National living wage rise kicks in as households brace for tax and bill hikes

Angela Rayner insisted a rise to the national living wage coming into effect on Tuesday will give workers “more money in their pockets” as households brace for April’s council tax and energy bill hikes.

Those eligible aged 21 and over will get a 6.7% pay increase, from £11.44 to £12.21 per hour, while 18 to 20-year-olds will receive an uplift of £1.40, from £8.60 to £10 per hour, under the changes.

However, the rise, announced in Chancellor Rachel Reeves’ budget, coincides with increases to council tax, employer national insurance contributions (NICs) and fuel costs for millions of households across the country.

The annual bill for a household using a typical amount of gas and electricity is going up to £1,849 per year, an increase of £111, when Ofgem’s latest energy price cap takes effect on Tuesday.

Water bills for households are also going up in England and Wales by £10 more per month on average, though it varies depending on the company.

Meanwhile, most councils in England will hike tax by the maximum amount allowed, which is 4.99%, and on April 6 the rate of employer NICs will increase from 13.8% to 15%.

Opposition critics have claimed families will be up to £3,536 worse off over the course of this Parliament as a result of what they call the Government’s “jobs tax”.

Speaking ahead of the national living wage rise on Tuesday, Ms Rayner, who is also overseeing Labour’s plans to upgrade workers’ right, said: “This pay rise for over three million of the lowest-paid workers was a priority for this Government and means we’re already giving hardworking people more money in their pockets, and a proper wage increase worth over twice the rate of inflation.

“These changes are part of our plan for change – to raise living standards for people across the country, including apprentices and young people, giving them more job security and the huge pay boost they deserve too.”

Business Secretary Jonathan Reynolds said: “We promised to make low pay a thing of the past. Now, as part of our plan for change and the biggest upgrade to workers’ rights in a generation, we are delivering that.

“Low pay is not only bad for workers, it prevents them from spending on our high streets and allowing local businesses to achieve their full potential.

“By ensuring that everyone gets a fair wage for the hours they work, we’re delivering the financial stability needed to kick-start economic growth and ensure our country is fit for the future.”

Unions welcomed the wage increase, with TUC general secretary Paul Nowak saying it would “make a real difference” to the lowest-paid workers and set out a path to ending “the outdated and unfair youth rates”.

“More money in working people’s pockets means more spend on our high streets – that’s good for workers and good for local economies,” he said.

Businesses and political opponents have suggested the employer NICs increase would damage jobs, growth and investment.

Conservative leader Kemi Badenoch said the Government’s economic policy left Britain dangerously exposed to the fallout from global tariffs announced by US President Donald Trump.

She said: “Rachel Reeves has gambled with the economy, leaving us dangerously vulnerable to American tariffs. Labour’s unprecedented borrowing spree and record levels of tax means she has pulled the handbrake on economic growth.

“The Prime Minister might think this is all just pocket money, but Britain’s working families will certainly notice the £3,500 Labour ministers have cost them.

“Labour didn’t have a plan and now they have snatched winter fuel payments from pensioners, introduced emergency welfare cuts and from this weekend will be hiking taxes on work through their jobs tax.”

Shadow chancellor Mel Stride claimed the pay rises coming into effect on Tuesday would be wiped out by “Labour’s skyrocketing bills and Rachel Reeves’ jobs tax.”

“Labour snatched away winter fuel payments, whacked up taxes on farmers, and clobbered businesses with higher taxes. We tried several times to get the government to exempt hospices, charities and other essential services from the jobs tax, but they refused to listen,” he said.

“You’re always poorer under Labour.”

However, the Government blamed the Conservative record for increases to water bills, saying the previous Tory administration had allowed company bosses to line their pockets with customer money.

Environment Secretary Steve Reed said: “Our sewage system crumbled under the Conservatives. They irresponsibly let water companies divert customers’ money to line the pockets of their bosses and shareholders.

“The public are right to be angry after they have been left to pay the price of Conservative failure.

“Never again. The Labour Government will ringfence money earmarked for investment so it can never be diverted for bonuses and shareholder payouts. We will clean up our rivers, lakes, and seas for good.”

Liberal Democrat leader Sir Ed Davey urged the Government to reverse its decision to cut the winter fuel payment for all but the poorest pensioners as part of Ms Reeves’ efforts to balance the books.

He said: “Families are facing spiralling energy and water bills while company bosses rake in millions of pounds in bonuses. It’s no wonder so many feel they’re being ripped off.

“The Government must get a grip on energy bills, and fast. That means reversing their callous decision to cut winter fuel payments and protecting families in fuel poverty from being hammered once again by unfair bill rises.”

Published: 01/04/2025 by Radio NewsHub