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​Jeremy Hunt's Pledge: £11 per Hour and a Revamped Benefits System

​Jeremy Hunt's Pledge: £11 per Hour and a Revamped Benefits System

Posted by Stelios on 2nd Oct 2023

The National Living Wage will see an increment to £11 per hour from the forthcoming April, as affirmed by the Chancellor, Jeremy Hunt.

Prime Minister Rishi Sunak hosts Business Council Meeting (53055511688) Image Source: Number 10, CC BY 2.0, via Wikimedia Commons

In his address at the Conservative Party conference, Mr Hunt expressed that this raise will positively impact approximately two million of the lowest-earning workers. He also pledged to re-evaluate the benefits system, specifically the sanctions mechanism, to ensure its equity.

Introduced officially in 2016, the National Living Wage is the minimal hourly pay rate legally permissible for workers who are 23 years and above. The present rate is £10.42 per hour, with a reduced scale for younger employees.

The chancellor has endorsed the recommendations from the Low Pay Commission, indicating potential pay enhancements in the next year. This could mean an increase of over £1,000 for those 2 million workers on low pay. Cumulative raises imply that by next year, a full-time employee receiving the National Living Wage would earn over £9,000 more than they might have in 2010.

Annually, the rate of the National Living Wage is determined by the government, following guidance from the independent advisory body, the Low Pay Commission. The government's norm is to adhere to these suggestions.

While the target is for the National Living Wage to achieve two-thirds of the median hourly earnings by the next October, the exact rate, falling between £10.90 and £11.43, is yet to be confirmed by the Low Pay Commission.

Care assistant Abigail Lewis, who currently earns below £11 an hour, tells the BBC that while the increase might offer temporary relief, the rising living costs often mean her salary is consistently trying to "catch up". She conveyed optimism about any raise, particularly amidst the prevailing cost-of-living crisis which has restricted her disposable income. She hopes that the increase might ease her monthly bills and permit some savings.

Regarding benefits, Mr Hunt articulated the necessity to reassess the system that mandates job-seeking for certain benefit recipients. He noted a concerning trend post-Covid, with an annual 100,000 individuals opting out of the workforce in favour of benefits.

However, details of this renewed strategy remain under wraps, with more insights anticipated during the Autumn Statement in November. There's speculation about potential measures, including prohibiting persistently sanctioned individuals from making new claims for a specified duration.

At a recent event, Work and Pensions Secretary, Mel Stride mentioned the government's consideration of modernising the Work Capability Assessment, aligning it with contemporary working models, like increased home-working options.

This assessment gauges how an individual's health condition or disability affects their working capability. If deemed fit, their benefits might be discontinued.

Reviving employment levels is the crux of the government's economic growth strategy. Recent data shows that due to long-term health issues, around 2.5 million people remain absent from the workforce.

How much is the minimum wage? 

The minimum wage - known officially as the National Living Wage - varies according to the age of the employee. 

Since 1 April 2023, the rates are: 

  • National Living Wage for over-23s: £10.42 an hour 
  • National Minimum Wage for those aged 21-22: £10.18 
  • National Minimum Wage for 18 to 20-year-olds: £7.49 
  • National Minimum Wage for under-18s: £5.28 
  • The Apprentice rate: £5.28 

The apprentice rate applies to people aged under 19, or people over 19 in the first year of their apprenticeship.