MILLIONS of workers will get a pay rise of £1,400 a year from next week.
Chancellor Rachel Reeves has confirmed the Government is hiking the National Living Wage by 6.7% from next Tuesday (April 1).
See The Sun’s live blog on the Spring Statement here
In a move first announced in the Autumn Budget in October, Ms Reeves said three million people will get the pay boost from next week.
She told the Commons during her Spring Statement address: “Restoring stability to our public finances… giving the Bank of England the foundation to cut interest rates… three times since the General Election.
Key announcements in the Spring Statement:
- No new tax rises: The Chancellor ruled out further tax hikes and pledged to crack down on tax avoidance, aiming to raise an extra £1bn.
- Growth downgraded for 2025: The OBR halved its GDP growth forecast for next year from 2% to just 1%.
- Growth boost from planning reforms: New housing policies expected to raise GDP by 0.6 per cent over the next decade.
- Housebuilding surge: 1.3 million homes expected over five years, with construction hitting a 40-year high.
- £2.2bn extra for defence: Additional funding confirmed to help meet the 2.5 per cent of GDP defence target.
- £400m Defence Innovation Fund: Backing new tech like drones and AI for the front line.
- Welfare shake-up: Targeted employment support and welfare reform to reduce benefit spending.
- Civil service cuts: New voluntary exit schemes and AI tools to shrink Government.
“Rebuilding our public services… with record investment in our NHS…bringing waiting lists down for five months in a row.
“And increasing the National Living Wage… to give 3 million people a pay rise from next week.”
[boxout headline=”What does this Spring Statement mean for Rachel Reeves?”]By Ryan Sabey, Deputy Political Editor
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.
But she announced a further round of welfare cuts – around £500million worth – to help balance the books.
Ms Reeves said the steps taken in the Spring Statement would restore her headroom against her debt target to £9.9 billion by 2029/30 after the OBR forecast she would miss it by £4.1 billion without taking action.
There is “nothing progressive” about working people paying the price of economic irresponsibility, she continued.
[bc_video account_id=”5067014667001″ application_id=”” aspect_ratio=”16:9″ autoplay=”” caption=”Cheaper pints, surprise wage boost & fuel duty freeze in Budget – but £40BILLION tax blitz will pay for it” embed=”in-page” experience_id=”” height=”100%” language_detection=”” max_height=”360px” max_width=”640px” min_width=”0px” mute=”” padding_top=”56%” picture_in_picture=”” player_id=”default” playlist_id=”” playsinline=”” sizing=”responsive” video_id=”6363977441112″ video_ids=”” width=”640px”]She told the Commons: “Now let me be clear. There is nothing progressive, there is nothing Labour, about working people paying the price of economic irresponsibility.
“The British people put their trust in this Government because they knew that we would never take risks with the public finances, that we would never do anything to put their household finances in danger. But we must earn that trust every single day.”
[authenticated-scripts src=”%3Cscript%20class%3D%22palin-poll%22%20src%3D%22https%3A%2F%2Fwww.thesun.co.uk%2Fpollingwidgets%2Fv3%2Fwidget.js%3Fquestion_id%3D110303%26game%3Dpolling%22%3E%3C%2Fscript%3E” type=”embedded” width=”100″ /]Ms Reeves said debt interest stands at £105.2 billion in the current financial year, noting this is more than the Government allocates on defence, the Home Office and justice combined.
She told the Commons: “The responsible choice is to reduce our levels of debt and borrowing in the years ahead so we can spend more on the priorities of working people.
“I said that our fiscal rules were non-negotiable and I meant it. I will always deliver economic stability and I will always put working people first. I said it at the election, I said it at the budget and I say it again today.”
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.
[boxout headline=”What is the Spring Statement?”]By Ryan Sabey, Deputy Political Editor
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.
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.”
Meanwhile, the National Minimum Wage for 18 to 20-year-olds will be hiked from £8.60 to £10 an hour – 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”.
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.
[boxout headline=”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 £12.60 an hour or £13.85 an hour if 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.