Press release

LPC welcomes the acceptance of its National Minimum Wage recommendations

The government has accepted the Low Pay Commission (LPC)'s recommendations on rates for the National Minimum Wage. This is the LPC's response.

The Low Pay Commission (LPC) today welcomed the government’s acceptance of its recommendations on rates for the National Minimum Wage (NMW) for adults and young people from October 2013.

The Chair of the LPC, David Norgrove said:

We have, as usual, considered all the evidence we have gathered together with assessments of the prospects for the UK economy when making our recommendations this year. Although the economy is forecast to grow through 2013 and 2014, the pace is likely to be slow and earnings increases still very restrained. We believe our recommendations for October 2013 balance the needs of low-paid workers against the challenges facing businesses, particularly small businesses.

The position of young people in the labour market appears to have stabilised compared with the continuing deterioration we reported a year ago. It is too early to know if this trend is temporary or will continue, so we have continued to be cautious with regard to our recommendations for young people. We do not want to damage the employment prospects of young people and the lower rise for them than for adults should further increase the relative attractiveness of young people to employers.

We welcome the government’s commitment to tackle non-compliance in the areas highlighted by us in our report.

Notes to editors

  1. The LPC is a statutory body whose role is to advise the government on the NMW.

  2. The LPC submitted its report to the government on 19 February 2013, in accordance with its remit. The government published and responded to this report on 15 April 2013.

  3. The 2013 Report is the LPC’s 14th report. All reports are available from the Stationery Office Bookshops or the commission’s website at: http://www.lowpay.gov.uk.

  4. The members of the LPC are:

  • David Norgrove (Chair), Chair of PensionsFirst, the Family Justice Board and Amnesty International Charitable Trust
  • Susan Anderson, consultant to the CBI on employment issues
  • Professor Bob Elliott, Professor of Economics and Director of the Health Economics Research Unit at the University of Aberdeen
  • Neil Goulden, Director, Neil Goulden Consulting Ltd
  • John Hannett, General Secretary of the Union of Shop, Distributive and Allied Workers
  • Peter Donaldson, Managing Director of D5 Consulting Ltd
  • Professor Stephen Machin, Professor of Economics at University College London and Research Director, Centre for Economic Performance, London School of Economics
  • Kay Carberry, TUC Assistant General Secretary
  • Heather Wakefield, National Secretary for UNISON’s Local Government Service Group
  1. A full list of this year’s recommendations follows.

NMW rates

We recommend that the adult rate of the NMW be increased by 1.9%, or 12 pence, to £6.31 an hour, from 1 October 2013.

We recommend an increase of 1% in the Youth Development Rate to £5.03 an hour and in the 16-17 Year Old Rate to £3.72 an hour from 1 October 2013.

We recommend that the Apprentice Rate should remain at £2.65 an hour from 1 October 2013.

Accommodation offset

We recommend that the accommodation offset should remain the only permitted benefit-in-kind that can count towards payment of the NMW and there should be only one rate. It should apply irrespective of whether the worker has a choice over taking the accommodation.

We recommend that the accommodation offset be increased by 1.9 %, to £4.91 a day, from 1 October 2013.

Salaried-hours Workers

We recommend that the regulations for salaried-hours workers continue to be required in all their essentials. In order to make it as simple and easy as possible to achieve NMW compliance, the government should adapt its guidance to include examples and an online means of determining what payment is required.

Compliance

We recommend that the government should combine a communications campaign and a targeted enforcement initiative to ensure that the Apprentice Rate is known to employers and apprentices, and that infringers are caught, punished, and wherever appropriate, named.

We recommend that contracts issued by public bodies which commission the provision of social care should contain a clause requiring at least the NMW to be paid, just as they may require compliance with other aspects of the law, such as health and safety legislation. The government should take responsibility for bringing this about.

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