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The London Living Wage is to rise to £9.75 an hour from next year, Sadiq Khan announced today.

The Mayor said the voluntary rate in the capital would increase by 35p - well above the national living wage rate brought in by the Government this year.

More than 1,000 businesses in the capital will now pay the new rate after 300 new firms including Ikea, Lloyds TSB and EDF Energy signed up.

Outside London, which accounts for a third of businesses paying the rate, the rate is increasing by 20p an hour to £8.45.

The living wage is different from the new compulsory National Living Wage of £7.20 for adults, rising to £9 per hour by 2020, introduced by George Osborne in April.

Sadiq Khan, announcing the new rate at the British Library, said it was not just the “right and moral” thing for employers to do, but also made “good business sense”.

The Mayor said: “It’s great news that London is leading the way in paying the Living Wage. I’m glad to say we’re well on track to see it rise to over £10 an hour during my mayoralty, but we need to go further.

“Our economy continues to grow and for the first time in London’s history we now have over one million businesses based here.

“It’s essential that hard-working Londoners, who keep this city going, are rewarded for their integral role in this success.

“As many employers already accredited know, the benefits are clear - including increased productivity and reduced staff turnover. I’ll be working to encourage more businesses across our great city to get involved.”

Since the voluntary rate was introduced in 2011 more than 60,000 low-paid workers have benefited.

Other organisations to sign up in the last year include the British Library, Borough Market, National Express and Majestic Wine.

Earlier this month, Mr Khan tasked his deputy mayors to make sure all staff working across the City Hall empire were paid the LLW after discovering that a handful of Transport for London subcontractors were not.

The boroughs of Brent, Ealing and Greenwich have increased accreditation in their areas by offering discounts in business rates to Living Wage employers.

Katherine Chapman, director of the Living Wage Foundation, said: “The high costs of living in London are widely known and today’s increase will be welcome news to thousands of hard working Londoners.

“Over 1000 employers in London ranging from FTSE 100 companies to small independent coffee shops are now leading the way on tackling low pay in the capital, making sure their employees earn a wage that they and their families can live on.”