Chancellor George Osborne has announced the introduction of a new National Living Wage, set to be launched from April 2016.
The compulsory measure, which came as part of the first fully Conservative Budget since that of Ken Clarke in November 1996, will see working people over the age of 25 earning at least £7.20 an hour, rising to £9 an hour by 2020.
Introducing the measure, Osborne declared: "Britain deserves a pay rise and Britain is getting a pay rise." He said that studies by the Office for Budget Responsibility (OBR) indicated there would be only a "fractional impact" on jobs as a result of the move, which will see future rises recommended by the Low Pay Commission.
It was the key announcement in a Budget that Osborne said was for "working people" and set against a backdrop of a British economy that he claimed was the "strongest of any advanced economy in the world".
The Chancellor stated that OBR forecasts put the predicted rate of economic growth for Britain at 2.4% in 2015, 2.3% in 2016, and 2.4% in 2017, while business investment was up 31.9% since 2010.
Other measures included in the Budget were:
- A cut in corporation tax to 19% in 2017 and 18% in 2020.
- Raising the tax free personal allowance to £11,000 next year and an "ambition" to raise it to £12,500 by 2020.
- The higher rate threshold will increase from £42,385 in 2015-16 to £43,000 in 2016-17
- The annual investment allowance, which has previously been increased temporarily, will be set permanently at £200,000 from January 2016. The allowance means businesses can deduct the full value of certain items, including equipment and machinery, up to a total value of £200,000 from their profits before tax.
- The Employment Allowance will increase by a further £1,000 to £3,000. Businesses will have their employer National Insurance bill cut by another £1,000 from April 2016, as the Employment Allowance rises from £2,000 to £3,000
- Working-age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from 2016-17 (this doesn't include Maternity Allowance, maternity pay, paternity pay and sick pay)
- An apprenticeship levy on large firms, in a bid to create three million new apprentices by 2020.
Let us know what you think of the new National Living Wage in The Caterer Living Wage discussion group