Policy paper

Low Pay Commission Remit 2025: National Living Wage and National Minimum Wage

Published 5 August 2025

As set out in the Plan for Change, economic growth is the number one mission of the government. Through the Growth Mission, the government will deliver higher living standards in every part of the United Kingdom by the end of the Parliament, putting more money in working people’s pockets. The government is determined to deliver a genuine living wage, backed by evidence and consistent with delivering inclusive growth for working people and competitive businesses across the UK.

The government recognises and values the Low Pay Commission’s (LPC) established track record of balancing a multitude of factors and making wage rate recommendations that deliver for workers and businesses alike. We therefore ask the LPC to make recommendations on the following rates to apply from 1st April 2026. The recommended rates should minimise impacts on employment prospects for workers and should consider the risks of youth unemployment in light of emerging and concerning trends for this cohort.

National Living Wage

The government is committed to raising the living standards of working people and this is the key focus of the government’s Growth Mission. That is why the government asks the LPC to ensure that the National Living Wage rate does not drop below two-thirds of UK median earnings for workers in the National Living Wage population, a recognised measure of low hourly pay. The LPC should take into account the cost of living, inflation forecasts between April 2026 and April 2027, the impact on the labour market, business and competitiveness, and carefully consider wider macroeconomic conditions.

National Minimum Wage for 18 to 20-year-olds

The government is committed to removing the discriminatory age bands for adults. We ask that the LPC carries out its proposed consultation on how this should be achieved. The findings from this consultation should then inform the LPC’s recommendations for the 18 to 20-year-old rate(s) from April 2026. In seeking to narrow the gap between the National Minimum Wage and the National Living Wage, the LPC should also take into account the effects on employment of younger workers, incentives for them to remain in training or education and the wider economy.

Other National Minimum Wage rates

The government asks the LPC to make recommendations on the under 18 and apprentice National Minimum Wage rates that should apply from April 2026. Rates should be set as high as possible without damaging the employment prospects of each group. In addition, we ask the LPC to recommend the accommodation offset rate that should apply from April 2026.

Research and evaluation

We ask the LPC to continue to gather evidence on the differing impact across the United Kingdom of increases to the National Minimum Wage and National Living Wage, to inform how the minimum wage helps to deliver greater prosperity and living standards for working people in all areas of the UK. We also ask the LPC to gather evidence and publish its findings on what criteria would need to be met in order for the baseline target of the National Living Wage rate to increase beyond the current two-thirds of UK median earnings level within this Parliament.

Timing

The LPC is asked to provide advice in response to this remit to the Prime Minister and the Secretary of State for Business and Trade by the end of October 2025.