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Report: Calculating the Real Living Wage for London and the Rest of the UK: 2020-21

This report sets out the method through which the Living Wage rates in London and the rest of the UK are calculated by the Resolution Foundation and overseen by the Living Wage Commission on behalf of the Living Wage Foundation.

Report: Calculating the Real Living Wage for London and the Rest of the UK: 2020-21 1

There were three main issues that shaped this year’s calculation:

  1. Inflation – the CPIH inflation averaged 1.1% in 2020, which is lower than recent years, reducing upward pressure on the Living Wage rate.
  2. Methodology changes – the Living Wage Commission (LWC) has changed some of the assumptions it makes about housing costs and pension contributions. In particular, it will now take account of pension contributions which are the norm thanks to auto-enrolment.
  3. How to handle the temporary boost to Universal Credit and working tax credits that were introduced as a result of the pandemic. The LWC has not incorporated this into their calculation in order to avoid extreme year-to-year volatility.

The rate for the UK Living Wage for 2020-21 is £9.50. The rate for the London Living Wage for 2020-21 is £10.85.

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