DRAFT National Minimum Wage (Amendment) REGULATIONS 2017

Julian Sturdy Excerpts

Tuesday 14th March 2017 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

I beg to move,

That the Committee has considered the draft National Minimum Wage (Amendment) Regulations 2017.

It is a pleasure to serve under your chairmanship, Sir Alan.

The purpose of the regulations is to increase the hourly rate of national minimum wage for all workers, including those who are entitled to the national living wage. The regulations also include an increase in the accommodation offset rate.

Our economy is fundamentally strong and it continues to grow. GDP growth was 0.6% in the last quarter of 2016, above market expectations, and the economy is now 8.7% larger than its pre-crisis peak. It is right that our economic success is shared by everyone. Through the national minimum wage and the national living wage, the Government continue to ensure that the lowest paid in our society are more fairly rewarded for their contribution to the economy. The latest employment figures are a testament to the success of this policy: our employment rate is at a record high of 74.6% and our unemployment rate remains low at 4.8%.

When the House met to debate the national minimum wage rises in September 2016, I informed hon. Members that from this April the national minimum wage and the national living wage will be uprated simultaneously. We have delivered on that commitment and the new rates will be effective from 1 April this year, to coincide with the start of the tax year. We hope that by aligning the cycles we can make it easier for employers to comply, while reducing their administrative burden.

The Government continue to be supported by the expert and independent advice of the Low Pay Commission, whose members I thank for their hard work and guidance. The LPC is asked to recommend the highest possible increase in the national minimum wage rates without damaging the employment prospects of low-paid workers, and to recommend the rate of the national living wage such that it reaches 60% of median earnings by 2020, subject to sustained economic growth. The LPC has carried out extensive research, consultation and analysis to inform its wage rate recommendations. We have considered and accepted all the recommendations as set out in the LPC’s autumn 2016 report.

I will take this opportunity to clearly set out the rates that will be effective from 1 April. The national living wage rate will increase by 30p to £7.50 per hour. It is projected that up to 2 million people will benefit from this increase, whereby a full-time worker in receipt of the national living wage will receive an annual increase of more than £500. All the national minimum wage rates will also be uprated above the rate of inflation. Those aged between 21 and 24 will be entitled to a minimum of £7.05 per hour, an annual increase of 3.2%. Those aged between 18 and 20 will be entitled to a minimum of £5.60 per hour, an annual increase of 3.1%. Those aged 16 and 17 will be entitled to a minimum of £4.05 per hour, an annual increase of 2.8%. Apprentices aged 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £3.50 per hour, which is the largest annual increase of all the rates at 4.5%. Finally, the accommodation offset rate will be increased from £6 to £6.40 per day.

We recognise that as rates rise, the risk of non-compliance also rises. The Government will ensure that every worker in the UK who is entitled to the national minimum wage or national living wage receives it. We are actively taking steps to tackle non-compliance and sending a clear message to employers that minimum wage abuses will not go unpunished. That is why the Government continue to invest heavily in minimum wage enforcement, increasing the budget to £25.3 million for 2017-18, up from £13 million in 2015-16. In addition, the Government have invested £1.7 million in an awareness campaign to highlight the rights and responsibilities among workers and employers. The campaign was launched in January and will pick up pace as we approach 1 April.

[Julian Sturdy (York Outer) (Con)]

I welcome the proposals on the table, but will the Minister outline what representations she has had from small business, given that the increases come at the same time as auto-enrolment and other cost pressures?

[Margot James]

My hon. Friend makes a good point. I have had representations from small businesses, particularly in the retail sector, saying that they are finding it challenging to cope with the various cost increases, but they tell me that they agree that introducing the national living wage is the right thing to do. Despite the difficulties, I have not had any representations urging us to row back on the increases in the regulations.

This Government are committed to an economy that works for everyone. The ongoing success of the UK labour market proves that a rising minimum wage can go hand in hand with rising employment. I commend the regulations to the Committee.