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The UK government is set to raise the minimum wage, though 18-to-20-year-olds will likely see smaller pay increases than in previous years. Chancellor John Healey will outline the new rates in the Budget, alongside various cost-of-living relief measures for families.
Minimum Wage Changes for Younger Workers
Pay for younger employees will increase in line with the adjustment for workers aged 21 and older, as reported by BBC News. However, this growth falls short of the rises seen over the previous two years, when Labour worked to fulfill a manifesto pledge to eliminate discriminatory age bands and ensure all adults receive an equal minimum wage.
Business Secretary Jonathan Reynolds told BBC News that the equalisation manifesto commitment remains active, though officials always understood it would happen gradually. “Of course, you want not just good wages but good work,” Reynolds said, adding, “It is a balance of making sure the pressures on the labour market are taken into account.”
The Times reported that the National Minimum Wage for 18-to-20-year-olds is expected to increase by 3.9% from £10.85 to approximately £11.27 an hour. This sits below the National Living Wage for older workers, which is slated to rise by 3.9% to reach £13.20 an hour. Andrea Egan, general secretary of the Unison union, called the continued pay disparity deeply unfair, stating that young care workers and teaching assistants perform identical duties to older colleagues and face the same supermarket prices.
Cost of Living Relief and Tariff Cuts
To ease household expenses, the government plans to eliminate import taxes on roughly 100 food items and products. Combined with previous tariff suspensions introduced in June on goods like pasta, fruit juice, and tuna, this move is expected to save the public around £500m annually. For food items specifically, removing tariffs could save individual households up to £21 a year.
The expanded list of products losing import tariffs includes baked beans, garlic, gherkins, chocolate-coated wafers, boiled sweets, toffees, citrus jams, cough drops, plant-based drinks, kerosene, and fertilisers. The Treasury stated that removing levies on kerosene assists households relying on heating oil, while fertiliser tariff cuts support farmers.
Addressing why the policy lowers import costs rather than direct domestic business expenses, Reynolds noted that the administration weighs such decisions against domestic economic interests. Meanwhile, Balwinder Dhoot, director of sustainability and growth at the Food and Drink Federation, argued that food and drink production remains more expensive in the UK than among close neighbors due to high energy pressures.
Additional Budget Measures
The government announced several other changes, including making permanent a 55p per mile tax-free mileage rate for work-related driving up to 10,000 miles, with a 35p rate above that threshold. Carers will also receive a taper mechanism by 2030, allowing them to earn more past the current limit without losing their entire allowance.
Self-employed fathers will gain access to two weeks of paternity pay, worth up to £194 a week, and hundreds of additional Post Office drop boxes will be installed. Furthermore, the government intends to freeze fuel duty and maintain the 5p discount originally introduced in 2022. Healey told BBC’s Newscast that none of the initiatives would single-handedly transform society, but aimed to provide marginal, actionable relief.
The Conservative opposition criticized the package. Shadow chancellor Andrew Griffith said that everyday fixes had been canceled out by increased borrowing costs, taxes, and inflation, calling the focus on cheaper gherkins an insult to families.
The Treasury will release the complete list of products affected by tariff removals on Wednesday.
