Budget 2024: More than one million low-paid employees in line for pay rise with minimal wage hike

Rachel Reeves could hike the minimum wage by more than 6% – giving over a million low-paid workers a boost in their wages from next year.

The Chancellor will reportedly announce the increase at the Budget on Wednesday after recommendations from the independent Low Pay Commission.

The current national minimum for over 21s – referred to as the “national living wage” – stands at £11.44. Earlier this year the Commission suggested this should increase to £11.89.

But according to The Times it could increase to more than £12.12 an hour after ministers promised to “raise the floor” on wages. Workers between 18 and 20, who currently receive £8.60 an hour, could be in line for a bigger hike under government plans for a single adult rate.

A Treasury source declined to comment on “speculation” when approached by The Mirror.

But critics have suggested the increase to minimum wage on top of other proposed measures like raising National Insurance rates for businesses would mean that employers would delay or cancel hiring decisions.

Craig Beaumont, the executive director of the Federation of Small Businesses, said the rise in NI would massively increase the costs of hiring new workers.

He suggested small businesses could stump up an additional £600, calling the rise “a tax on pay, hours and jobs which would lead to recruitment freezes – or worse”.

The executive added: “Small business owners are among the hardest working people imaginable. They are strivers, working long hours to run their business and in many cases create jobs and opportunities.”

But the general secretary of the Trades Union Congress (TUC) Paul Nowak said employees could absorb the rise. He told The Times: “Every time the minimum wage goes up there are some voices who predict this will drive up unemployment. Every time they are wrong.”