Update on the National Living Wage from the Low Pay Commission

The Low Pay Commission have given an update on the projection for the new National Living Wage is in 2026. Please see below for the list of updates. We urge members to get ahead and start planning in line with these changes. These are subject to change depending on economic factors. See the Low Pay Commission’s statement here

Low Pay Commission (LPC) – Current NLW Forecasts

• Central Estimate for April 2026 NLW: £12.71 (4.1% rise).
• Projected Range: £12.55 – £12.86.
• Previous Estimate (May 2025): £12.65 (3.6%) with a range of £12.50 – £12.80.
• Why the increase?
  • Average wage growth has been stronger than expected in 2025.
  • Forecasts for 2025–26 wage growth have also risen.

• Current modelling assumes:

• • Wage growth of 5.1% (May 2025).
  • Year-end growth forecasts of 3.9% (Q4 2025) and 3% (Q4 2026).

Timeline & Process

• By October 2025: LPC will submit its final recommendations to the government.
• April 2026: New NLW and NMW rates take effect.
• Figures remain indicative, as LPC also considers wider economic conditions before making recommendations.

Implications for Care Providers

• Even the lower end of the NLW forecast will mean significant upward pressure on wage bills.
• The gap between median care wages and the NLW may need to be maintained to remain competitive in recruitment and retention.
• Cost pressures may be well over £1bn across the sector by 2026.

Recommended Actions for Members

1. Review Staffing Budgets
   • Model scenarios for £12.55, £12.71, and £12.86 NLW rates — plus maintaining any competitive gap above NLW.
2. Update Workforce Plans
   • Factor in likely increases in recruitment costs, agency rates, and pension/ENIC contributions.
3. Engage with Commissioners Early
   • Begin conversations on contract uplifts and funding requirements for 2026/27.
4. Track LPC Updates
   • The central estimate may rise further if wage growth outperforms forecasts again this year.

What We Know vs. What’s Uncertain