UK's government raises national living wage to uplift economic growth

04 Apr '24

3 min read

Pic: Adobe Stock

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The UK government has increased the national living wage to £11.44 (~$14.48) per hour, raised the VAT threshold to £90,000, and announced funding for 20,000 youth apprenticeships.
Additional measures by the government include a 75 per cent business rates discount for retail and leisure sectors, and a significant reduction in household energy bills.

The UK government has announced a substantial rise in the national living wage, increasing it from £10.42 (approximately $13.19) to £11.44 (approximately $14.48) per hour for workers over the age of 21. This adjustment ensures that no full-time worker will earn less than two-thirds of the average hourly wage, translating into an additional £1,800 annually for individuals. This move fulfils a key manifesto commitment to eradicate low pay in the UK.

Simultaneously, the VAT threshold has been elevated from £85,000 to £90,000, a change that exempts 28,000 small businesses from the tax, offering them more financial freedom to scale and expand. This adjustment places the UK's VAT threshold higher than that of any EU country, further enabling British small businesses to thrive and grow, the UK government said in a press release.

In an effort to bolster youth employment and skills development, the government has also committed to fully funding apprenticeships for young individuals up to the age of 21 within small businesses. Supported by £60 million in funding, this initiative aims to create up to 20,000 new apprenticeships, ensuring the future workforce is skilled and robust.

Moreover, retail and leisure businesses will enjoy a continued 75 per cent discount on their business rates for another year, benefiting around 230,000 high street properties. This relief measure is set to save the average pub nearly £13,000 in the upcoming tax year. Furthermore, the small business multiplier for business rates will remain unchanged for the fourth consecutive year, shielding over one million ratepayers from a potential 6.6 per cent increase in their bills.

Households across the UK are also set to experience financial relief with a significant reduction in energy bills, as announced by Ofgem. Energy bills are poised to drop by approximately 12.3 per cent from the previous quarter, reaching their lowest levels since the onset of geopolitical tensions in February 2022. This decrease is expected to save the average household around £250 annually.

Prime minister, Rishi Sunak, said: “These measures could save households around £3,850 year on average which—taken with the upcoming cuts to NICs—will put more money in their pockets to help ignite the economy. Although recent years have tested our resolve, we have not bowed. We have stuck to the plan, more than halved inflation, and set us on a path to growth.

“Because of this determination, we find ourselves in a new economic moment and—thanks to our bumper package of economic reforms coming into force today—2024 is set to be the year Britain bounces back.”

Fibre2Fashion News Desk (DP)

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