National Minimum Wage: Interim government evidence to the Low Pay Commission 2016

16 October 2015

This document provides evidence on issues relevant to the Low Pay Commission’s (LPC) task of monitoring, evaluating and reviewing the National Minimum Wage and its impact and making recommendations.

This publication ‘National Minimum Wage: Interim government evidence for the 2016 Low Pay Commission’ is a very interesting read; the evidence covers the UK economy, pay, the labour market and the youth labour market but at 50 pages we’ve highlighted just some of the key areas.

National Minimum Wage (NMW)

In making its recommendations for all NMW rates (including the National Living Wage (NLW) rate), the Low Pay Commission (LPC) will continue to provide independent advice and is asked to consider the pace of the increase, taking into account the state of the economy, employment and unemployment levels, and relevant policy changes.

Depending on the outcome of the review into bringing forward the NMW cycle (see 'Review into alignment...' below), alongside the NMW recommendations in February 2016 the LPC are asked to provide indicative NMW rates for 2017, in order to give more certainty to business. Alongside the premium recommendation in October 2016 the LPC are asked to provide an indicative premium rate for April 2018. (Both subject to confirmation in light of economic conditions).

The LPC is asked to provide a report to the Prime Minister and the Secretary of State for Business, Innovation and Skills on the NMW rates as early as possible in February 2016, and on the NLW by October 2016.

National Living Wage (NLW)

The Government’s objective is to have a NLW of over £9 by 2020. The NLW will be mandatory and introduced into law through an amendment to the National Minimum Wage Regulations 2015. It will come into force from 1 April 2016.

The adult NMW rate is currently £6.70. From April 2016 the NLW will be come into effect, setting a minimum of £7.20 per hour for workers over 25 year olds. The NMW will continue to apply to those aged between 21 and 24. The other NMW rates will continue as they have done previously and will also be recommended by the independent LPC.

Review into alignment of the NMW and Personal Allowance cycles

The Summer Budget announced the Government’s intention to legislate so that people working 30 hours on the NMW will not pay income tax. This will be implemented in practice by ensuring that once the income tax personal allowance has reached £12,500 (by 2020), it will always be set at least at the equivalent of 30 hours a week on the NMW, rather than indexed on the basis of price inflation.

A formal review is taking place to assess options for changing the timing of the NMW setting cycle so it is aligned with the Income Tax Personal Allowance cycle. It is considering the issues for both businesses and workers when aligning these cycles and will report to Ministers before the end of 2015.


The Government has considered that raising the Apprentice rate could reduce employer demand for apprentices. As well as raising direct employer costs, employers must allow apprentices time off from their work to train. However, the Apprentice rate of £3.30 is still less than the NMW of a non-Apprentice 16 year old. In addition Apprenticeships provide substantial productivity benefits to employers and the Government’s reforms should support a further rise in their productivity.

The LPC recommended that Government amend the regulations to exempt Higher Apprenticeships from the scope of the Apprentice Rate. The Government will assess the impacts of the Apprentice rate rise from October 2015 before taking any further action on this recommendation. Once the NLW is implemented in April 2016, those apprentices aged 25 and over, in the second year of an apprenticeship will be paid the NLW of £7.20.

As part of the Government’s commitment to delivering 3m apprenticeships this Parliament there will be many more Higher and Degree Apprenticeships allowing young people to combine a world-class degree with a world-class apprenticeship.

Degree apprenticeships are a new integrated model of Higher Apprenticeship involving employers, universities and relevant professional bodies co-designing apprenticeships to meet full occupational competency and a degree (bachelor’s or master’s). The new Degree Apprenticeships complement the existing degree model whereby current degrees can be used as part of the assessment process to ensure full competency in an occupation.

Higher and Degree Apprenticeships are widening access to the professions and developing higher level technical skills needed to improve productivity and support British industry to compete internationally. They are available in occupations as diverse as Solicitor, Software Developer, Accountant, Dental Technician and Space Engineer - and range from level 4 (certificate of HE level) all the way up to level 7, master’s degree level.

NMW Enforcement

The Government has invested many resources into strengthening deterrents and this statistical table on NMW enforcement provides a 2014-15 summary.









Cases / Interventions


Arrears per case


Arrears per worker


Strike Rate


Cases with arrears


Penalties charged


Penalties charged £s


Average workers per case


Read the full report - National Minimum Wage: Interim government evidence for the 2016 Low Pay Commission.