The highlight of the financial calendar, the 2026 Autumn Budget, is nearly upon us and employers and employees alike are eagerly waiting to see how their fortunes may change.
In the buildup to the big day, the Living Wage Foundation announced the new figure for the Real Living Wage.
Notably higher than the current statutory minimums set by the Government, does the Real Living Wage help businesses or make things more challenging for them?
What is the new Real Living Wage?
Announced on 15 October 2026, the latest Real Living Wage is £14.10 per hour for workers above the age of 18 and £15.45 for those working in London.
By contrast, the current National Living Wage (NLW) is only £12.71 per hour for those over 21 and £10.85 for those aged between 18 and 20.
Under the Real Living Wage, a person could earn between £27,495.00 and £29,328.00, depending on whether they work a standard 37.5-hour or 40-hour week – the comparable range for the NLW is only £24,784.50 to £26,436.80.
Set up by the Living Wage Foundation, the Real Living Wage is a voluntary scheme that currently sees over 17,000 businesses pay their employees an independently calculated salary that factors in the current cost of living.
While there is no legal obligation to follow the Real Living Wage, it is believed that the creation of the NLW was influenced by the scheme.
It also establishes a baseline for salary expectations that may play a pivotal role in influencing the upcoming Autumn Budget, where it is likely that both the National Minimum Wage and NLW will increase.
How do businesses balance rising wages with economic challenges?
While workers may be elated at the notion that they may soon have some money that is not immediately consumed by bills, businesses are under increasing pressure to foot the bill without much external support.
Pay compression continues to be an ongoing issue, as the gap between the minimum wage and graduate salaries has collapsed entirely over the last two decades.
The Resolution Foundation, one of the organisations behind the Real Living Wage, reported that the early 2000s saw “the median graduate in a ‘graduate job’ have a salary 2.5 times that of a minimum wage worker, but by 2023, the typical graduate earned only 1.6 times the salary of someone on the wage floor.”
This figure could be lower in some instances, with “those at the 10th percentile of earnings now have salaries just 11 per cent higher than someone on the wage floor, compared to 82 per cent higher back in 2001.”
As the median graduate salary for UK graduates in full-time employment 15 months after graduation was £28,500 in 2022/23, it is possible that the Real Living Wage amounts to more than some graduates may be earning.
For businesses, this poses a notable challenge as employees continue to expect to be compensated based on experience and qualifications.
The Autumn Budget may once again codify this struggle by imposing a higher NLW which, coupled with the continued pressure of National Insurance Contributions, can place a great strain on business budgets.
It is hoped that more will be done to tackle costs in other areas, as small businesses were particularly overlooked in the previous Autumn Budget and Spring Statement.
However, it is clear that greater control of finances will be necessary to tackle ongoing challenges and ensure that workers are compensated fairly.
Paying the Real Living Wage could help tackle some issues, as 68 per cent of employers say paying a Real Living Wage has improved their recruitment outcomes, but knowing how any form of pay increase sits within the company’s funds is vital.
Our team of expert accountants can support you with clear financial forecasting that will adapt to the announcements of the Autumn Budget and give you a clear vision of what to expect.
If reliefs are offered or greater burdens imposed, we will work to combine the sum and give you tailored advice on how it impacts your unique position.
From that clearer starting point, you can consider the best approach for your business in terms of recruitment, retention, growth and keeping going in the face of economic challenges.
Get in touch with our team to confidently handle the upcoming Autumn Budget and ensure your staff are well compensated.