Government moves to end age bands for National Living Wage

The UK Government has asked the Low Pay Commission to end age bands for the National Minimum and National Living Wage when it makes its recommendations for changes to the rates next year.

The Low Pay Commission will consult with employers, trade unions and workers on narrowing the gap between the 18–20-year-old rate of the National Minimum Wage and the National Living Wage (the higher statutory minimum rate paid to those 21 and over) and will put forward recommendations on achieving a single adult rate in the years ahead.

Recent updates to the National Living Wage have seen the age needed to qualify reduce from 25, when first introduced, to 21, and currently stands at £12.21 per hour as of 1st April. The National Minimum Wage is currently £10 per hour.

The latest estimates for next year’s rates published by the Low Pay Commission will see the National Living Wage rise to between £12.55 and £12.86 per hour, based on current forecasts for the cost of living, inflation, and average earnings of those on higher incomes.

Chancellor of the Exchequer Rachel Reeves said:

“Fair pay which supports working families is integral to our Plan for Change, because when working people are properly rewarded with more money in their pockets, businesses thrive and our entire economy benefits.

“To ensure the right balance is struck between the needs of workers, business affordability, and the wider economy, the LPC is being asked to consult on several issues before recommending the new rates.“

Baroness Philippa Stroud, Chair of the Low Pay Commission, said:

“We are pleased to receive our remit from the Government. Already, since the beginning of the year, we have spent significant time speaking with workers and employers, to understand the pressures in the economy and the effects of the most recent increases in the minimum wage. We have held a successful call for evidence and received detailed submissions from all sides.

“Our recommendations on the minimum wage are always finely balanced. More than ever, it is important that we draw on first-hand evidence from those affected by our decisions. I look forward to working with the rest of the Commission over the autumn to reach a shared view on this evidence and deliver our advice to the Government in October.“

Recommendations by the government to begin closing the gap between the National Minimum Wage and National Living Wage follows an election manifesto commitment by the Labour Party in 2024 to end the age-related banding which it has describes as discriminatory. The move also has the backing from groups representing workers: TUC General Secretary, Paul Nowak said:

“The minimum wage has been one of the big success stories of the last 25 years – lifting pay at the bottom and proving the doom-and-gloom merchants wrong. But it’s important that it keep rising so that it better reflects what it actually costs to get by in Britain today.