Adults on minimum wage to see 20p an hour pay increase

More than a million workers will get a pay rise after the national minimum wage increases by 20p an hour from today.

The new adult rate is £6.70 an hour, the statutory figure for 18 to 20-year-olds will be £5.30 (up from £5.13), the age for under-18s will go up by 8p to £3.87, while the apprenticeship rate will rise by 57p to £3.30.

They come into force ahead of the planned national living wage of £7.20 an hour for over 25-year-olds from next April.

The Government said the 3% rise in the adult rate is the biggest real increase since 2006 and moves the minimum wage closer to the average wage than ever before.

A full-time employee working 40 hours will see the largest cash increase in their annual pay packets since 2008 as a result of the new rate.

TUC general secretary Frances O'Grady said: "Today's increase in the national minimum wage is welcome but hardly cause for euphoria.

"It is hard to celebrate when many low-income families will see this and future gains wiped out by the Chancellor's cuts to tax credits. And when under-25s will be excluded from the new supplement that comes in next April.

"Giving with one hand and taking more with the other is not the way to make work pay. Slashing vital in-work benefits will serve only to push more working households into poverty.

"We won't have a recovery for the many by taking an axe to the welfare budget."

Paul Kenny, GMB general secretary, said: "The additional 20p per hour for lower paid workers is welcome but as the Chancellor recognised, £6.70 per hour is not a living wage.

"Employers who can afford to pay more should do so without delay. The Government must also step up enforcement and enable unions and local councils to contact HMRC to report employers who are not paying the rate."

Meanwhile, a report by the Resolution Foundation found the proportion of workers earning the legal minimum is set to more than double over the next five years as a result of the national living wage.

The think-tank said women and older workers are particularly likely to be affected.

Adam Corlett, economic analyst at the foundation, said: "Today's 20p rise is relatively conservative given the strength of the labour market, but most of those on the minimum - and many just above it - will get a far bigger increase in April as a result of the national living wage announced in the Budget.

"The new ambition shown by the Chancellor is welcome. But it will mean that around one in seven private sector workers will have their pay directly set by Government by 2020.

"Given the scale of the change, Government must now work closely with the Low Pay Commission and employers to ensure the policy is a success. It's also important that businesses offer low-paid staff more opportunities for promotion and progression so that they don't get stuck on the wage floor.

"The national living wage has injected fresh energy into the debate on tackling Britain's chronic low pay problem, but further action will be needed to secure stronger wage growth throughout the workforce."

Business Secretary Sajid Javid said: "As a one-nation Government we are making sure that every part of Britain benefits from our growing economy and today more than 1.4 million of Britain's lowest-paid workers will be getting a well-deserved pay rise.

"The increase for apprentices is the largest in history, making sure that apprenticeships remain an attractive option for young people. While the national minimum wage will see the largest real-terms increase since 2007."

Rhys Moore, director of the Living Wage Foundation said: "The Living Wage Foundation welcomes a strong national minimum wage, and the rates that come into force today will bring a much needed and welcome pay-rise to many. However life on the minimum wage remains very difficult.

"That's why we call upon responsible businesses to pay the UK Living Wage of £7.85 an hour and the London Living Wage of £9.15. These rates are calculated independently and reflect the real cost of living. The Living Wage isn't about luxuries but enabling people to do more than simply exist."