Britain's lowest earners will receive a pay rise of 19p an hour next year.

Basic rate workers will get a 2.2 per cent hike, Rishi Sunak said, in a U-turn on the 49p an hour promised earlier this year.

Speaking during his Spending Review on Wednesday, he said the National Living Wage will rise to £8.91 an hour next April, with this rate extended to those aged 23 and over.

However, unions described the decision to axe the 49p pay rise as a "let down" for thousands of vulnerable families as he also ignored calls for an extension of the £20 a week Universal Credit boost.

"Workers on the national minimum wage - not least the two million who are key workers - have been let down by the Government's decision to row back on the full planned rise they were promised," the Trades Union Congress said.

Wage increase based on age

This is how much the minimum wage is set to rise from April 2021 based on age groups:

  • 16 to 17 years old: a 1.5 per cent increase from £4.55 to £4.62 per hour
  • 18 to 20 years old: a 1.7 per cent increase from £6.45 to £6.56 per hour
  • 21 to 22 years old: a 2 per cent increase from £8.20 to £8.36 per hour
  • For apprentices: a 3.6 per cent increase from £4.15 to £4.30 per hour

The daily accommodation offset rate will also be increased by 2 per cent from £8.20 to £8.36.

“Further, the government will increase the 2021-22 Income Tax Personal Allowance and Higher Rate Threshold in line with the September CPI figure,” the SR2020 states.

The government will also use the September CPI figure as the basis for selling all National Insurance limits and thresholds, and the rates of Class 2 and 3 National Insurance contributions, for 2021-22.

Chancellor Rishi Sunak said: “We are accepting in full the recommendations of the Low Pay Commission to increase the National Living Wage by 2.2 per cent to £8.91 an hour; to extend this rate to those aged 23 and over; and to increase the National Minimum Wage rates as well.”

It was explained that around two million people would benefit from these minimum wage increases, and that a full time worker on the National Living Wage will see their annual earnings increase by £345 next year.

“Compared to 2016 when the policy was first introduced, that’s a pay rise of over £4,000,” Sunak said.