The Chancellor, Rishi Sunak delivered the government’s spending plans for the coming year to Parliament on 25 November 2020. The Spending Review usually covers 3 to 4 years but given the many unknowns as a result of the pandemic the review will only cover the period from April 2021 to April 2022.
The Chancellor said his immediate priority was to protect people’s lives and livelihoods as the country continues to battle the outbreak – allocating £55 billion to tackle the virus next year.
Plans were also announced for increased infrastructure spending with £100 billion of capital spending next year and a £4 billion Levelling Up Fund. As expected, it was also announced that there will be a public sector pay freeze with an exemption for the NHS and for public sector workers who earn below the median wage of £24,000.
The Chancellor also used the Spending Review to confirm that increased National Minimum Wage and National Living Wage rates will come into effect on 1 April 2021.
From 1 April 2021 the National Living Wage will increase by 19p to £8.72. This represents an increase of 2.2%. The National Living Wage currently applies to those aged 25 and over but from next April will be extended to 23 and 24 year olds for the first time. There will also be increases to the National Minimum Wage and other wage rates for younger people. The new rates mirror the recommendations made by the Low Pay Commission which have been accepted in full by the government.