When Chancellor Rachel Reeves announced the increases in the Budget last year, she said the cost of living was still the biggest issue for working people.
“The economy isn’t working well enough for those on the lowest incomes,” she added.
At the time, the Treasury said the new minimum wage rates for 2026 struck a balance between “the needs of workers, the affordability for businesses and the opportunities for employment”.
The Living Wage Foundation has welcomed the rises but says they do not go far enough.
The Foundation calculates what is known as the Real Living Wage, which it says is a more accurate reflection of the cost of living in the UK. It currently stands at £13.45 across the UK and £14.80 in London.
Kate Chapman, the executive director of the Living Wage Foundation, said one in seven businesses now pay the Real Living Wage.
“That’s because they know the Living Wage is good for people, good for society and good for business,” she said.
The British Chamber of Commerce has said that tax and labour costs are the biggest concerns for British businesses.
In its quarterly survey of 4,000 firms, 73% said labour costs are putting pressure on them to raise prices.
