National living wage will consider cost of living

In a change of approach, the government has told the Low Pay Commission to take the cost of living into account when setting the next national living wage increase

This will be the first time the cost of living has been used as a lever when setting rates for the national living wage.

The Low Pay Commission (LPC) will give the government recommendations on the proposed rise for 2025-26 in October with the increase coming into force from April 2025.

Business secretary Jonathan Reynolds said: ‘The new remit to the LPC is the first of many vital steps we will take to support more people to stay in work and improve living standards.

‘Our focus remains on putting more money in working people’s pockets and boosting economic growth.’

In addition to the cost of living, the LPC will continue to take into account the impact on business, competitiveness, the labour market and the wider economy.

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