Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Innovation and Skills, what assessment his Department has made of the potential effect of the National Living Wage on (a) costs to businesses and (b) employee pay.

The Government’s Impact Assessment for the introduction of the National Living Wage estimates the total cost to businesses at around £1.1 billion, consisting of direct wage costs, associated non-wage labour costs, maintaining pay differentials and transition costs.

Direct costs to employers contribute just under £700 million to the total cost to raise employees’ wages to the initial rate of £7.20. This will be a direct benefit to employees from receiving higher wages.

On current OBR forecasts, a full-time National Minimum Wage worker will earn over £4,200 more by 2020 from the National Living Wage in cash terms.