National Minimum Wage and National Living Wage rates rise on 1 April 2023

All rates of the National Minimum Wage, including the National Living Wage, increased on 1 April 2023, the Low Pay Commission said¹. The National Living Wage, the statutory minimum for workers aged 23 and over, rose 9.7 per cent to £10.42 an hour, an increase of 92p². The government described it as the largest ever cash increase in the National Living Wage².

The 21 to 22 year old rate rose 10.9 per cent to £10.18, an increase of £1.00. The 18 to 20 year old rate rose 9.7 per cent to £7.49, up 66p. The 16 to 17 year old rate and the apprentice rate both rose 9.7 per cent to £5.28, up 47p. The accommodation offset, an allowable deduction from wages for employer-provided accommodation, rose 4.6 per cent to £9.10 a day².

The increases followed recommendations the Low Pay Commission made to the government in autumn 2022. The commission originally submitted its recommendations in October 2022 and the government announced its acceptance of them on 17 November 2022². The commission said the rise was expected to leave the real value of the National Living Wage, adjusted for inflation, higher in April 2023 than in April 2022, recovering much of the value lost since April 2021 but remaining slightly below its all-time high in April 2021².

Bryan Sanderson, chair of the Low Pay Commission, said:

The commission said the new rate kept it on track for the government's target, in place since 2020, for the National Living Wage to reach two-thirds of median earnings by 2024². It estimated the rate would need to rise to between £10.90 and £11.43 in 2024 to meet that target, with a central estimate of £11.16². The government has said it intends to lower the age threshold for the National Living Wage to 21 by 2024².

The National Living Wage is separate from the UK Living Wage and the London Living Wage calculated by the Living Wage Foundation, which are voluntary benchmarks rather than legal requirements, apply to workers aged 18 and over, and are based on an attempt to measure need². The National Living Wage and National Minimum Wage guide sets out how the pay floors rise, and the comparison with the real Living Wage explains what each measures.

Why it matters for households

The rates apply to pay from 1 April 2023 for workers in the relevant age bands across the UK². For someone aged 23 or over paid at the minimum, the hourly rate rose from £9.50 to £10.42, a 92p increase². The Joseph Rowntree Foundation, which publishes the Minimum Income Standard, said the 9.7 per cent rise was above CPI inflation of 8.7 per cent in April 2023 but did not make up the gap between the National Living Wage and inflation resulting from a below-inflation increase in 2022, and did not cover the increase in the cost of a minimum budget over the past year³. It said a single person needed to earn £29,500 a year to reach a minimum acceptable standard of living in 2023, and a couple with two children £50,000 between them³.

The Resolution Foundation said the rise from £9.50 to £10.42 would protect the lowest earners from inflation⁴. It also noted that benefits were uprated by 10.1 per cent in April 2023 and that the benefit cap was increased by the same percentage⁴. The Joseph Rowntree Foundation said that even with cost-of-living support payments, a couple with two children on out-of-work benefits had half of what they needed for a minimum standard of living, and that the same family with one parent working full time on the National Living Wage reached 77 per cent of the Minimum Income Standard with the payments and 74 per cent without them³.

What happens next

The Low Pay Commission consulted on National Minimum Wage rates for April 2024 and beyond, with the consultation running from 23 March to 9 June 2023, and said it would make recommendations to the government in October². The commission said it was also inviting evidence on the future of minimum wage policy once the two-thirds target is achieved². The government had not yet published its remit to the commission for 2023².