John Healey set to announce 'inflation-busting' minimum wage hike

John Healey is gearing up to announce an "inflation-busting" minimum wage hike as concerns mount over what could be included in the Budget.

The National Living Wage could rise by just under four per cent on Wednesday if Andy Burnham's Chancellor goes ahead with the plans.

Such a move would push hourly wages to £13.18 - the highest rate Britain will have ever seen.

But the "inflation-busting" increase would soar above inflation, which is already bludgeoning hard-working businesses across the country.

Last week, figures revealed that inflation surged to its highest level in almost a year ahead of Mr Healey's Autumn Budget.

The Consumer Prices Index (CPI) rose to 3.5 per cent in September, up from 3.1 per cent in August, according to the Office for National Statistics (ONS).

This marked the highest inflation rate since October 2025, when it stood at 3.6 per cent, and exceeded economists' expectations of 3.4 per cent.

Mr Healey, at the time, heaped blame onto conflicts in the Middle East and Europe which were impacting international economies.

Now, the Chancellor's potential minimum wage boost risks burdening British businesses further, many of which have railed against Labour's rates.

Companies up and down the country are still trying to find their feet after Rachel Reeves hit them with a £25billion jump in employers’ National Insurance contributions as well as the the Employment Rights Act during her time in No11.

Alex Hall-Chen, from the Institute of Directors (IoD), said: "Combined with an increase in the National Living Wage of over 40 per cent since 2021, there is a crisis in the cost of employment which is leading many employers to curb hiring and look to automation and outsourcing as alternatives."

Economic experts used official earnings data published by the ONS, which is used to work out the minimum wage rate, said the boost could be even larger.

Deutsche Bank even predicted a staggering 4.6 per cent increase by next April - and Morgan Stanley forecast the jump could scramble as high as 5.5 per cent by spring.

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The Treasury declined to comment.

With the UK face-to-face with a youth unemployment crisis, the anticipated rise could make it harder to encourage firms to take on young graduates.

Youth unemployment is worse in some parts of England than in Bulgaria or Slovenia, new research revealed this morning.

The Conservatives also claim a third of 16-24-year-olds who are not in education are also not in work as around one million young people across the UK are considered Neets.

More than 30 per cent of young people in Blackpool claim out-of-work benefits, a figure local MP Chris Webb says is unacceptable.

Speaking to GB News, the Labour backbencher said he and other MPs have been telling the Government for some time they need to focus on this issue and provide young people with more assistance.

He added: "If young people are able to work, they should be in work. And we’ve got to make sure that happens, because we can't let that benefit bill keep going up and up and up.

"But we've got to give them (young people) that support to make sure they can."