Before becoming the UK Government, the Labour Party published a document entitled ‘Plan to Make Work Pay: Delivering A New Deal for Working People’.
This document pledged two things:
- Ensure that the rates are ‘a real living wage that people can live on’
- Remove of the age bands which it described as ‘discriminatory’
Reference to this was also made in their Manifesto which said that a Labour UK Government would change the remit of the independent Low Pay Commission (LPC). The LPC is responsible for making recommendations about the rate of National Minimum / Living Wage and reference was made about ensuring that their recommendations considered ’the cost of living’. There was no definition of what cost of living meant.
On 30 July 2024, Jonathan Reynolds, Secretary of State at the Department for Business and Trade issued a House of Commons written statement confirming that he had sent a remit to the LPC as follows:
- Their recommendations must ensure that the National Minimum / Living Wage rates ensure they are reflective of two-thirds of UK median earnings for workers aged 21 and over. This is a calculation reported by the Office for National Statistics (ONS) and is a recognised measure of low hourly pay. This is not a change from the previous UK Government’s remit to the LPC
- Their recommendations should consider the impact on business, competitiveness, the labour market and the wider economy. This is not a change either but
- Their recommendations must consider the expected annual trends in inflation between now and March 2026. This is the cost of living factor
This report is to be delivered by the end of October 2024 and new rates will apply from April 2024.
For Bookkeepers
Note that the above documents also referred to working with a (new) Single Enforcement Body and HMRC to ensure enforcement and clarification on travel time when working across multiple sites. There have not any been announcements on this.
The new rates are usually announced at the annual Budget which is planned for 30 October 2024. We are usually ‘leaked’ this information before the Budget and the Chancellor’s speech just confirms the rates.
Regarding the removal of the age bands, Jonathan Reynolds confirms it is the aim to remove the age bands on a year-by-year basis, however, this will not happen from 2025. From April 2025, we will still have rates for:
- Apprentices (currently £6.40 per hour)
- Under 18s (currently £6.40 per hour)
- 18 to 20-year-olds (currently £8.60 per hour)
- The National Living Wage (21+, currently £11.44 per hour)
- The Accommodation Offset (currently £9.99 per day)
The LPC has also been asked to gather evidence on groups of low paid workers with protected characteristics. This will be those defined in the Equality Act 2010.
