Low Pay Commission recommend a 3 percent increase on the Adult Rate of NMW

25 February 2015

In addressing his letter to Rt Hon Vince Cable MP, Secretary of State for Business, Innovation and Skills, David Norgrove, Chairman of the Low Pay Commission, wrote

“… We recommend that the adult rate should increase by 3 per cent to £6.70. This is likely to be a larger real terms increase than last year and, on the basis of the most recent Bank of England inflation forecast, should restore three-quarters of the fall in the real value of the NMW relative to its peak in 2007.

Our recommendation may increase the number of jobs covered by the minimum wage to over 1.4 million in October 2015 compared with 900,000 at the start of the downturn in 2008, as the minimum wage has risen in relation to median earnings.”

Current rates of NMW:

Adults £6.50

18-20s £5.13

16-17 year olds £3.79

Apprentices £2.73

LPC Recommended Rates for October 2015

Adults £6.70

18-20s £5.30

16-17 year olds £3.87

Apprentices £2.80

The letter went on to consider whether the structure of the Apprentice Rate could be simplified in order to improve compliance, in addition to a recommendation that the Apprentice Rate should not apply to the Higher Apprentice.

“Communication and enforcement are the weapons for lack of awareness or deliberate non-compliance. Welcome efforts to strengthen publicity and guidance are recent and small relative to need. They have also not yet addressed the weak incentives for training providers to communicate the rate. We welcome the increase in resource for HMRC enforcement.”

Full details can be found in the Executive Summary of the LPC.

 

CIPP Comment:

The CIPP are encouraged by this response which is consistent with the findings of our membership survey that fed in to our response to the 2014 consultation work of the Low Pay Commission. We also welcome the acknowledgement that communication as well as enforcement are key to improved compliance and that recent efforts to strengthen publicity and guidance are indeed small relative to need.