Low Pay Commission consultation on the future of the National Living Wage and National Minimum Wage

25 March 2020

The Low Pay Commission (LPC) is the independent body responsible for advising the government on National Living Wage (NLW) and National Minimum Wage (NMW) levels, and has been tasked by the government with providing recommendations as to what rates should be in operation from April 2021. This information needs to be provided by October 2020. The LPC has launched a consultation to focus on the impact of recent increases to the NLW and NMW, to help to inform its recommendations for the NMW and NLW rates for 2021.

The consultation was published on 12 March 2020 and will close on 11:45pm on 4 June 2020 but the CIPP intends to submit a written response, on behalf of its members, before that point.

The target of reaching 60% of median earnings, as set by the government back in 2015, has been achieved due to the fact that the NLW will increase to £8.72 per hour from 1 April 2020. The government have fixed a new aim for the LPC, of increasing the NLW to two-thirds of median earnings by 2024, alongside expanding the reach of the NLW to those aged 23 and over by 2021 and further, to those aged 21 plus, from 2024.

The ambition for other NMW rates is that they will increase as much as is possible, without having a detrimental effect on employment.

The LPC wishes to collect evidence on the effects of the recent increases to NMW and NLW on both employers and workers, and further views on businesses conditions and the economic outlook. Coronavirus will undoubtedly be discussed in responses that are submitted this year.

The consultation asks about:

  • Affordability and effects of an increase in April 2021 to a NLW rate of £9.21. This is the current central projection for next April’s rate, with a likely range of 6 pence above or below this figure
  • Views on the LPC’s remit to 2024, involving a new NLW target of two-thirds of median earnings and lowering the NLW age threshold to 21. Based on forecasts, the current central projection for the April 2024 NLW rate is £10.69, with a likely range of 30 pence above or below this figure
  • Views on potential changes to the Apprentice Rate and their effects in particular on younger (16-18 year old) apprentices

The LPC also wants to hear about any impacts that the recent increase to NLW and NMW levels have had on employment and hours, pay and benefits, productivity, prices and profits.

There is also a note that the programme of regional visits planned for 2020 has been suspended, due to the outbreak of coronavirus, but that the LPC will continue to work to fulfil its remit and to gather information on the economy and labour market.

CIPP comment

This is a topic that the CIPP are extremely interested in, and we will be submitting a written response to this consultation.

In order to collate the views and feedback of our members, we are currently investigating how a virtual thinktank would work and will be announcing details in due course. If you would like to participate, please don’t hesitate to contact Samantha Mann at policy@cipp.org.uk.

 


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