National living wage could rise by over a pound in the next year

The national living wage could rise next year to well above what the UK Government has announced, according to a new report.

The Resolution Foundation said stronger than expected wage growth means the figure could increase to around £11.46-an-hour next April, well above the £11 suggested by the Chancellor recently.

The think tank said the national living wage is currently pegged to median hourly pay, so strong wage growth in recent months – average weekly earnings grew by 7.8% in the three months to August – should increase its cash value next April.

The foundation’s calculation implies the statutory rate will rise to £11.46-an-hour next year, up from the current £10.42.

This would be a 10% increase in cash terms, the third largest percentage cash increase in the minimum wage during its 26-year history.

Nye Cominetti, senior economist at the Resolution Foundation, said: “The Chancellor has announced that the national living wage would rise to at least £11-an-hour next April.

“This looks to be a rare case of a politician underpromising, as the actual rate is more likely to be around £11.46. This would be a huge pay increase that will help millions of low earners as they navigate the cost-of-living crisis.

“However, a higher minimum wage alone cannot deliver higher living standards for everyone. Over the past decade, cuts to working-age benefits have offset the gains from the national living wage for many.

“Low-paid families with children in receipt of benefits will have experienced next to no, or even negative, income growth over this period, despite their hourly pay rising by 27% in real terms.

“A strategy to boost the living standards of low earners must combine a higher minimum wage with better conditions at work and a stronger social security safety net as well.”