Real living wage to rise by record 10.1% to £10.90 an hour outside London | Living wage

Almost 400,000 workers in the UK whose employers are signed up to paying the real living wage are in line for a record pay rise, as the charity that sets the rate approved an increase to £10.90 an hour for outside London.

The Living Wage Foundation said it was launching the annual increase two months earlier than planned and had recommended its biggest single rise yet in recognition of the intense pressure on households from rocketing energy prices and the highest inflation rate in 40 years.

The living wage – which is paid by more than 11,000 employers including Aviva, Ikea, Burberry and Lush – will increase by £1 to £10.90 an hour across the UK, and by 90p to £11.95 an hour in London.

Calculated based on what people need to live on, the rate is higher than the £9.50 national living wage set by the government for workers aged 23 and over. The Living Wage Foundation said its 10.1% rise for workers outside London was the biggest in its 11-year history.

Inflation in the UK rose above 10% in July for the first time since the early 1980s, fuelled by soaring petrol prices and energy bills, as well as the rising cost of a weekly shop. The headline rate fell slightly to 9.9% in August, although is set to rise further in October after a sharp increase in energy bills.

The announcement comes as average wage growth across the UK has failed to keep pace with rising living costs, with workers suffering the biggest real-terms hit to average pay on records going back 20 years. Annual growth in regular pay was 5.5% in the three months to June – stronger than before the pandemic as companies struggled to recruit workers, but still significantly below the soaring rate of inflation.

Some workers have benefited from stronger pay growth than others. While workers in the public sector have seen wages rising by 2% on average, those in the private sector have had increases of 6% – the biggest difference on record.

An estimated 4.8 million workers in Britain are paid less than the real living wage, and there is evidence of a rise in workers skipping meals and using food banks.

Katherine Chapman, the director of the Living Wage Foundation, said: “With living costs rising so rapidly, millions are facing an awful ‘heat or eat’ choice this winter – that’s why a real living wage is more vital than ever. Today’s new rates will provide hundreds of thousands of workers and their families with greater security and stability during these incredibly difficult times.

“We are facing unprecedented challenges with the cost of living crisis, but businesses continue to step up and support workers by signing up to the living wage in record numbers. We know that the living wage is good for employers as well as workers, that’s why the real living wage must continue to be at the heart of solutions to tackle the cost of living crisis.”