National Minimum Wage (Amendment) Regulations 2021 — House of Lords, 2021-03-01
Topic: Labor
Martin Callanan (Conservative, Centre-right): My Lords, the purpose of these regulations is to raise the national living wage and the national minimum wage rates on 1 April 2021. We are determined to make the UK the best place in the world to work. This has been an extraordinary year presenting extraordinary circumstances. Our approach is to balance the needs of workers and employers The impact of coronavirus on the economy has been significant. The UK economy contracted by 9.9% in 2020. This recession has been much more severe in magnitude than previous ones. The effects on the labour market, however, have so far been more muted. The latest ONS headline estimate of unemployment was 5.1% from October to December 2020. This is in part due to government intervention, including the Coronavirus Job Retention Scheme. With the number of employees supported by the scheme peaking at 8.9 million in May 2020, workers were able to retain some form of attachment to a job. At the end of December, there were around 4 million jobs on the scheme Turning to these regulations, which will increase the rates of the national minimum wage and the national living wage from 1 April, we estimate this will provide a pay rise to approximately 2 million workers. I am pleased to say that this Government accepted all the recommendations made by the Low Pay Commission in October 2020. This independent body brings together the views of businesses and workers, informed by expert research and analysis, to reach a consensus on its advice. I would like to place on the record my sincere gratitude for its work Many low-paid workers have supported the country through these challenging times, but this Government recognise that many businesses are also struggling in the current crisis. In its recommendations, the Low Pay Commission sought to balance these needs against the wider economic conditions. Therefore, 2021’s increase is smaller than in previous years. The Low Pay Commission concluded that these rates would give low-paid workers a real-terms pay rise, recognising their contributions during this pandemic, without presenting a significant risk to employment prospects. The LPC makes its recommendations on the basis of significant stakeholder evidence from business, worker and academic representatives. Business representatives broadly supported a cautious increase to minimum wages These regulations will increase the national living wage for those aged 23 and over by 19p to £8.91, an increase of 2.2%. A full-time worker on the rate will be more than £345 better off over the course of the year. The national living wage currently applies to workers aged 25 and over. However, from April 2021 it will be extended to those aged 23 and over. This gives 23 and 24 year-olds an extra 71p an hour, the largest increase for these individuals ever The regulations also increase the rates for younger workers and apprentices. Workers aged 21 and 22 will be entitled to a minimum hourly rate of £8.36, a 16p increase. Workers aged between 18 and 20 will receive an extra 11p an hour, taking their rate to £6.56. Under-18s will earn at least £4.62 an hour, a 7p increase. Apprentices aged under 19, or those in the first year of their apprenticeship, will receive an increase of 3.6%—an hourly rate of £4.30, 15p more. The regulations also change the amount that employers can charge workers for accommodation without it affecting their pay for national minimum wage purposes. From April, that will increase to £8.36 per day I turn to record-keeping. This year, the Government will make a further legislative change to the minimum wage regulations. This pertains to the records that employers must keep to ensure compliance with the minimum wage. These records currently have to be held for three years. We are extending that to six years. This change will align the period for which an employer must keep records with the period of liability under the National Minimum Wage Act 1998, which is six years, and it follows a recommendation in the Director of Labour Market Enforcement’s UK Labour Market Enforcement Strategy 2019/20. Amending the length of time for which records must be kept will give employers clarity, remove an inconsistency that will aid HMRC investigations into underpayment and ultimately enable underpaid workers to receive the money that they are legally owed as soon as possible Looking ahead, the Government have pledged to continue raising the minimum wage rates. As set out in our manifesto, we have set a target for the national living wage to reach two-thirds of median earnings by 2024. To improve fairness for younger workers, beyond the age threshold change this year we will apply the national living wage to those aged 21 and over by 2024. These targets continue to be dependent on economic conditions, and we will of course carefully monitor the labour market In conclusion, these regulations ensure that the lowest-paid workers are fairly rewarded for their valuable contributions to the economy. The Government will continue to monitor the impact of the minimum wage as we navigate our way out of this economic crisis. We will shortly publish the remit to the Low Pay Commission for 2021 asking it to make recommendations for new minimum wage rates to apply from April 2022. I commend the regulations to the House.