The British national living wage is set to increase to at least £11 an hour from next April, Chancellor of the Exchequer Jeremy Hunt is expected to confirm this Monday in a speech to the Conservative Party conference. The move will benefit two million of the lowest-paid workers, according to an advance of the speech shown to BBC.
He will also say he intends to toughen sanctions for people on benefits who do not take steps to find work. It comes as the government is under pressure from some Tories to cut taxes.
The national living wage - currently £10.42 an hour - sets out the lowest amount workers aged 23 and over can be paid per hour by law. Younger workers are paid at a lower rate.
The rates are decided each year by the government, based on the advice of an independent advisory group, the Low Pay Commission.
Ministers generally accept the commission's recommendations. The government had already set a target for the national living wage to reach two-thirds of median hourly pay by October next year.
The Low Pay Commission has not yet confirmed its recommendations for next year but it estimates the rate needed to meet the government's target should be between £10.90 and £11.43.
In his speech on Monday Mr Hunt is expected to say that whatever the recommendation, the rate will increase to at least £11 an hour.
The Conservatives said this meant the annual earnings of a full-time worker on the national living wage would increase by £1,000 next year.
Since we introduced [the national living wage], nearly two million people have been lifted from absolute poverty, Mr Hunt is expected to say.
That's the Conservative way of improving the lives of working people. Boosting pay, cutting tax.
The chancellor is also set to announce that ministers will look again at the benefits sanctions regime to help get people back to work.
Since the pandemic, things have being going in the wrong direction, he is due to say.
Whilst companies struggle to find workers, around 100,000 people are leaving the labor force every year for a life on benefits.
Calling the issue a fundamental matter of fairness, he will add: Those who won't even look for work do not deserve the same benefits as people trying hard to do the right thing.
However, further details on the plans for benefits reform are unlikely to come until the Autumn Statement in November - when the chancellor sets out his economic plans.
Meanwhile, the government is continuing to face calls from some Conservative MPs to reduce taxes. On Monday, former Prime Minister Liz Truss will use a speech to urge the government to cut corporation tax for businesses to help grow the economy.