Low Pay Commission Remit

Tuesday 30th July 2024 Written Statements

[The Secretary of State for Business and Trade (Jonathan Reynolds)]

This Government are committed to making work pay. As part of our ambitious agenda, we pledged to update the remit of 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 set the minimum wage rates each year following the advice of the LPC. Recommendations are made by the LPC each October for the minimum wage rates that are 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 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 to 20-year-olds from April 2025. This should continue to narrow the gap with the national living wage; we are 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 1998, it has become respected internationally. This Government are 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 is 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 are 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, and 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 to 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.

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