Healey to announce minimum wage rise of nearly 4% in UK budget

Defence spending path to 3% of GDP by 2030 also outlined

By LineZotpaper AI staff

Published26 October 2026

Updated27 October 2026

Read Time2 min

Sources4 outlets

Chancellor John Healey is expected to announce a near-4% increase in the UK's minimum wage in his Wednesday budget statement, according to reports. The pay rise, which would take effect in 2027, would see the National Living Wage for workers aged 21 and over rise from £12.71 to around £13.20 per hour. The budget is also set to outline a path for defence spending to reach 3% of national income by 2030, as indicated by Prime Minister Andy Burnham.

Chancellor John Healey is expected to unveil plans to raise the minimum wage by nearly 4% in his autumn statement on Wednesday, according to reports from The Times citing unnamed sources. The National Living Wage for workers aged 21 and over would rise by 3.9% from £12.71 to approximately £13.20 per hour. The National Minimum Wage for 18- to 20-year-olds would increase from £10.85 to around £11.27 per hour. If confirmed, the rises would take effect in 2027, ending a recent trend of younger staff receiving larger percentage increases.

The Treasury declined to comment on the report. The UK's minimum wage is already among the highest in advanced economies as a share of median earnings, following efforts by previous governments to lift it to two-thirds of median hourly pay. Some analysts and employers have noted that the higher rates for younger workers may be contributing to rising youth unemployment.

In April, the Low Pay Commission, which advises the government, suggested the National Living Wage would need to rise by about 3.7% to £13.18 in 2027 to keep pace with average pay growth. In March, the government adjusted the commission's remit to give it more flexibility to consider labour market conditions for 18- to 20-year-olds.

On Monday, Prime Minister Andy Burnham said the budget would set out a path for defence spending to reach 3% of national income by 2030, placing national security as the top priority. Opposition critics and military figures have pressed the government to commit to 3% of GDP by 2030 and 3.5% by 2035 as part of NATO pledges. Healey, who resigned as defence secretary earlier this year over military funding disputes, has stated that the detailed timetable will be outlined in next year's spending review rather than in the budget.

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Minimum wage rates by age, current and proposed for 2027

£ per hour

Proposed rates are as reported by The Times, citing unnamed sources; changes would take effect in 2027. Source: The Times, as reported by The Independent

Analysis

Why This Matters

The minimum wage increase will directly boost incomes for millions of low-paid workers across the UK, but may raise costs for businesses.
The shift away from larger percentage increases for younger workers could affect youth employment trends, a concern flagged by some analysts.
The defence spending path sets a clear priority for national security but leaves questions about funding offsets in other areas.

Background

The UK minimum wage is among the highest in advanced economies relative to median earnings, a position achieved through successive government policies. The Low Pay Commission independently advises on wage levels, and its remit was adjusted in March to allow greater consideration of labour market conditions for younger workers. The expected rise of 3.9% aligns with the commission's earlier projection of 3.7% needed to keep pace with average pay growth by 2027.

Key Perspectives

Analysts and employers: some have pointed to the higher pay rates for younger workers as a factor contributing to rising youth unemployment. Opposition critics and military figures: have urged the government to commit to defence spending reaching 3% of GDP by 2030 and 3.5% by 2035, consistent with NATO pledges.

What to Watch

Confirmation of the exact wage increases in Wednesday's budget statement.
The reaction from business groups and unions to the proposed changes.
Details on the defence spending timetable, expected in the next year's spending review.

Sources

John Healey to announce inflation-busting minimum wage rise · The Telegraph
John Healey to increase minimum wage but slow rise for young people · The Times
Healey ‘to announce UK minimum wage will rise by nearly 4%’ in new boost for workers · The Independent UK
Budget 2026 latest: Chancellor Healey to cut food costs in bid to deliver ‘everyday fixes’ · The Independent UK

Checked

12 claims in this story checked against 1 source: 9 supported.

Show each claim

SupportedHealey is expected to announce a nearly 4% minimum-wage rise in Wednesday’s budget.The Independent UK: “Chancellor John Healey is expected to unveil plans on Wednesday to raise the minimum wage by nearly 4 per cent, according to reports.”
Partly supportedThe budget is set to outline a defence-spending path to 3% of GDP by 2030.The Independent UK: “Earlier on Monday, prime minister Andy Burnham said the Budget will set out a path for defence spending to hit 3 per cent of national income by 2030.”
SupportedThe National Living Wage for workers aged 21 and over is set to rise 3.9%, from £12.71 to around £13.20 an hour.The Independent UK: “The Times, citing unnamed sources, reported that the UK’s National Living Wage for workers aged 21 and over is set to rise by 3.9 per cent, moving from £12.71 to around £13.20 ($17.63) per hour.”
SupportedThe National Minimum Wage for 18- to 20-year-olds is set to rise from £10.85 to around £11.27 an hour.The Independent UK: “Meanwhile, the National Minimum Wage for those aged 18, 19 and 20 will increase broadly in line with older workers, rising from £10.85 to approximately £11.27 an hour.”
SupportedIf confirmed, the proposed pay rises would take effect in 2027.The Independent UK: “If confirmed in Wednesday’s budget statement, these pay rises would take effect in 2027, bringing an end to the recent trend of younger staff receiving larger percentage increases than older employees.”
SupportedThe increases would end the recent trend of younger workers receiving larger percentage rises than older workers.The Independent UK: “these pay rises would take effect in 2027, bringing an end to the recent trend of younger staff receiving larger percentage increases than older employees.”
SupportedSome analysts and employers have said higher rates for younger workers may be contributing to rising youth unemployment.The Independent UK: “Some analysts and employers have previously pointed to the rate payable to younger workers as a cause of increasing youth unemployment.”
Partly supportedIn April, the Low Pay Commission suggested the National Living Wage would need to rise about 3.7% to £13.18 in 2027 to keep pace with average pay growth.The Independent UK: “In April, the Low Pay Commission, which advises the government on minimum wage rises, said the National Living Wage would probably need to increase by around 3.7% in 2027 to £13.18 an hour to keep up with how it expected average pay to rise.”
SupportedOn Monday, Prime Minister Andy Burnham said the budget would set out a path for defence spending to reach 3% of national income by 2030.The Independent UK: “Earlier on Monday, prime minister Andy Burnham said the Budget will set out a path for defence spending to hit 3 per cent of national income by 2030.”
SupportedBurnham said national security was the top priority.The Independent UK: “He added that national security was “at the top of the priority list” ahead of the autumn statement.”
Partly supportedOpposition critics and military figures urged the government to commit to 3% of GDP by 2030 and 3.5% by 2035 as part of NATO pledges.The Independent UK: “Opposition critics and military figures have urged the Government to commit to a path for defence spending to reach 3% of gross domestic product (GDP) by the end of the decade, along with a Nato pledge to hit 3.5% by 2035.”
SupportedHealey said the detailed timetable would be set out in next year’s spending review, not the budget.The Independent UK: “The Chancellor, who resigned as defence secretary over a dispute about the pace and extent of military funding earlier this year, has previously said the timetable will be detailed at next year’s spending review rather than the Budget.”