AN above inflation rise in the national living wage announced in the Budget is not enough to tackle work poverty, Scots poverty campaigners have warned.

The Chancellor announced that the NLW is to increase from £7.83 to £8.21 an hour for workers aged 25 and over next April, a hike of 4.9%.

But campaigners said it was still below what many need to live on - called the "real living wage" - a voluntary sums put at £10.20 an hour in London and £8.75 outside the UK capital.

Just over one in five employees in the UK - three million full-time and 3.3 million part-time staff - are now paid less than the real living wage.

The Chancellor also announced that the minimum wage for other age groups will also go up - from £7.38 to £7.70 for 21-24 year olds, from £5.90 to £6.15 for 18-20 year olds and from £4.20 to £4.35 for 16-17 year olds.

The statutory rate for apprentices aged under 19 or in the first year of their apprenticeship will increase by 20p an hour to £3.90.

The Low Pay Commission (LPC), which recommends minimum wage rates, estimated that the increases will benefit around 2.4 million workers.

In total, the annual earnings of a full-time minimum wage worker will have increased by over £2,750 since the introduction of the national living wage in April 2016, it was estimated.

But Peter Kelly, director of the Poverty Alliance in Scotland, said it was just not enough.

He said: “While the Budget has increased the National Living Wage, this does not reflect the true cost of living and won’t be sufficient to tackle in-work poverty. The new real Living Wage will be announced on Monday as part of Living Wage Week. "

And John Dickie, director of the Child Poverty Action Group in Scotland added: "Increases to the national minimum wage are welcome but don't go far enough.

"With over two thirds of children in poverty living in working families further action on both wages and in-work benefits is vital."

Labour responded by saying that it will introduce a real living wage of £10 an hour by 2020.

Philip Hammond told MPs that the Government had an ultimate objective of ending low pay, while wanting to protect employment.

The Government will set out next year the LPC's remit for the years beyond 2020, saying it will hold consultations as it sets policy to take account of the potential impact on employment and economic growth.

Bryan Sanderson, chairman of the LPC, said: "The increase in the national living wage to £8.21 in April 2019 will ensure a pay rise for the lowest-paid workers that exceeds both inflation and average earnings.

"

Over the past year, the labour market has continued to perform well and the economy, while subdued, has met the criteria of 'sustained growth' set out in our remit for the national living wage.

"We therefore recommended an increase in line with a path to 60% of median earnings by 2020. On current forecasts, we estimate that the NLW will reach this target at a rate of £8.62 in 2020."

The higher rates will still be below the voluntary so-called Living Wage of £10.20 and hour in London and £8.75 in the rest of the UK.

Jon Preshaw, tax director at accountancy firm PwC Scotland, said: “Businesses will have to spend time looking at the impact on their people costs as a result of changes to national living wage rates, which will increase to £8.21, amendments to the operation of the apprenticeship levy rate and the widely trailed introduction of new rules for off payroll workers, although it appears that smaller business won’t have to consider the implications for self-employed contractors.”

SNP MP David Linden had called on Mr Hammond to enshrine the “real” living wage in law, and said it was “completely unacceptable that young workers are being discriminated against” through lower legal minimums.

The latest analysis of Office for National Statistics data shows women are particularly badly affected by low pay: 28 per cent of all female employees are paid below the real living wage.

But more than 4,400 businesses – including Ikea, Aviva and Nationwide – have agreed to pay the higher, voluntary rates to their lowest-paid employees.

A pre-budget poll by the GMB union found that two in three of 1000 people asked backed a real-term pay rise - which takes into account inflation - for millions of workers.