Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, pursuant to the Answer of 7 January 2020 to Question 318 on Employment: Poverty, what assessment her Department has made of the effect on in-work poverty of raising the statutory National Living Wage to at least the level of the Real Living Wage.

It is not possible to predict the impact of the real living wage on in-work poverty as poverty projections are inherently speculative as they require projecting how income will change for every individual in society which are affected by a huge range of unknown factors.

On 1 April 2020, the Government will increase the National Living Wage (NLW) for over 25s by 6.2% to £8.72. This increase is projected to meet the Government’s target of reaching 60% of median earnings by 2020. This latest increase will mean that the annual earnings of a full-time worker on the NLW will have increased by nearly £3,700 since the year the policy was announced. In September last year, the Chancellor pledged to raise the NLW to two-thirds of median earnings within five years, making the UK the first major economy in the world to set such an ambition.

The Government considers the expert and independent advice of the Low Pay Commission (LPC) when setting the NMW and NLW rates. The LPC draws on economic, labour market and pay analysis, independent research and stakeholder evidence. The key distinction between the NLW and other rates, such as the Living Wage Foundation’s voluntary Living Wage, is that the LPC considers the impact on businesses and the economy when making its recommendations.