Boris challenges Osborne as he says Londoners need £9.40-an-hour to live on, a third more than Chancellor's 'Living Wage'

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Boris Johnson today stepped up pressure on the government to go further in helping the low paid as he announced the London Living Wage would hit £9.40 next year.

The London Mayor, who has led criticism of George Osborne's cuts to tax credits for working families, urged businesses to pay the 25p increase in the voluntary rate for the capital. 

It is almost a third higher than the £7.20 compulsory 'National Living Wage' promised by Mr Osborne for the over-25s from April next year.

London Mayor Boris Johnson announced the voluntary London Living Wage would rise to £9.40 next year, almost a third higher than the £7.20 compulsory 'National Living Wage' promised by George Osborne for the over-25s

Mr Osborne sought to outmanoeuvre his political opponents in July with the shock creation of a new National Living Wage.

From April next year employers will have to pay everyone over 25 at least £7.20 an hour - rising to £9 by 2020.

But the rate is much lower than the amount campaigners say workers need to earn to survive.

Announcing the new London rate, Mr Johnson said: “As our economy continues to grow and employment in London increases, it is essential all hardworking Londoners receive a fair share of the proceeds of the capital’s success.

“I have long argued that those companies that can afford to pay the London Living Wage should do so because there are clear benefits for employers in increasing productivity and reducing staff turnover, while it makes a real difference to the quality of life for employees.'  

The Living Wage is a voluntary scheme where businesses are encouraged to agree to pay their staff more than the legal amount set by the minimum wage.

There are two rates - one for London to reflect higher living costs in the capital, and one for the rest of the UK. 

The UK-wide Living Wage is to rise by 40p to £8.25 an hour, giving a pay rise to almost 70,000 workers at firms signed up to the scheme. 

From April next year, George Osborne's National Living Wage of £7.20-an-hour must be paid to all over-25s. But the Living Wage Foundation says workers in London need £9.40, with a rate of £8.25 for the rest of the UK

The Living Wage Foundation also announced that more than 2,000 employers were now accredited to the organisation, which sets the rate.

Unilever, Richer Sounds and Lloyds Banking Group are among firms who have recently agreed to pay staff the Living Wage.

Sarah Vero, director of the Living Wage Foundation said: 'These employers are not waiting for Government to tell them what to do. Their actions are helping to end the injustice that is in-work poverty in the UK now.'

Frances O'Grady, TUC general secretary, said: 'It's good news that the number of Living Wage employers is growing. It's a basic standard many more employers should meet.

'But six million people are still scraping by on less than the Living Wage, despite many working for employers who could afford to pay it.'

A study by personal services firm KPMG found that almost six million workers are paid less than the national Living Wage.

The figure represents 23 per cent of all employees, up by 1 per cent over the past year. 

Over a third of women in their 20s are set to earn less than the Living Wage next year, according to a new analysis published by the Resolution Foundation.

The think tank said the number of employees earning less than the Living Wage is set to rise to a record 6.5 million in 2016 - up from five million in 2012, and almost six million this year.

Women in their 20s are 50% more likely to earn less than the Living Wage next year than the workforce as a whole, and over three times more likely than men in their 40s, its study found.

Almost three in 10 men in their 20s are set to earn less than the Living Wage next year, it added.

Adam Corlett, economic analyst at the Resolution Foundation, said: 'The number of people earning less the Living Wage has increased rapidly in recent years, with over a third of young women set to earn less than the new rate next year.

'While you'd expect young people to move onto higher wages as they gain experience, the fact that they are moving jobs far less frequently today compared to before the crash is a real cause for concern. This risks holding up their careers and could leave them stranded on low pay for longer.

'More needs to be done to boost wages and pay progression for young people. Greater take-up of the voluntary Living Wage should play a key part in that, along with a renewed focus on better career ladders within businesses and industries.

'If we fail to help young people today we risk scarring their incomes for the rest of their careers.'

Green Party leader Natalie Bennett said: 'George Osborne's offer of £7.20 an hour for over 25-year-olds from next April is pitiful in comparison to this real living wage.

'It is no wonder that our current minimum wage leaves people reliant on food banks and struggling to keep a roof over their head.'