Chancellor hints at real terms NMW hike

16 January 2014

The Chancellor George Osborne is reported to be backing calls for the national miminum wage to rise to £7 per hour this October. He told the BBC:

"I believe Britain can afford an above-inflation increase in the minimum wage so we restore its real value for people and we make sure we have a recovery for all and that work always pays."

CPAG Chief Executive Alison Garnham responded by saying:

“This is a very welcome suggestion from the Chancellor and it would do a great deal of good both for the poorest working families and for the economy.

“We know that when workers get better pay, not only are they able to better meet their children’s needs but more money flows through their local community as they spend it. This helps jobs and growth and is exactly what we need to get the economy moving in the poorest communities that need it most.

“The Low Pay Commission makes recommendations to government on the national minimum wage, but the final decision lies with Ministers, so we hope to see this become a firm commitment very soon.”

The NMW went up by 8.8% between October 2009 and October 2013 (from £5.80 to £6.31). But prices went up by 13.7% in the same period (on the government’s preferred CPI measure). If the NMW had gone up with prices during that same time period, it would now be worth £6.60. Therefore, an increase of £0.29 would get the NMW back to what it was worth in October 2009. However, CPAG believes that there is a strong case for raising the minimum wage further above inflation over time to reach living wage levels.

For more information on the Living Wage please visit