Chancellor John Healey announced a 3.9% rise in the National Living Wage to £13.21 an hour, but offered no indication that employers would receive relief on National Insurance costs, Personnel Today reported.
The adult rate increase was part of what Healey called a “budget for the working people of Britain”. He also said the government would reject broad-based tax rises, while pledging action to recover unpaid tax and tackle loopholes.
Pay rises and employer costs
The minimum wage for workers aged 18 to 20 will rise by 3.9% to £11.27 an hour. Personnel Today noted that this is slower growth than in recent years: the rate for younger workers increased by 44% over the previous three years. Those earlier rises have been cited as one factor discouraging employers from hiring young people.
Conservative leader Kemi Badenoch backed the slower increase, saying it could encourage businesses to take a chance on younger workers. She also criticised the Budget as lacking support for businesses and said more action was needed on youth unemployment.
Business rates relief will mean many small employers in hospitality, retail and leisure pay no business rates, according to the report. But employers’ National Insurance costs were not reduced. Nick Bustin, HaysMac’s head of employment tax, said businesses would be disappointed that relief had not been expanded.
Other measures and reaction
The personal income tax allowance will remain at £12,750. Healey said a portion of income tax would go to regional mayors from 2028 as part of a wider move towards fiscal devolution.
The Budget also included a “founders’ relief”, allowing people to earn up to £3,000 tax-free from a new venture, and a young entrepreneurs allowance to cover a year of living costs while recipients develop business ideas.
Measures announced before the Budget were confirmed, including extending parental pay to self-employed people and changing the carers’ allowance earnings limit. Under the new approach, carers who earn slightly above the current weekly threshold will not lose their entire allowance.
Healey also outlined plans for a government digital overhaul, which the report said could save around £600 million in back-office costs, and a review of NHS productivity and artificial intelligence.
Charles Hipps, founder of recruitment technology firm Oleeo, said higher wages would help young people facing living costs, but cautioned that slower increases alone might not prompt employers to recruit more inexperienced workers. He said hiring also requires investment in training and supervision.
Ben Harrison of Lancaster University’s Work Foundation warned the Budget risked being a “stopgap”. Healey said the second part of the Milburn review on young people and work would be published next month, with a government response due by year-end and legislation to follow.
Original Source: https://www.personneltoday.com/hr/budget-2026/
