With a new Prime Minister and a new Chancellor at the helm, the upcoming 2026 Autumn Budget is set to be a matter of great interest to businesses and individuals alike.
As a sign of how challenging the economy has become, the Living Wage Foundation has issued a new figure for the Real Living Wage.
The Government’s own statutory minimum still falls behind this figure, so businesses are left to wonder whether the Autumn Budget will bring with it steep wage increases and if any means to absorb them will be included this time.
Although not a legal necessity for any business, the Real Living Wage is positioned as the only independently calculated salary that reflects the cost of living in the country.
Issued on 15 October 2026, the Real Living Wage is now £14.10 per hour for workers above the age of 18 and £15.45 for those working in London.
To put the salary into perspective, 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.
Where the figures become more notably detached from each other is in terms of the annual salary a worker on each can expect to receive.
A person on the Real Living Wage could earn between £27,495.00 and £29,328.00, depending on whether they work a standard 37.5-hour or 40-hour week, while the comparable range for the NLW is only £24,784.50 to £26,436.80.
Over 17,000 businesses currently follow the Real Living Wage and the scheme is cited as a factor in driving up wages across the country and has been noted as a factor in the establishment of the NLW.
With the Autumn Budget yet to be announced, many businesses may look to the Real Living Wage as an indicator of potential wage increases – though it is unlikely that the NLW would rise to such a level.
The amount of pressure that businesses face, particularly smaller businesses, at the moment is intense.
Employees want and need more money to keep up with rising bills, but those same bills are eating into the profitability of businesses and making those pay increases more challenging.
Wage disparity is an ever-growing concern, with the gap between graduate salaries and minimum wages collapsing over the last two decades.
One of the organisations responsible for the Real Living Wage, the Resolution Foundation, observed how 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.”
However, some graduates may find their wage to be earning only just above the minimum, as “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.”
The annual salary for the Real Living Wage may have caught the eye of some employees, given that the median graduate salary for UK graduates in full-time employment 15 months after graduation was £28,500 in 2022/23.
This means that the Real Living Wage may be higher than some graduate salaries and could place additional pressure on businesses to maintain clear pay divisions based on experience and qualifications.
While previous Autumn Budgets increased the NLW and added an additional burden of higher National Insurance Contributions, it is hoped that any NLW increase this time around will be offset in some capacity.
Small businesses felt overlooked in the previous Autumn Budget and Spring Statement, meaning that a break from that tradition will be necessary if wage increases are to be reasonably absorbed.
Regardless of what ends up being in the Autumn Budget, having expert accounting support is vital for handling the ongoing economic pressures.
Understanding your budgets with clear financial forecasts puts you back in control of the core financial decisions that affect your business.
This may include increasing staff salaries, even if the increase falls below the Real Living Wage – though 68 per cent of employers say paying a Real Living Wage has improved their recruitment outcomes.
Whether the Autumn Budget brings your business much-needed relief, extra burdens or a combination of the two, we will help you understand exactly what it means for you and how to adapt to the changes.
Handle the Autumn Budget with confidence while managing employment costs by getting in touch with our team.
