National Minimum Wage (Amendment) Regulations 2025

Lord Fox Excerpts

Monday 17th March 2025 Grand Committee

[Lord Jones (Lab)]

My Lords, it is instructive to follow the noble Lord, Lord Sikka, who has a professorial exactitude that excites considerable interest in someone such as me. I thank the Minister for the precision, cogency and persuasiveness of her introduction. I rise on the principle that the Executive should be challenged and questioned. That is what a Parliament is for, and the Westminster Parliament will always acknowledge the need to challenge the Executive.

I greatly welcome the regulations. Anyone who offers a 6% or more increase must be acknowledged and thanked. I must say that the complexity of the regulations is considerable, and the weight of the document is evidence of that. Each year these regulations present themselves, but the data changes. I am grateful for the helpfulness of the Explanatory Memorandum. I know that a lot of work goes into the presentation of it and the regulations by the Minister’s departmental officials.

Can the Minister indicate how many people in Wales are on the national minimum wage? Is there a figure for the number of apprentices in Wales on the national minimum wage?

There is a need to consider the context to these regulations. The Explanatory Memorandum says that the legislation went forward and got parliamentary approval in 1998. I was present in the other place Her Majesty’s Government made those proposals, and I recollect the intensity of the determination of Prime Minister Blair and Chancellor of the Exchequer Brown. But we also experienced the angry and persistent opposition to these proposals in the other place. There was a considerable amount of anger, but now everyone would agree, I think, that it was a measure of social justice that was overdue, bearing in mind that unemployment was considerably high in the 1980s—indeed, there was mass unemployment. The memory of those tumultuous times enabled the Opposition of the day to include a national minimum wage in their manifesto and, when elected in 1997, to proceed to organise legislation.

I would like to point to paragraph 5.2 of the Explanatory Memorandum. In reading it, I acknowledge that this is a noble objective. It says:

“The Government has set a policy aim to deliver a genuine living wage for every adult worker, and the increases to the rates this year are intended to make progress towards that, both by increasing the headline NLW rate and narrowing the gap between the 18-20 NMW rate and the full adult rate”.


That has to be really good news and it deserves commendation. It is also worthwhile indicating that in paragraph 9.2 there is a reference to employers:

“These costs to employers represent a transfer to low-paid workers, and include the estimated cost on employers in the public sector. Over 3 million workers are estimated to receive a direct pay rise due to the increase to the NMW and NLW in April 2025”.


These regulations must be welcomed, and the Minister commended for her introduction.

[Lord Fox (LD)]

My Lords, we have heard two spirited supporters of this statutory instrument. I will add my spirits to the support of these regulations.

As the noble Lord, Lord Sikka, observed, many millions of workers have suffered a severe fallback in their living conditions as a result of a variety of measures, not least inflation, energy costs and the like. This has happened to a great degree over the past few years. Therefore, to some degree, this instrument is getting them back to a place they have slipped from. It is debatable whether it is protecting millions of workers, as the noble Baroness said, or helping ameliorate some of the problems they have. On that basis, we should be welcoming it.

In her speech, the Minister talked about the fair work agency, which will be enforcing this. It would be useful for us to find out what will be different. What will the fair work agency be doing that has not been done before? Quite clearly, this provision has been on the statute before and, as the noble Lord, Lord Sikka, pointed out, there have been many businesses that do not uphold it. How will the fair work agency be any different? What will it be doing to achieve that?

We have to put this into context. The noble Lord, Lord Jones, spoke about the aim to create a genuine living wage for everyone. To do that, we have to have businesses that are profitable and workers that have the skills to earn those wages. This measure cannot be taken in isolation. For business, there is not just this instrument, which I think most good businesses will welcome. Most good businesses are paying more than these wages already, but the cumulative effect on our businesses is already rolling up. It is the perception of that roll up that is causing the problems for the Chancellor at the moment, with very low growth and investment falling back.

I think we all welcome this measure but then we have the employers’ national insurance contribution, which we do not welcome. The noble Lord, Lord Sharpe, and I will be in the same camp on this. There is then the non-domestic rate rises for businesses in the retail, hospitality and leisure sector, which are the businesses most likely to be paying the minimum wage. They will have a huge increase in their rates, notwithstanding the small variations that can happen. The loss of the Covid reliefs will leave them paying two or three times the non-domestic rate that they are currently pay. These are the businesses that will be laying off workers because they cannot afford to pay them even the current minimum wage. There is a big discontinuity in government policy at this point.

Finally, the noble Baroness mentioned the Employment Rights Bill. There are good and bad things in that Bill; there are puts and takes. Contrary to what the noble Lord, Lord Jones, said, only four pages of these documents are the statutory instrument. The rest is an Explanatory Memorandum, which is an example of what we want from those and from impact assessments. It is a comprehensive and well-prepared document. I hope the noble Baroness will pass that on to all her colleagues.

On page 13, the impact assessment says that the aim—the Government’s preferred option—has been to minimise “administrative and compliance costs”. When we come to the Employment Rights Bill, the minimising of administration and compliance costs should be their preferred option for those rights. The little work I have already done on that Bill indicates that it is complicating things and making things harder for businesses to comply. Even where we agree with the measures in that Bill, the legalistic approach through which they will be brought about will not meet the Government’s objective, which, quite rightly, was applied to this legislation.

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[Baroness Gustafsson (Lab)]

Before the Division, I was about to turn to the observations of the noble Lord, Lord Sharpe, the first of which was about the impact on SMEs and businesses. I remind noble Lords that we have accepted in full the recommendations of the Low Pay Commission. We are confident that these increases will help millions of families across the country without placing excessive burdens on businesses. The remit of the LPC asks it to take into account the impact on businesses, including SMEs, competitiveness, the labour market and the wider economy. The LPC draws on extensive labour market and pay analysis and stakeholder evidence when recommending rates.

Regarding support for businesses as they adjust to these new rates, the 2025 national minimum wage and NLW rates were announced in the Autumn Budget 2024, more than five months before the rates came into effect. These timelines are consistent with previous years, providing businesses with the maximum adjustment time. Similar to previous years, the Government will undertake an extensive communications campaign to increase awareness and understanding of the changes to the rates coming into effect from 1 April 2025 and to ensure that businesses and workers are prepared. The communication campaign is expected to include targeted activities specifically to support SMEs. The Government also publish extensive guidance online to support businesses in understanding the legislation and the steps required to comply.

This Government are proud to be delivering the biggest upgrade to the rights of working people in decades. An ambitious minimum wage, backed by robust enforcement, will always be a cornerstone of a Labour Government’s employment rights framework, and we are grateful for cross-party support on this vital measure. As noted, the Government’s impact assessment, which was published alongside this legislation, estimates a direct pay rise for more than 3 million people, covering all the nations and regions of the UK and every sector of employment. It is worth repeating that a full-time worker on the national living wage will receive a gross annual pay rise on 1 April of £1,400, while an 18 to 20 year-old working full time on the national minimum wage will benefit to the tune of £2,500 a year.

I reiterate the Government’s thanks to the noble Baroness, Lady Stroud, and the Low Pay Commission. Once a new remit is issued to the LPC, we will look forward to hearing its next recommendations later this year as we continue our path towards a genuine living wage for all adults. I commend these regulations to the Committee.

[Lord Fox (LD)]

May I just take the Minister back to before the Division, when we were starting to talk about the fair work agency? Either she has nothing more to tell us or it somehow got lost in the wash. Her response was somewhat thematic but really short on process. It is not clear to me how the fair work agency will be juxtaposed with other enforcement activities. In her answer to the noble Lord, Lord Sikka, the Minister talked about the role of HMRC. Will HMRC no longer have that role? If not, will the fair work agency have access to the data that HMRC has in order to make its prosecutions? That is just one of the outstanding queries about how this new agency will operate in the context of enforcing this important change.

[Baroness Gustafsson (Lab)]

I thank the noble Lord. I talked about the additional rights and enforcing the wider roles and rules of the domestic agency, but on how that will be impacted operationally, as well as the interface with HMRC, I will write to the noble Lord, Lord Fox, with some details on exactly how that will be undertaken.