49p minimum wage rise for 2million poorest workers ‘won’t happen’ due to Covid
An independent body had originally projected the minimum wage could rise by 49p (Image: Getty Images)
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A mooted 49p minimum wage rise for 2million of Britain’s poorest workers looks set not to happen in tomorrow’s spending review.
The Low Pay Commission had consulted on whether the minimum wage for over-25s should rise from £8.72 to £9.21 an hour in April 2021.
But that initial projection was made way back in March – before the national lockdown that inflicted months of chaos on the economy.
It's thought wider wage growth – on which the projection is based – has since fallen due to the pandemic. The Commission warned at the time that "actual wage growth may turn out higher or lower".
Chancellor Rishi Sunak is due to issue a response to the Commission as part of tomorrow’s spending review.
According to The Times, he will accept a revised recommendation from the Commission to impose a smaller 28p rise to £8.90 an hour, in line with inflation.
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Government sources said the Commission had to reflect comments from businesses, who fear they’ll go bust, and unions.
They insisted the Tories were still on track to meet their target for the wage to hit two-thirds of median earnings by 2024.
But TUC general secretary Frances O’Grady told The Times: “Rowing back on this planned pay rise is no way to treat those who kept the country going through this pandemic.
“After their dedication through this crisis, the very least our low-paid key workers deserve is the pay rise they were promised.”
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The minimum wage for people over 25 was rebranded the ‘National Living Wage’ by the Tories. It is still below the voluntary Real Living Wage.
It is currently worth £8.72 and was due to be extended to those aged 23 and over next spring.
Minimum wage rates are £8.20 for those aged 21 to 24; £6.45 for those aged 18 to 20; and £4.55 for under-18s.
Last year the Tories announced the rate for over-25s would rise to two-thirds of median earnings by 2024 and extend to over-21s. A source insisted the “only plan” was that one and “we’re sticking to it”.
Sources dismissed reports Mr Sunak would “scrap” a 49p rise, saying he couldn’t scrap something that wasn’t formally recommended by the Commission in the first place.
A government source insisted the Tories were sticking to their plan for the minimum wage to hit two-thirds of median earnings by 2024
It comes as the Chancellor prepares to freeze the wages of almost 4million public sector workers in tomorrow’s spending review.
Teachers, Armed Forces, police, civil servants and council staff are tipped to be in the move, which would be a real-terms cut.
The UK has 5.5million public sector workers, although the 1.8million who work in the NHS are tipped to be spared.
They endured seven years of freezes or pay rise caps under the last round of Tory austerity.
But the Chancellor has said it is only “fair” for public sector pay rises to follow the same trend as those in the Covid-hit private sector.