John Healey is expected to use Wednesday's Budget to announce that the National Living Wage will rise by about 3.9 per cent to around £13.20 an hour from April 2027, according to reports in The Times and Bloomberg (which put the rise at about 4 per cent), with the rate for 18 to 20-year-olds rising by the same proportion to about £11.27.
The Times reported the figures on Monday evening without naming its sources. Bloomberg cited a person familiar with the discussions who spoke on condition of anonymity because no announcement has been made. A Treasury spokesman declined to comment, the Mirror reported.
If confirmed, the youth figure would be the more significant of the two. It would end two years in which the 18 to 20 rate rose much faster than the adult rate, the route by which the government has pursued Labour's 2024 manifesto pledge to remove what it called "discriminatory" age bands from the minimum wage.
The adult rate stands at £12.71 and the 18 to 20 rate at £10.85, both in force since 1 April. The reported increases would widen the cash gap between the two from £1.86 to £1.93 an hour, while leaving the youth rate at roughly 85 per cent of the adult rate, the same share as now.
The adult figure is close to what the Low Pay Commission, the independent body that advises ministers on the rates, had already projected. On 1 April it published a central estimate of £13.18 for April 2027, within a range of £13.02 to £13.34, based on its target of two-thirds of median hourly earnings. The reported £13.20 is 3.9 per cent above the current rate; the central estimate would be 3.7 per cent.
The last round of increases, which the government accepted in full on the commission's recommendation, lifted the adult rate by 50p, or 4.1 per cent, and the 18 to 20 rate by 85p, or 8.5 per cent. The commission considered moving 20-year-olds onto the adult rate in 2026, a step that would have raised their wage floor by more than 25 per cent, but rejected it.
"Given the state of the youth labour market and stakeholder feedback, we think this is too risky and have decided against making this change this year. Instead, we recommend keeping the 18-20 year olds together for another year."
The government's remit to the commission, published on 16 March, restated the commitment to remove the adult age bands but left the timing open. The commission has said the remit gives it "full flexibility to determine the pace and ultimate timing of that alignment, with priority being given to the employment prospects of younger workers."
Those prospects have worsened over the past year. Some 715,000 people aged 16 to 24 were unemployed between June and August 2026, a rate of 15.6 per cent, up from 14.6 per cent a year earlier, according to a Commons Library briefing published on 20 October using Office for National Statistics data. The ONS put the share of 16 to 24-year-olds not in education, employment or training at 13.0 per cent in April to June, up 0.2 points on the year.
Business groups have argued that rapid rises in the youth rate deter employers from hiring young people, according to City AM and LBC. The commission said in October 2025 that "our assessment is that the evidence is not sufficient to say that these increases have affected young people's employment overall." The TUC has rejected warnings about equalising the rates, citing its own analysis that 85 per cent of young people are already paid above the youth rate, the Mirror reported.
City AM reported that the reported rise marks the end of the government's ambition to equalise pay for under-21s. The March remit, however, keeps that commitment in place and leaves its pace to the commission.
It is not yet known whether the commission recommended a 3.9 per cent rise for 18 to 20-year-olds or whether the Treasury settled on the figure itself. LBC reported, without attribution, that Mr Healey will say he has accepted the commission's recommendations. The commission's advice on the 2027 rates is due by the end of October, according to IBTimes UK, and has not been published.
Wednesday's Budget will be Mr Healey's first since Prime Minister Andy Burnham appointed him Chancellor on 20 July in succession to Rachel Reeves. The rates will not be confirmed until the Budget is delivered and the government publishes its decision.
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