Summer Budget 2015: National Living Wage to be introduced in 2016

By Emma Eversham contact

- Last updated on GMT

George Osborne's Summer Budget is making the Living Wage compulsory from 2016
George Osborne's Summer Budget is making the Living Wage compulsory from 2016

Related tags: National living wage, 2016, George osborne

All UK businesses will have to pay workers a National Living Wage of £7.20 an hour from next April, Chancellor George Osborne has announced. 

Delivering his emergency Summer Budget earlier today, Osborne said he would be making it compulsory for all firms to pay workers over 25 a Living Wage at the rate of £7.20 per hour, rising to £9 per hour by 2020.  

A number of hospitality businesses, including InterContinental Hotel Group and Sundial Group​, have pledged to pay employees a Living Wage and at last week's British Hospitality Association's Hospitality and Tourism Summit London Mayor Boris Johnson called for all hospitality employers​ to pay it.  

However, Greater London Authority member Tony Arbour warned last year it could lead to more than 200,000 jobs in the industry​ being lost.

In his speech Osborne said the OBR had said the move would have only 'a fractional' effect on jobs.

"The OBR have assessed the economic conditions of the country, and all the policies in the Budget.

"They say that by 2020 there will be 60,000 fewer jobs as a result of the National Living Wage but almost 1 million more in total," he said. 

For business owners, however, there were some benefits. Businesses will see their National Insurance bill cut by another £1,000 from April 2016 as the Employment Allowance rises from £2,000 to £3,000, a move welcomed by the British Beer & Pub Association.

Corporation tax will be cut to 19 per cent in 2017 and 18 per cent in 2020. This follows cuts from 28 per cent in 2010 to 20 per cent 'in order to boost UK competitiveness'. 

There was also an announcement on apprenticeships with three million new apprenticeships to be created by 2020, which will be funded by a levy on large employers.

"Firms that are committed to training will be able to get back more than they put in," said Osborne.

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