We're changing the way the Minimum Wage is set so it keeps in line with the cost of living. What changes are being made to the Minimum Wage? The government are changing the way the Minimum Wage is set so it keeps in line with the cost of liv…
We're changing the way the Minimum Wage is set so it keeps in line with the cost of living.
What changes are being made to the Minimum Wage?
The government are changing the way the Minimum Wage is set so it keeps in line with the cost of living.
For the first time, the Low Pay Commission (LPC) will factor the cost of living when deciding the rate of the Minimum Wage and Living Wage, in a move to put more money in working people's pockets.
They are also taking the first steps towards making rates the same for everyone, regardless of age, by narrowing the gap between the National Minimum Wage, for 18–20-year-olds, and the National Living Wage.
In addition to the cost of living, the remit of the LPC will continue to consider the impact on business, competitiveness, the labour market and the wider economy.
The introduction of the minimum wage is considered to have been one of the most effective and successful policy interventions of the last 25 years, and this announcement is the next step in achieving the promise of a genuine living wage for working people.
The Secretary of State for the Department of Business and Trade will write to the Chair of the Low Pay Commission and the full remit has now been published.
This builds on the Government's Plan to Make Work Pay, which it states sets out a significant and ambitious agenda to ensure workplace rights are fit for a modern economy, empower working people and deliver economic growth.
What are the National Minimum and Living Wage rates for 2024/2025?
The hourly rate for the minimum wage depends on your age and whether you're an apprentice
aged 21 to get the National Living Wage - the minimum wage will still apply for workers aged 20 and under Current rates
These rates are for the National Living Wage (for those aged 21 and over) and the National Minimum Wage (for those of at least school leaving age). The rates change on 1 April every year.
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Apprentices
Apprentices are entitled to the apprentice rate if they're either:
aged under 19
aged 19 or over and in the first year of their apprenticeship
Example:
An apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £6.40.
Apprentices are entitled to the minimum wage for their age if they both:
are aged 19 or over
have completed the first year of their apprenticeship
Low Pay Commission Remit Statement
Statement
This Government is committed to making work pay.
As part of our ambitious agenda, we pledged to update the remit to the Low Pay Commission to formally take account of the cost of living for the first time, and I am pleased to confirm that this has been achieved.
As Members will know, the Government sets the minimum wage rates each year following the advice of the LPC. These recommendations are made by the LPC each October – for minimum wage rates to apply from the following April – in line with the parameters set out in the annual remit from the Department for Business and Trade.
I have written to Baroness Stroud, the Chair of the LPC, to set out an updated remit.
Following the cost of living crisis which has harmed working people in recent months and years, the remit asks the LPC to consider the cost of living for the first time. The remit highlights the need to also consider the impact on business, competitiveness, the labour market and the wider economy.
We are ambitious in developing a path towards a genuine living wage, but we know that this path must be backed by evidence and consistent with delivering inclusive growth for workers and businesses.
As part of the Government's commitment to a genuine living wage that benefits every adult worker, we also pledged to remove discriminatory age bands.
The new remit published this week will take a major step towards this – asking that the Low Pay Commission recommends a National Minimum Wage rate that should apply to 18–20-year-olds from April 2025. This should continue to narrow the gap with the National Living Wage, taking steps year by year in order to achieve a single adult rate. We are committed to achieving a single adult rate, and we will ensure that any impacts on youth employment or participation in education and training are considered carefully, as we move towards this.
Since the establishment of the Low Pay Commission, through the National Minimum Wage Act, it has become respected internationally. This Government is proud to confirm our continued commitment to the LPC, and we extend our thanks to the commissioners and the secretariat for their independence, their diligence, and their expertise.
I can confirm that the new remit maintains the request to recommend minimum wage rates for workers above school age but under 18, and for those eligible for the apprentice rate, which should increase as much as possible, without damaging these groups' employment prospects. The remit also asks the LPC to recommend next year's accommodation offset rate.
We recognise the importance of providing sufficient notice of changes to the minimum wage, so the timelines remain unchanged in the new remit. We have asked the LPC to report back by the end of October, and the rates will increase in April 2025.
The Government is also pleased to confirm that this year's remit asks the LPC to continue and expand its cutting-edge research on the impacts of the National Living Wage and National Minimum Wage, in particular its assessment of the impact on groups of low paid workers with protected characteristics.
This year marked the 25th anniversary of the creation of the minimum wage in the UK. Few would now disagree that it has been one of the most consequential and beneficial economic policy interventions of recent decades. Now is the time build on this, by delivering a genuine living wage, removing unfairness for different age groups, and making work pay.
We look forward to receiving the recommendations and wider advice of the Low Pay Commission in October.
Opinion
Original announcements from the new Labour Government talked of the within 100 days commitments. Many may have a view this meant that National Minimum Wage changes would be applied within 3-4 months.
However, the announcement made on 30th July is a more steady approach continuing the prior plans of reducing the start age of the National Living Wage heading towards 18 and progression of rises with a new goal using factors relating to the cost of living.
This implies a basis of steps over the next years to achieve the 100 day commitment.
So the next round of National Minimum Wage changes will apply from 1st April 2025.
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