Chancellor to announce National Living Wage boost and benefits reform to ‘make work pay’

Chancellor Jeremy Hunt will tomorrow (2 October) address Conservative Party conference in Manchester where he is expected to announce a plan to make work pay with a wage boost for 2 million of the UK’s lowest paid and a new approach to benefit sanctions.

Despite enormous global challenges, the British economy is proving the doubters wrong. Compared to France, Germany and Italy, the UK has been the joint fastest growing since Brexit, and the fastest growing since 2010. 

The hard but necessary long-term decisions this Conservative government has taken mean we are now growing the economy and on track to halve inflation this year. Because of this, we are able to meet our 2019 manifesto commitment to raise the wages of the lowest paid to two-thirds of median earnings.

The Chancellor will therefore confirm the UK Government will accept the Low Pay Commission’s forthcoming recommendation and increase the National Living Wage from April 2024. Based on latest forecasts, the rate is set to increase to at least £11.00 an hour, and would mean annual earnings of a full-time worker on the National Living Wage will increase by over £1,000 next year.

After successive rises by Conservative governments since its introduction in 2015, a full-time worker on the National Living Wage will be around £9,000 better off than they would have been in 2010.

This huge pay boost for the lowest paid will mean we continue to support the British people with the cost of living. In contrast, the Labour Party would hammer the lowest paid with their plans reckless borrowing and unfunded spending - meaning higher inflation and higher taxes.

Prime Minister, Rishi Sunak, said:

“I’ve always made it clear that hard work should pay, and today we’re providing a well-earned pay rise to millions of people across the country.

“This means a full-time worker will receive an increase of over £1,000 to their annual earnings, putting more money in the pockets of the lowest paid.

“We’re sending a clear message to hardworking taxpayers across the country; our Conservative Government is on your side”.
To ensure work always pays, the Chancellor will also confirm that he and Work and Pensions Secretary Mel Stride will look again at the benefit sanctions regime to make it harder for people to claim benefits while refusing to take active steps to move into work. Proposals will be set out in the upcoming Autumn Statement.

On the National Living Wage, Chancellor Jeremy Hunt is expected to say:

“Today I want to complete another great Conservative reform, the National Living Wage. 

“Since we introduced it, nearly two million people have been lifted from absolute poverty.

“That’s the Conservative way of improving the lives of working people. Boosting pay, cutting tax.

“But today, we go further with another great Conservative invention, the National Living Wage.

"We promised in our manifesto to raise the National Living Wage to two-thirds of median income – ending low pay in this country.

“At the moment it is 10.42 an hour and we are waiting for the Low Pay Commission to confirm its recommendation for next year.

“But I confirm today, whatever that recommendation, we will increase it next year to at least £11 an hour.
"A pay rise for over 2 million workers.

“The wages of the lowest paid over £9,000 a year higher than they were in 2010 - because if you work hard a Conservative government will always have your back.”

On benefit sanctions, the Chancellor will also say:

"I am incredibly proud to live in a country where, as Churchill said, there’s a ladder everyone can climb but also a safety net below which no one falls.

“But paying for that safety net is a social contract that depends on fairness to those in work alongside compassion to those who are not.

“That means work must pay, and we’re making sure it does. From last year, for the first time ever, you can earn £1,000 a month without paying a penny of tax or national insurance.

“But since the pandemic, things have been going in the wrong direction. Whilst companies struggle to find workers, around 100,000 people are leaving the labour force every year for a life on benefits.

"As part of that, we will look at the way the sanctions regime works. It is a fundamental matter of fairness. Those who won’t even look for work do not deserve the same benefits as people trying hard to do the right thing.

“Labour would take us in the opposite direction. They have pledged to end sanctions, removing the incentive to look for a job.
“Have they learned nothing? When they left office we had more children in workless households than nearly anywhere in Europe. 

“Since then workless households are down by a million - and conference we’re not going back.”

Notes to Editors

• We are announcing that we will meet our manifesto commitment to boost the wages of the lowest paid by agreeing that the National Living Wage will rise to two-thirds of median earnings. We will accept the recommendations of the Low Pay Commission should they, as they are expected to, recommend this uprating.

• This means that the National Living Wage could rise next year to at least £11.16 an hour – leading to a pay rise for over 2 million workers. The rise will take effect from April 2024, based on the Low Pay Commission’s remit which sets a target for the rate to reach two-thirds of median earnings by 2024 for workers aged 21 and over, taking economic conditions into account. The exact figure of the new hourly rate is subject to final Commission projections, but the current published forecast rate is £11.16 an hour. 

• The annual earnings of a full-time worker on the National Living Wage will have increased by over £6,000 since its introduction in 2016, and by around £9,000 since 2010. Young people, women, individuals from some ethnic minority backgrounds, and those with a disability are among those more likely to benefit from this increase.• No Labour Government has ever left office with unemployment lower than it was when they came into power – leaving more people without the security of a pay packet. Every Labour Government has left office with unemployment higher than before they came into power. Under the last Labour Government, unemployment rose from 2.1 million in 1997 to 2.5 million by the time they left office in 2010 – meaning more people were denied the security of a good job. 

• Labour have doubled down on their £28 billion borrowing plan meaning more money for you and your children to pay off. Rachel Reeves has said Labour would borrow £28 billion a year until 2030, despite concerns it could crash markets – Reeves confirmed Labour would ‘ramp up’ to the spending. 

• Paul Johnson, the Director of the Institute for Fiscal Studies, said Labour’s plans would result in a rise in personal taxes and an increase to interest rates. Johnson said: ‘It is hard to say how, without tax rises, they do anything more generous than is currently planned’. Johnson then said: further borrowing could ‘potentially increase inflation, and also drive up interest rates’