The UK minimum wage is expected to increase in the upcoming Budget, although workers aged 18 to 20 will receive smaller percentage raises than in recent years, aligning instead with the percentage increases set for older employees.
According to figures reported by The Times, the National Minimum Wage for 18-to-20-year-olds is set to rise by 3.9 percent, moving from £10.85 per hour to approximately £11.27. While the Labour government has delivered a cumulative 26 percent pay increase for younger workers since returning to power in 2024, the upcoming adjustment marks a smaller step forward than the substantial boosts introduced over the past two years to fulfill a manifesto promise aimed at removing age-based wage bands.
Despite the planned raise, pay for younger staff will remain below the National Living Wage for employees aged 21 and over. That higher rate currently stands at £12.71 per hour and is anticipated to increase by 3.9 percent to £13.20. Business Secretary Jonathan Reynolds clarified that while the government remains committed to equalising pay across adult age groups, the transition was designed to occur gradually over time. "The manifesto pledge on equalisation still applies but we were always clear it could happen over time," Reynolds said. "Of course, you want not just good wages but good work. It is a balance of making sure the pressures on the labour market are taken into account."
The decision to maintain distinct pay brackets drew sharp criticism from trade unions. Andrea Egan, general secretary of the union Unison, described the ongoing wage gap as "deeply unfair." Highlighting the disparity, she noted that twenty year-old care workers, teaching assistants and security guards do the same work as their older colleagues. "They don't pay less in the supermarket or at the petrol pump. They must be paid equally," Egan said.
Alongside the pay updates, Chancellor John Healey is unveiling a package of economic interventions intended to offer families what he described as "breathing space" with the cost of living. Among these measures is the removal of import taxes on 100 food items. Combined with existing tariff suspensions enacted in June on goods such as pasta, fruit juice, and tuna, the policy is expected to save individual households up to £21 per year, or roughly 40p per week. Reynolds noted that while the tariff rollbacks are not a complete solution, the combined summer and autumn changes will save consumers approximately £500 million annually.
The government also detailed several additional policy commitments. The tax-free mileage rate for work-related driving up to 10,000 miles will be permanently set at 55p per mile, while the rate for distances beyond that threshold will rise from 25p to 35p per mile. In addition, ministers plan to eliminate the current benefit cliff-edge for individuals receiving carer's allowance payments, replacing it with a sliding taper mechanism that lets carers earn more without forfeiting their full entitlement; however, this change will not be implemented until 2030. The government is also giving two weeks of paternity pay to self-employed fathers, who have previously missed out on payments of up to £194 a week for the period. To facilitate parcel shipping, the government is also rolling out hundreds of additional Post Office drop boxes across the country.
Speaking about the combined policy announcements, Chancellor Healey acknowledged the realistic scope of the measures. "None of this is going to change the world. But if it helps around the margins and its action the government can take, then I want try and fix it," Healey said.
Other measures the government announced on Tuesday included:
Allowing carers to earn more than an existing earnings limit without losing their entire allowance, replacing it with a taper mechanism instead. However, this will not come in until 2030
