Budget 2021: Tory MPs 'fed up' with Rishi Sunak says Watt
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Rishi Sunak recently delivered his Autumn Budget and from April 1, 2022, the National Living Wage will increase by 6.6 percent. This will mean those aged over 23 will see their rate rise from £8.91 to £9.50 an hour, with full-time workers set to get £1,074 extra a year before tax.
Minimum wage increases
Minimum wage rates will also be increased for younger workers and apprentices. From April 1, the following increases will be introduced:
- National Minimum Wage for those aged 21-22: From £8.36 to £9.18
- National Minimum Wage for 18 to 20-year-olds: From £6.56 to £6.83
- National Minimum Wage for under-18s: From £4.62 to £4.81
- The Apprentice Rate: From £4.30 to £4.81
In commenting on the increases, Mr Sunak said the rises “ensure we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament”.
However, despite the Chancellor’s best efforts, new research from Investing Reviews looked at how affordable cities are for those living on the minimum wage, with only five cities in the UK affordable on the new minimum wage of £9.50 an hour.
The most unaffordable cities in the UK for those on minimum wage
Unfortunately, those in the south of England are set to struggle. Investing Reviews examined disposable income levels for those aged 23 and compared it with total monthly cost of living levels, which included rent. The results highlighted how much disposable income a worker would have after the cost of living is accounted for:
- The City of Westminster: Disposable income – -£3,238.99
- London: Disposable income – -£1,340.38
- St Albans: Disposable income – -£704.85
- Brighton & Hove: Disposable income – -£574.05
- Edinburgh: Disposable income – -£419.31
- Cambridge: Disposable income – -£416.26
- Bristol: Disposable income – -£386.46
- Oxford: Disposable income – -£368.75
- Durham: Disposable income – -£347.65
- York: Disposable income – -£187.36
The same research showed 29 cities are now affordable for those on minimum wage above the age of 23, which is fewer than before the increase (32) due to rising rent prices and the cost of living.
Investing Reviews warned nowhere is affordable for those doing an apprenticeship or aged under 18 and when looking at the average minimum wage across all age groups, it was found only five cities were affordable.
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The most affordable cities in the UK for those on minimum wage
Those who may be keen to move to a more affordable area may have luck in the following cities:
- Bradford: Disposable income – £361.00
- Kingston upon Hull: Disposable income – £323.10
- Stoke-on-Trent: Disposable income – £313.16
- Aberdeen: Disposable income – £313.06
- Derby: Disposable income – £297.06
- Wakefield: Disposable income – £264.64
- Worcester: Disposable income – £196.06
- Preston: Disposable income – £195.29
- Wolverhampton: Disposable income – £194.27
- Sheffield: Disposable income – £174.82
Simon Lister, Financial Author for www.InvestingReviews.co.uk, commented: “The last year has put a lot of pressure on our finances, with job insecurity and losses across the UK. The Autumn Budget and the news of increasing minimum wages will be welcomed by those who are in minimum wage jobs however looking at our research it does still beg the question as to whether this is enough, with plenty of large cities still outpricing those on a minimum wage.
“The new minimum wage could also cause problems for a lot of small businesses who are already struggling as a result of the pandemic. The increase in wage for staff could be unaffordable for many businesses, and if they don’t see any further support from the Government, they may be unable to keep on staff. To counteract this challenge we could see an increase in the cost of products and services to help business owners be able to afford to retain their staff.”
On top of ongoing affordability problems, StepChange Debt Charity warned lower-income households who accumulated debt during the pandemic are still deep in a hole from which a “helping hand from the state to climb out remains too far away to reach.”
StepChange explained: “The main positive take-aways from [the] Budget and the pre-announced measures of the past few days for people experiencing problem debt are the change in the Universal Credit taper that will allow people to keep more of their benefit as they increase their income from working, along with the rise in the national living wage, the additional support for rent arrears and an increase in affordable housing.
“However, overall, lower income households – who are disproportionately represented among households experiencing problem debt – are still likely to be worse off than they were before the £6billion of temporary uplift to Universal Credit was withdrawn, with increased National Insurance contributions also looming for many households from next year.”
The charity also went on to note the National Living Wage increase was “welcome”, but among lower income clients turning to debt advice, an increasing proportion are still likely to face a deficit budget, with their expenditure on basic essentials exceeding their outgoings, even before trying to find ways to repay their debt.
Peter Tutton, Head of Policy, Research and Public Affairs at StepChange Debt Charity, commented on Mr Sunak’s announcement.
“Among our clients, lower income households are disproportionately represented among those experiencing problem debt, and [the Budget’s] measures – while helpful – won’t shift the dial on this much,” he said.
“The improvement to the Universal Credit taper is very welcome – although while two million working households will benefit, millions of others will not. A third of our clients experiencing problem debt claim Universal Credit, and they are already experiencing the rising costs of fuel, energy and food, together with the Covid backlog of rent and council tax arrears, and unaffordable deductions from their payments which push them further into debt.
“Of course we welcome the incremental improvements to increase the minimum wage and address some of the structural flaws of Universal Credit, as well as the recognition that rent arrears will not resolve themselves and will lead to a significant rise in evictions without support.
“The big picture, though, is that social security safety nets are simply not adequate to ensure that people who are forced to rely on them are able to make ends meet. Alongside longer term reform, we would urge the Government to stand ready to offer further support, beyond the Budget measures announced, to those who need it most.”
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