The Fed reacts to further increase in National Living Wage

(Pictured: The Fed’s President, Hemanshu Patel)

The Fed has reacted to a reported increase in the National Living Wage, albeit at a slightly slower rate of increase than in recent years.

As reported in The Times newspaper on Tuesday, the minimum wage paid to people in the UK aged 21 and over is expected to rise by 3.9%, from the current £12.71 to £13.20 an hour from April 2027, with the increase expected to be confirmed by the Chancellor in Wednesday’s Budget.

Meanwhile, the minimum wage for those aged 18–21 is expected to rise by a similar rate of 3.9%, from £10.85 to £11.27 an hour. However, this is a lower increase than the 16.3% and 8.5% rises for younger workers that took effect in April 2025 and April 2026 respectively. The expected increases come at a time when the Office for National Statistics (ONS) records inflation at approximately 3.5% in the year to September.

Whilst independent retailers are major employers, the Fed has repeatedly raised concerns that sharp increases in the minimum wage, combined with higher National Insurance Contributions and other rising operating costs, are making it increasingly difficult for independent businesses to recruit and retain staff.

Hemanshu Patel, National President of the Fed, said: “Independent retailers want to pay their staff fairly, but the Government must recognise that every increase in employment costs has to be paid for by a business already facing significant financial pressures.

“For many independent retailers, these are not simply figures on a spreadsheet. They affect decisions about whether they can afford to take on new staff, offer hours to younger workers or maintain their existing workforce. We are concerned that, without proper consideration of the cumulative costs facing employers, the Government risks making it harder for young people to find work and for independent retailers to continue providing jobs in their local communities.

“We want to see fair pay, but we also need a sustainable environment in which independent retailers can employ people, invest in their businesses and continue serving their communities.”

According to the House of Commons Library, the UK’s minimum wage rate is the fourth highest in the Organisation for Economic Co-operation and Development (OECD) by purchasing power parity and has grown faster than every other G7 country since 2015, reaching approximately 62% of the national median wage.