Living Wage rise provides a boost for low paid workers

The living wage is calculated according to the basic cost of living

More than 30,000 low paid workers will receive a pay rise worth up to £400 a year after a rise in the voluntary "living wage" rate.

The UK Living Wage rate, which is not binding on employers, has been increased by 20p to £7.65 an hour. It is much higher than the legal UK minimum wage of £6.31 an hour.

In London, the Living Wage rate has been increased by 25p to £8.80 an hour.

A total of 432 employers have signed up to pay the rate, up from 78 last year.

Firms signed up to the voluntary scheme include Barclays, Oxfam, Legal and General and the National Portrait Gallery.

Rhys Moore, director of the Living Wage Foundation, said the living wage had become "a must-have badge of honour for employers".

"By looking out for the Living Wage badge, you can now choose to support businesses that are doing right thing. It works just like Fairtrade and will grow even faster with consumer support," he added.

Dominic Johnson, employee relations director at Barclays, said paying the rate had improved retention rates for its cleaners.

"Early research on the impact of the Living Wage for cleaners on Barclays' contracts shows our suppliers have a 92% retention rate versus an industry average of 35%," he said.

The Living Wage is set independently each year, based on the basic cost of living in the UK.

The new rates were announced at the start of Living Wage Week.

Last week, Labour leader Ed Miliband said if his party won the next election, it would offer firms a 12-month tax break in 2016 if they agree to pay the living wage.