National Living Wage to rise to £12.71 an hour from next April

The National Living Wage for those aged over 21 is set to rise by 50p to £12.71 per hour from next April, the government has confirmed.

The minimum wage for 18-20-year-olds will also jump to £10.85 per hour, a higher-than-expected increase of 8.5%, as the government looks to eventually phase out the lower pay band into a single adult rate.

Apprentices and those aged 16-17-years-old will see their hourly pay rise 6% to £8 an hour.

Chancellor Rachel Reeves said she was “determined to cut the cost of living for everyone” and the higher rate rise would put an extra £900 per year in the pocket of full-time workers.

But UKHospitality said the increases would cost the hospitality industry an extra £1.4b and warned it would be passed onto customers via price increases.

It said the rise would also put pressure on youth employment, just days after Office for National Statistics data showed there were almost a million young people not in employment, education or training.

UKHospitality chair Kate Nicholls said: “Hospitality businesses have reached their limit of absorbing seemingly endless additional costs. They will simply all be passed through to the consumer, ultimately fuelling inflation.”

She added: “Hospitality is a sector that offers opportunities for all, regardless of experience or background, and is uniquely placed to help tackle youth unemployment. This should be embraced and supported, rather than discouraged.”

The trade body is calling on the government to deliver business rates reform in the Budget on Wednesday by implementing the maximum possible discount for all hospitality properties with a rateable value below £500,000 and ensuring there is no penalty charge for venues above the threshold.

Minimum pay has risen sharply in recent years and jumped 6.7% in April this year, leaving many hospitality businesses struggling to balance costs alongside the increase in employer’s National Insurance Contributions (NIC).

JD Wetherspoon boss Tim Martin previously said that increases to employers’ NICs and minimum pay had cost the pub giant an extra £60m per year.

The chancellor is expected to announce the Budget from 12:30pm on Wednesday.

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