Low Pay Commission recommends new National Minimum Wage rates

27 February 2014

The Low Pay Commission has recommended that the adult NMW rate should increase by 3 per cent on 1 October 2014, from £6.31 to £6.50 an hour.

The recommendations from the LPC are:

  • the adult rate be increased by 3 per cent to £6.50 an hour;
  • the youth development rate be increased by 2 per cent to £5.13 an hour;
  • the rate for 16-17 year olds be increased by 2 per cent to £3.79 an hour;
  • the apprentice rate be increased by 2 per cent to £2.73 an hour; and
  • the accommodation offset be increased by 3.5 per cent to £5.08 a day.

The Low Pay Commission has published the executive summary executive summary of its 2014 report, together with a letter from the LPC Chair to Vince Cable from the Low Pay Commission, David Norgrove, to Ministers.

The minimum wage has risen faster than other wages since during the economic slowdown, and the wages of the lowest paid are now higher relative to those of other workers than they have been for decades. However the real value of the minimum wage has fallen, even though the minimum wage has risen faster than other wages, because both it and average wages have been exceeded by inflation.

David Norgrove said:

“We have had to balance the risk of recommending more than business and the economy can afford, bearing in mind the pressures on low-paying sectors and small firms, against the risk of doing too little to start to restore the real value of the earnings of the lowest paid.

“We do believe however that the economic recovery should this year allow an increase in the real value of the minimum wage, the first increase for at least five years. So we are recommending that the adult rate should increase by 3.0 per cent on 1 October, from £6.31 to £6.50 an hour. This is likely to increase the number of jobs covered by the minimum wage by over a third to around one and a quarter million.

“Provided the economy continues to improve we expect to recommend further progressive real increases in the value of the minimum wage, restoring and then surpassing its previous highest level, so that 2014 will mark the start of a new phase – of bigger increases than in recent years – in the work of the Commission.”

The Government is expected to publish the full 2014 report of the Low Pay Commission during the next few weeks.

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