The government has today accepted the independent Low Pay Commission’s (LPC) recommendations for this year’s adult and youth National Minimum Wage (NMW) rates.
However, the government has concluded that the apprentice rate should be increased rather than frozen as recommended by the LPC. The LPC based this recommendation on concerns about level of compliance with the apprentice rate.
The following rates will come into effect on 1 October 2013:
- the adult rate will increase by 12p to £6.31 an hour
- the rate for 18-20 year olds will increase by 5p to £5.03 an hour
- the rate for 16-17 year olds will increase by 4p to £3.72 an hour
- the apprentice rate will increase by 3p to £2.68 an hour.
- the accommodation offset increases from the current £4.82 to £4.91
Business Secretary Vince Cable said:
The independent Low Pay Commission plays a crucial role in advising the government when setting the National Minimum Wage every year. It balances wages of low paid workers against employment prospects if the rate was set too high.
We are accepting its recommendations for the adult and youth National Minimum Wage rate increases, which I am confident strikes this balance. However, there is worrying evidence that a significant number of employers are not paying apprentices the relevant minimum wage rate.
Apprenticeships are at the heart of our goal to support a stronger economy, and so it is important to continue to make them attractive to young people. Therefore, I am not taking forward the LPC’s recommendation to freeze the apprenticeship rate due to non-compliance, but instead am raising it in line with the youth rates. We are working on a series of tough new measures to ensure we tackle non-compliance issues across the board.
Chair of the LPC David Norgrove said:
We welcome publication of our 2013 Report today and the government’s acceptance of our recommendations on the level of the National Minimum Wage for adults and young people. We also very much welcome the government’s commitment to tackle non-compliance in the areas highlighted by us.
The government will be working with employers, apprentices and training providers to improve awareness of rights and responsibilities on pay. Along with this, it will be undertaking focused enforcement work to clamp down on non-compliance by employers of apprentices.
The government supports work experience as a valuable way of helping young people get into work. The law on the NMW is clear. Work experience as part of an education course and pre-employment provision is exempt under the NMW regulations. However, if somebody is a worker under NMW legislation, then they are entitled to the minimum wage.
Notes to editors:
1.The independent Low Pay Commission was established following the National Minimum Wage Act 1998 to advise the government on the National Minimum Wage. It is made up of representatives from all sides of industry.
2.The LPC makes recommendations to the government in its annual report. For more details and copies of the report see http://www.lowpay.gov.uk/
3.The government has noted the following recommendation:
That the government should ensure that contracts issued by public bodies which commission the provision of social care contain a clause requiring at least the National Minimum Wage to be paid, just as they may require compliance with other aspects of the law, such as health and safety legislation.
4.The apprentice rate applies to apprentices under 19 or over 19 and in the first year of their apprenticeship
5.The LPC monitors and evaluates the impact of the NMW, with particular reference to the effect on pay, employment and competitiveness in low paying sectors and small firms; the effect on different groups of workers; the effect on pay structures; and the interaction between the minimum wage and the tax and benefit systems. The Commission reviews the level of each of the NMW rates and makes recommendations, if appropriate, for change.
6.The government published the remit for the LPC’s 2013 Report in June 2012. The remit can be found here http://www.lowpay.gov.uk/
7.The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set four ambitions in the ‘Plan for Growth’ (PDF 1.7MB), published at Budget 2011:
- to create the most competitive tax system in the G20
- to make the UK the best place in Europe to start, finance and grow a business
- to encourage investment and exports as a route to a more balanced economy
- to create a more educated workforce that is the most flexible in Europe.
Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.