National Minimum Wage (Amendment) Regulations 2015 — House of Lords, 2015-07-16
Topic: Labor
James Stopford (Conservative, Centre-right): My Lords, the purpose of these regulations is to increase the hourly rate of the national minimum wage for all workers and to increase the maximum amount for living accommodation that counts towards minimum wage pay, in line with recommendations from the Low Pay Commission The national minimum wage is designed to protect low-income workers and provide an incentive to work by ensuring that all workers receive at least the hourly minimum rates set. The minimum wage also helps businesses by ensuring that competition is based on the quality of goods and services provided and not on low prices based on low rates of pay. Following advice from the Low Pay Commission, the Government are uprating the minimum wage from 1 October 2015 so that the adult rate will be £6.70 per hour. Young people aged between 18 and 20 will earn £5.30 and those between 16 and 17 will have a minimum wage rate of £3.87 per hour. This represents an increase of 3% for the adult rate and similar increases for the youth rates. This is the largest real increase to the adult rate since 2006, and low-paid workers will enjoy the biggest cash increase in their pay packets since 2008. It also means that the adult rate will be closer to the average wage than ever before. The adult rate increase will benefit more than 2 million low-paid workers on the national minimum wage, and will mean that full-time workers on the adult rate will receive an additional £416 a year in their pay packet Finally, the Government believe that it is important to improve the attractiveness of apprenticeships for young people by delivering a wage that is comparable to other choices of work. That is why we are increasing the minimum wage for apprentices by 21%—a 57p an hour increase to £3.30. This means that someone working full time on the apprentice rate will be £1,185 better off per year than last year. This is a departure from the Low Pay Commission’s apprentice rate recommendation of a 7p increase to £2.80. We would not depart from such a recommendation unless we felt strongly that our approach would benefit apprentices in the UK. In our view this increase to £3.30, alongside wider reforms, will encourage more young people to consider apprenticeships as a credible alternative to both higher education and jobs without training Since its introduction in 1999, the national minimum wage has been successful in supporting the lowest-paid UK workers. It has increased faster than average wages and inflation without an adverse effect on employment. It continued to rise each year during the worst recession in living memory and is now closer to the average wage than ever before. The Low Pay Commission has proven that a rising minimum wage can go hand in hand with rising employment. This increase is carefully managed through advice from the Low Pay Commission. The Government’s 2015 remit asked the Low Pay Commission to make recommendations for these new rates based on maximising the wages of the low paid without damaging employment opportunities The Low Pay Commission recommendations follow consultation with business and workers and their representatives, together with extensive research and analysis. The Low Pay Commission consists of three commissioners from employer backgrounds, three from employee representative backgrounds, and three independents. Its recommendations reflect the objectives of both employers and unions, and are unanimous. The Low Pay Commission has stated in its report that we are now in a period of faster real increases in the national minimum wage, provided that the economic recovery continues The Chancellor announced in the summer Budget the introduction of the national living wage for those aged over 25. The Government’s ambition is for the national living wage to reach £9 by 2020. However, the national living wage is not the purpose of today’s debate. It is for implementation from April 2016, and the Government will bring forward the regulations to bring it into effect in due course. Those regulations will also be debated in this House The Government believe that the rates set out in the regulations before you today will increase the wages of the lowest paid while being affordable for business. I commend these regulations to the House.