National Minimum Wage (Amendment) Regulations 2025

Lord Ashton of Hyde Excerpts

Monday 17th March 2025 Grand Committee

[Baroness Gustafsson (Lab)]

My noble friend Lord Sikka asked about the real value of the minimum wage already being eroded. The 2025 national living wage is expected to have the highest real-terms value in the history of the UK’s minimum wage. In real terms, the national living wage in 2025 is expected to be about 4% higher than the 2024 rate and 78% higher than the main adult rate when the national minimum wage was introduced in 1999. I hope that goes some way to relieving some of those cost of living pressures.

On 18 to 20 year-olds being denied the full rate but still having the same living costs, we recognise that people in that band are more vulnerable to unemployment and that any impacts on employment costs or incentives to remain in training or education must be monitored very carefully as we proceed. We have asked the LPC to make progress on extending the national living wage to more adults than ever before by continuing to narrow the gap between the 18 to 20 minimum wage rate and the national living wage on a year-by-year path towards achieving a single adult rate, and we are delivering on that pledge.

There was a question around enforcement and the naming and shaming of those that do not comply with the minimum wage. The current system of employment rights is fragmented and ineffective and can be confusing for workers and employers alike, which can deliver bad outcomes for workers and the majority of businesses which want to do right by their staff. We are establishing the fair work agency to deliver a much-needed upgrade to the enforcement of workers’ rights. This is about bringing together the existing state enforcement functions in a single place which individuals and businesses can go to for help. Bringing together currently separate state enforcement functions will mean less duplication and better use of public money.

My noble friend’s last question was about penalties and enforcement. HMRC investigates breaches of the national minimum wage legislation. If it finds a breach, it orders the employer to repay the workers and also pay a penalty to the Government of up to 200% of the arrears owed to the workers. My noble friend asked about the last time and the circumstances in which that level of penalty was enforced. I confess I do not know the answer, but I will write to follow up with that information.

My noble friend Lord Jones raised questions around the complexity of regulations. Regulations can often be complex. They are by necessity complicated because they often deal with complicated issues that require balance on both sides. We have extensive guidance on them. Simplification can tend to make regulations easier to read but less precise and more open to avoidance, so it is a delicate balancing act that we are trying to navigate here. As mentioned earlier, we are grateful to ACAS for its work and encourage any employer or worker to contact it directly for guidance and assistance, which is often available.

My noble friend Lord Jones also asked a question about the number of workers on the national minimum wage and the number of apprentices in Wales. Roughly 150,000 workers in Wales are on the national minimum wage; for completeness, it is about 200,000 workers in Scotland and 160,000 workers in Northern Ireland. We remain committed to ensuring that apprentice wages support the attraction of talented individuals to apprenticeships and remain fair for employers. High-quality apprenticeships are often key to unlocking a more skilled and productive economy. On the apprenticeships statistics that were requested, I am happy to write to follow up on some of those specifics.

I turn now to the question from the noble Lord, Lord Fox, around the differences in the FWA as compared to previous enforcement agencies. The fair work agency will be a strong, recognisable single brand so that individuals know where to head to for help. It will have a more ambitious remit that goes further than the previous single enforcement body proposal. It will be about taking on and enforcing domestic agency rules, the national minimum wage, licensing standards for gangmasters and certain aspects of the Modern Slavery Act 2015. It will also take on additional rights, such as holiday pay and statutory sick pay, and there will be flexibility to bring in additional legislation as new challenges emerge,

[The Deputy Chairman of Committees (Lord Ashton of Hyde) (Non-Afl)]

My Lords, there is a Division in the House. We will adjourn for 10 minutes.