Chancellor announces increase to the National Living Wage and National Minimum Wage
Source: gov.uk (2025-12-03)

The government has recently taken further action to ease the cost of living having frozen rail fares, prescription fees and uprated the Triple lock.

Issued 25 November 2025
- The cost of living is the number one issue for working people and the government will always take action to ensure people have more money coming in.
- That is why the government has accepted the recommendations of the LPC to increase the National Living Wage and National Minimum Wage.
In a video message (https://www.youtube.com/shorts/BurtuhKdteE) posted today, the Chancellor of the Exchequer, Rachel Reeves said:

I know that the cost of living is still the number one issue for working people and that the economy isn’t working well enough for those on the lowest incomes.

Too many people are still struggling to make ends meet.

And that has to change.

That’s why today I’m announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work.

These changes are going to benefit many young people across our country, getting their first job and I’m pleased to be here at Primark talking to workers about these announcements.

These changes mean that from April, the National Minimum Wage and the National Living Wage will boost the pay packets of around 2.7 million workers.

For a full-time worker on the National Living Wage, that means an increase in pay of £900 a year.

And for someone on the National Minimum Wage, working full time, it will mean a £1500 increase.

We also need to support businesses while protecting jobs and the economy.

And that’s why we’ve secured trade deals with the US, with the EU, and with India.

It’s why we’re committed to economic stability.

To help interest rates fall further.

It is why we have capped corporation tax, and why we’re reforming business rates, particularly so that they help the high street.

In this week’s Budget, I’m going to deliver our mandate for change, and I’m determined to cut the cost of living for everyone.

More information

Paul Nowak, General Secretary of TUC:

The government is delivering on its promise to make work pay.

With living costs stubbornly high an above-inflation pay rise will make a real difference to the lowest-paid.

Putting more money in people’s pockets is good for workers and good for the economy as it goes straight back into our high streets and local businesses.

And sticking with plans to scrap youth rates is absolutely the right call. Young workers have bills like everyone else and deserve a fair day’s pay for a fair day’s work. It’s right they see a larger rise as youth rates are phased out.

Youth Employment UK:

We welcome this increase, which is a vital and necessary step in the government’s ongoing journey to make work pay for everyone. The evidence from our 2025 Youth Voice Census clearly shows that the cost of living and low pay remain major obstacles for young people entering the world of work, and this rise will provide much needed financial relief. However, we also recognise the significant cost pressures this places on business, meaning the forthcoming Budget must provide the support and stability employers need to invest in youth jobs and training.
- From 1 April 2026, the NLW will rise by 4.1% to £12.71 per hour for eligible workers aged 21 and over. This will increase the gross annual earnings of a full-time worker on the NLW by £900, benefiting around 2.4m low-paid workers.
- The NMW rate for 18–20-year-olds will also increase by 8.5% to £10.85 per hour, narrowing the gap with the NLW. This will mean an annual earnings increase of £1,500 for a full-time worker, and marks further progress towards the government’s goal of phasing out 18-20 wage bands and establishing a single adult rate.
- The NMW for 16–17-year-olds and those on apprenticeships will increase by 6% to £8 per hour.
- By seeking expert and independent advice, we are able to ensure that the right balance is struck between the needs of workers, the affordability for businesses and the opportunities for employment.
- We are a pro-business government that has capped Corporation Tax at 25%, the lowest rate in the G7, we’re reforming business rates, have secured trade deals with the US, EU and India, and have seen interest rates cut five times since the election, benefiting businesses in every part of Britain.
- The Chancellor’s Budget will deliver on the government’s mandate for change and the priorities of the British people: cutting waiting lists, cutting the national debt and cutting the cost of living.
- These are early provisional figures based on methodology set out in DBT’s Impact Assessment for the 2025 rates (https://www.legislation.gov.uk/ukdsi/2025/9780348268492/impacts/2025/26) and updates this methodology using inflation forecasts to estimate the counterfactual. DBT will publish a full Impact Assessment in early 2026.