has promised an extra £66 million for next year but that doesn’t even cover one third of these increases.”

“The Low Pay Commission’s report recognises that the childcare sector is ‘price-taking’, meaning it is reliant on Government funding rates and can’t adjust prices in the same way other businesses can. Governments in England, Scotland and Wales will need to review the impact of today’s announcement on the real costs of delivering the funded childcare promises they have made to parents, and ensure providers have the resources they need to deliver high quality early education and care for our children.”

Last reviewed 10 January 2020