Age Discrimination: National Living Wage

Debate between Mhairi Black and Nick Boles

Wednesday 8th June 2016 Westminster Hall

[Nick Boles]

No. I heard a lot from the hon. Lady.

It is especially important that young people are given early opportunities, which explains the original construction of the national minimum wage. Opposition Members surely recognise that the Low Pay Commission is an independent body charged with advising the Government on what is a responsible increase for the national minimum wage. The commission is charged with looking in particular at what is called—forgive me for the rather unpleasant jargon—the varying bites of minimum wage rises. That refers to the percentage of the median wage for someone of that age that the national minimum wage would represent at that particular level. I am sure everybody can understand, because it is a matter of common sense, that the closer the national minimum wage rate for somebody of that age gets to the median wage, the greater the risk that raising the national minimum wage rate will reduce employment opportunities.

[Mhairi Black]

Will the Minister give way?

[Nick Boles]

I am not going to give way. I listened to the hon. Lady intently and I am trying to cover all the points raised in a longish debate.

It is critical to understand that although the national minimum wage bite—the percentage of the median wage—for 25 to 30-year-olds in 2015, before the national living wage came in, was only 59%, the bite for 21 to 24-year-olds was 78.7%. That is nearly 80% of the median wage, and that is before the substantial increase in the national minimum wage that was recently introduced for people under 25. There was a significant risk that, had the Government introduced the national living wage for everyone, including those under 25, that would have had a substantial and negative effect on those under-25s’ employment opportunities.

The hon. Member for Heywood and Middleton (Liz McInnes) referred to the apprentice minimum wage. It is important to note that in 2015 the apprentice minimum wage rose by 21%. We had inherited from the previous Government, which she supported, an extremely low apprentice national minimum wage. Employers make a substantial investment in apprentices, so we understand that it is important not to choke off their willingness to make that investment by setting legal minimum wages that are too high.

Nevertheless, in Government—at the time, the coalition—we felt that the level of the national minimum wage for apprentices was egregiously and unfairly low. On one of the few occasions when any Government of either, or any, stripe have rejected a recommendation of the Low Pay Commission, we rejected its recommendation for a small increase in the apprentice national minimum wage, and we instead increased it in one year by 21%, the equivalent of a £1,185 pay rise for a full-time apprentice working 40 hours a week. So we acted on the apprentice minimum wage.

We have taken the advice of the Low Pay Commission and also acted on the national minimum wage rates that apply to people under the age of 25. This year, we accepted all of the Low Pay Commission’s recommendations for national minimum wage rates to come into force from this October. The main national minimum wage rate for 21 to 24-year-olds will increase by 25p, or 3.7%—substantially more than inflation or, indeed, average wage growth—to £6.95 per hour. That is the largest single increase in the main rate of the national minimum wage since 2008, in cash terms, with the expectation of the highest level ever in real terms.

Finally, hon. Members from the various Opposition parties may debate how discriminatory legislation brought in by the Labour Government was, but this Government will continue to invest in apprenticeships; to create millions of jobs, in particular for young people; and to increase wages of all working people, under and over the age of 25, through the national minimum wage and the new national living wage.