National Minimum Wage (Amendment) Regulations 2026

Tuesday 17th March 2026 Lords Chamber

Motion to Approve

20:19

Moved by

[Lord Leong]

That the draft Regulations laid before the House on 2 February be approved.

Relevant document: 52nd Report from the Secondary Legislation Scrutiny Committee

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I note the regret amendment tabled by the noble Lord, Lord Sharpe.

The context of this instrument is that the regulations were laid before Parliament on 2 February and approved by the other place on 2 March. Their purpose is to increase the national living wage and national minimum wage rates. Subject to the approval of this House, the regulations will come into effect on Wednesday 1 April.

The creation of the minimum wage is one of the proudest legacies of the previous Labour Government. We will always defend working people, and the minimum wage remains a key plank of this Government’s plan to make work pay. The Opposition are wrong to suggest that we are not sufficiently taking into account employment opportunities for young people.

These increases are based on the recommendations of the Low Pay Commission, which the Government have accepted in full. We are grateful to the commission and extend our thanks to its chair, the noble Baroness, Lady Stroud, and her fellow commissioners and supporting officials. The LPC is an independent and expert body. It reaches its decisions through consensus between its employer, worker and independent commissioners, following extensive stakeholder consultation and research. The Government recognise and value the commission’s established track record of balancing a multitude of factors when making wage rate recommendations that deliver for workers and businesses alike.

The remit for the 2026 rates was to ask the LPC to recommend rates that minimised impacts on employment prospects for workers and considered the risks for younger workers. In addition, the Government are committed to helping young people get and retain good jobs—including the recent announcement of reducing the cost of hiring younger workers. The Government are also delivering a long-overdue reform to rebalance the business rates system and deliver growth-boosting support with the business growth service to unlock business potential.

Noble Lords will have seen the publication yesterday of the 2026 remit of the Low Pay Commission. The remit continues to benchmark the national living wage to two-thirds of median hourly earnings, while also considering the condition of the labour market, the cost of living, the impact on business and competitiveness and wider macroeconomic conditions. The new remit maintains the commitment to removing the discriminatory age bands for adults. We recognise that the national minimum wage and national living wage alignment must be achieved while protecting jobs and supporting labour market stability. The remit gives the LPC full flexibility to use its significant expertise and social partnership model, including employer and worker representatives, to recommend the appropriate pace and timing of aligning the 18 to 20 national minimum wage with the national living wage. We have asked the LPC to provide its recommendations to government by October. The Government will then confirm the new national living wage and national minimum wage rates to apply from April 2027.

I turn to the detail of the minimum wage regulations. The national minimum wage—the statutory minimum for workers aged 21 and over—will increase by 4.1%, or 50p, to £12.71 an hour. This represents a gross annual increase of £900 for a full-time worker. The national minimum wage for workers aged between 18 and 20 will increase by 8.5%, or 85p, to £10.85 an hour. A full-time worker on this rate will see their gross annual earnings rise by over £1,500. This continues our progress in closing the gap between this rate and the full adult rate.

The regulations will also increase the national minimum wage rate for workers aged above school-leaving age but under 18 to £8 an hour. This increase—equivalent to 45p or 6%—also applies to the apprentice national minimum wage, which relates to apprentices aged under 19 or in the first year of their apprenticeship.

Finally, the accommodation offset—the maximum daily amount an employer can charge a worker for accommodation without reducing their pay for minimum wage purposes—will increase by 4.1% or 44p to £11.10.

By approving this year’s minimum wage increases, we can deliver a significant and deserved uplift for millions of workers in the coming weeks. I refer noble Lords to the comprehensive impact assessment, which was published alongside these regulations by the Department for Business and Trade. The impact assessment contains a full equality assessment and received a green “fit for purpose” rating from the independent Regulatory Policy Committee.

The Government estimate that the minimum wage increases from these regulations will provide a direct pay uplift for approximately 2.7 million workers, while an additional 5.1 million workers may benefit from positive spillover effects as employers maintain pay differentials.

The minimum wage is rightly regarded as one of the most successful and effective economic policies of the last few decades. Since it was introduced, the share of low-paid jobs, in hourly terms, has dropped from 21.9% to just 2.5%, and the value of the national living wage is expected to be 80% higher in real terms this year than the top statutory rate was in 1999.

This progress has been achieved without the negative impact on the economy and employment that was predicted at the time by some Members. Indeed, the impact assessment sets out a range of potential economic benefits of this year’s uprating, including putting more money in the pockets of the lowest-paid workers, creating greater incentives for people to enter work and boosting consumer demand. We also recognise the importance of a robust enforcement regime in upholding workers’ right to a fair day’s pay.

Since the introduction of the minimum wage, the Government have overseen the repayment of almost £200 million to 1.5 million workers and issued over £105 million in financial penalties. The annual budget for HMRC has increased to around £30 million, and we are going further with the creation of the Fair Work Agency. The Fair Work Agency will have stronger powers and a wider remit, delivering for exploited and underpaid workers and ensuring a level playing field, so that the majority of businesses, which already do the right thing by their workers, cannot be undercut by their less scrupulous competitors.

In closing, it is worth re-emphasising the positive impact that these regulations will have on the lives of millions of working people. When the increases come into effect next month, we will continue in our progress towards our manifesto goals—ensuring a genuine living wage and extending it to all adult workers—while safeguarding employers and protecting the employment prospects of younger workers.

Amendment to the Motion

Moved by

[Lord Sharpe of Epsom]

At end to insert “but this House regrets that the draft Regulations will make it harder for small businesses to take on staff, especially for first jobs and apprenticeships; risk worsening already elevated youth unemployment by further increasing the cost of hiring younger workers; and fail to reflect sufficiently the fragility of the youth labour market, at a time when the number of young people not in education, employment or training is approaching one million”.

[Lord Sharpe of Epsom (Con)]

My Lords, I am extremely grateful to the Minister for explaining and introducing this SI, to which I have tabled a regret amendment. But I am afraid I take a slightly different view from the one he has just explained.

Once again, we start with an ill-thought-out, anti-business measure by this Government. It is very interesting to note that the Minister, when he was explaining and introducing the instrument, referenced a number of government agencies that will be enforcing all sorts of fines and whatnot, but he did not really talk about its impact on business, which is regrettable. Quite frankly, this will end up being an anti-worker measure too, and it will price people out of the labour market.

No one on this side of the House opposes higher pay in principle. Of course we want people to earn more but, for that to be the case, there must be work to be had. A wage floor that is set without proper regard to hiring conditions, business confidence and the fragility of entry-level employment does not help the low paid if it helps price them out of a job altogether. That is why this SI is so troubling. From 1 April, the adult rate will rise to £12.71, while the rate for 18 to 20 year-olds will rise to £10.85 and the under-18 and apprentice rates will rise to £8.

The Government may pretend that there is no trade-off here, but everyone outside government understands that there is. If one sharply compresses the wage differentials—the Minister called them “discriminatory”—between inexperienced younger workers and older workers, one makes it less attractive to hire those with the least experience, the least confidence and the least established work history. The key word is not “discrimination”; it is “experience”. That is not only true for those aged 21 to 25 who are entering the workforce but especially true for 18 to 20 year-olds, many of whom rely on part-time, flexible and entry-level work to get that crucial first foothold in the labour market. Retailers themselves are warning that these local, flexible jobs are often the first step into work for young people, including Saturday jobs and short-hours roles around study or caring responsibilities.

20:30

This is not happening in a healthy labour market. The latest ONS figures show that the overall UK unemployment rate was 5.2% in October to December 2025. As we heard in the debate on the previous subject, the OBR is forecasting that to rise to 7%. For 16 to 24 year-olds, the unemployment rate was 16.1%, according to the latest ONS series. That is now higher than the EU average. The latest ONS NEET release shows that 957,000 young people aged 16 to 24 are not in education, employment or training, including 411,000 who are unemployed and 547,000 who are economically inactive.

Business groups have been warning the Government about exactly this. The British Chambers of Commerce said that

“every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities”.

It warns that:

“Making employment more expensive risks deepening the jobs crisis among young people”.

The BCC also found that

“labour costs remain the biggest cost pressure for SMEs, cited by 72% of businesses”.

Its January recruitment survey found that only 23% of firms expected to increase their workforce in the next three months and 14% expected to reduce it.

The chief economist at the CBI warned that, when government piles more costs on to employment, those costs

“feed back into hiring decisions, investment plans and … the opportunities … available to individuals”.

The CBI says that

“hiring intentions have been negative for eighteen months”,

that the UK unemployment rate is at a post-pandemic high and that the higher employer national insurance, large minimum wage rises and the Employment Rights Act have all made it more expensive and riskier to create jobs.

The British Retail Consortium has said that rising employment costs are already forcing leading retailers to reassess hiring, with 52% of chief finance officers planning to reduce hours or overtime and 32% expecting to freeze recruitment. That matters because retail remains the largest gateway into work for young people, with around 780,000 retail jobs held by 16 to 25 year-olds.

UK Hospitality has suggested that the cumulative burden of wage rises, taxes and other employment costs is reducing job opportunities—again, particularly for young people. It has already reported that hospitality employed 8,784 fewer people in December 2025 than in November, and 20,014 fewer people than in September, and at precisely the time the sector would usually be staffing up.

What makes this especially striking is that even organisations that are not normally associated with Conservative scepticism about minimum wage hikes are now sounding the alarm. The Tony Blair Institute says that the Government’s plan to abolish the youth rate on a fixed timetable is

“increasingly risky … Youth employment is more sensitive to hiring costs … Any convergence with the adult rate should be … conditional on … improvements in youth-employment outcomes”.

The Resolution Foundation says:

“The Government should … pause the convergence of the youth minimum wage with the National Living Wage until youth unemployment begins to fall”.

At this point, it is hard to resist the conclusion that no one in this Cabinet has any real experience of running a business—I exempt the Minister opposite from that remark. If they did, they would understand that every additional cost alters hiring decisions in the real world.

What else have the Government done recently? In effect, they have admitted the problem, because, today, they announced a £1 billion youth employment drive, including a new youth jobs grant paying employers £3,000 for each eligible 18 to 24 year-old they hire. In other words, the Government are now telling business, “We are going to refund employer national insurance in part if you hire the very people you currently cannot afford to hire because we raised employer national insurance”. In what sort of fantasy parallel economic socialist universe is that common sense?

The language the Government have used is revealing. They say they hope this programme will create or support 60,000 opportunities. “Hope” is the key word, so calling it a youth jobs guarantee is frankly misleading. Even worse, the scale is nowhere near enough. ONS data for January 2026 showed that the number of payrolled employees was 30.3 million, which was down 0.4% on the year. That is the equivalent of 134,000 fewer employees than in January 2025—so not even on their optimistic assumptions would this scheme make up for the jobs already lost.

Nor is the wider framework helping. Ministers say that they are not banning all zero-hours contracts and that workers will be able to stay on them if they wish, but the Government’s fact sheet on the Employment Rights Act confirms that employers will have to offer guaranteed hours based on regular patterns. Retailers are warning that, if implementation adds further cost or rigidity, entry-level and short-hour roles will be the first to go. That is precisely the sort of flexible, part-time work on which many younger workers depend. So will the Minister say what is the plan for the 957,000 young people who are now not in education, employment or training? What is the plan for small firms already telling us that labour costs are their biggest pressure? What is the plan for sectors such as retail and hospitality that provide the first rung on the ladder? What is the plan for the 18 year-old, the 19 year-old or the 20 year-old who does not need another Whitehall initiative but simply needs an employer willing to take a chance on them?

The real minimum wage is in fact zero and, unfortunately, that is what many young people receive when we make it too expensive to hire them. While this Government seem determined to compete with the Greens for the prize of economic illiteracy, businesses are closing, hiring is weakening, training budgets are being cut and too many young people are seeing the path into work disappear before their eyes. The country cannot afford that, and young people certainly cannot afford that. I beg to move.

[Baroness Carberry of Muswell Hill (Lab)]

The noble Lord, Lord Sharpe, will not be surprised to hear that I do not agree with his interpretation of the Government’s announcement yesterday of a major drive to create hundreds of thousands of jobs for young people and to radically transform apprenticeships. I suggest that it demonstrates that this Government are not reckless with the youth unemployment market and the economy.

I would like to reinforce the opening remarks of the Minister about the way that the regulations before the House this evening came about. Without labouring the point, they were the product of the painstaking examination of evidence by the Low Pay Commission, a tripartite body featuring representatives from businesses large and small, labour market economists and experts and representatives of workers. I can attest to the thoroughness of that exercise that takes place year after year because I did it myself 11 times.

The commission, as has been said, is excellently chaired by the noble Baroness, Lady Stroud. As it is directly relevant to these regulations, I shall quote briefly from her letter to the Government making recommendations to apply from April this year. She wrote:

“Having comprehensively considered the available evidence base”,


the Low Pay Commission’s judgment was that the recent national living wage increases

“have not had a significant negative impact on jobs”.

On young people specifically, the Government, as the noble Lord, Lord Sharpe, has reminded us, had asked the commission to extend the national living wage to 18 year-olds, but to do this by balancing concerns about youth unemployment. The letter from the noble Baroness, Lady Stroud, said that the Low Pay Commission acknowledged

“a concerning rise in the rate of young people not in education, employment or training”.

These were not reckless recommendations.

The Low Pay Commission also acknowledged:

“Young people are also more likely to work in hospitality and retail, which have seen significant falls in vacancies and employee numbers”


at realistic assessment. It said, however, that minimum wage effects were

“difficult to separate out … from other pressures on these sectors”.

It said that there was not enough evidence to say that previous increases in the minimum rate for 18 to 20 year-olds had

“affected young people’s employment overall”.

It is not me saying this; it was the Low Pay Commission.

The commission opted for caution and recommended waiting until 2028 or 2029 to lower the national living wage threshold to 18, and then only subject to economic conditions. It was similarly cautious and careful with the apprentice rate, keeping it the same as the rate for 16 and 17 year-olds and increasing it to only £8 an hour.

The Low Pay Commission’s wisdom and caution is reflected in the regulations before your Lordships’ House this evening. I ask the noble Lord, Lord Sharpe, to think again about his amendment and about the effects of seeking to deny the lowest paid in our society a few more pounds in their wage packets.

[Lord Sikka (Lab)]

My Lords, it is a sad day to be speaking on the Conservative amendment objecting to a rise in the minimum wage. I support the rise in the minimum wage and the acceleration of the rate for younger workers, who bear the full cost of living. The product of their labour is not sold for lower prices at Starbucks, Tesco or anywhere else. Some 25.3 million people live below the minimum living standard, and their voices must be heard.

Last week the Conservatives promised to reintroduce the two-child benefit cap if they ever return to office. Over 500,000 children and their families will be pushed back into poverty. That lack of empathy is on display again today, as now they are targeting low-paid workers and depriving children and their families of nourishing food, good housing and other essentials.

The Joseph Rowntree Foundation has estimated that a single person needed to earn £30,500 a year to reach a minimum acceptable living standard in 2025. A couple with two children needed to earn £74,000. Even after the forthcoming minimum wage increase, millions will be well short of that target, yet the party opposite is objecting to this.

It is striking that it is silent on soaraway executive pay. A typical FTSE 100 CEO collects an average UK wage in just two days, and the CEO-to-worker pay ratio is 141 times. Recently, the chief executive of Shell got a pay rise of 60%, rising to £13.8 million. The BP CEO’s pay has doubled to £11.7 million. Her daily pay exceeds the annual median wage of a UK employee. At Melrose Industries, the CEO-to-worker ratio is over 1,110 times.

We never hear anything from the party opposite about such rip-offs and inequalities. The party opposite objects to a rise in the pay of younger workers, but it has not offered a single suggestion for lifting young adults out of poverty. It could support calls for the abolition of university tuition fees or the abolition of prescription charges, or promise free bus passes to under-21s as in Scotland, but it does not support any of these poverty-alleviating measures.

Sadly, the opposition to the rise in the minimum wage is part of a steady decline of empathy for a large section of the population. The political discourse venerates the super-rich and scapegoats children, minorities, the poor, the disabled, the sick and the unfortunate for social problems. Empathy is the glue that holds a society together, but it is increasingly undermined by toxic political discourses. I am reminded of a quote by Hannah Arendt, who said:

“The death of human empathy is one of the earliest and most telling signs of a culture about to fall into barbarism”.


Condemning millions to poverty is barbaric. We must search our souls and aim for equitable distribution of wealth to ensure that every single person in this country can live with dignity and fulfil their life.

20:45

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Sikka, who makes the powerful point that there are enough resources in this country for everyone to have a decent life, and for us to look after climate and nature, if we share those resources out fairly.

I thank the Minister for introducing this SI. However, while I agree with the noble Lord, Lord Sharpe, in regretting this SI, I am going to depart in the 180-degree opposite direction from the noble Lord on the Tory Front Bench’s reason for doing so. The noble Lord was keen to quote the Tony Blair Institute. He is quoting an institute that takes its name and leadership from a Prime Minister who saw the wage share—that is, wages as a percentage of total national income—fall significantly; from the 1960s to the 1980s, it was around 60%, but in the late 1990s it fell as low as 51%. Yes, the Blair Government brought in a minimum wage, but then they allowed its real level to decline and workers to suffer, so the noble Lord’s comments were entirely in line with that Blairist approach.

I want to pick up some comments made by the Chancellor in introducing this measure. She said that

“the economy isn’t working well enough for those on the lowest incomes”,

and I agree. She said:

“Too many people are still struggling to make ends meet”—


with which I also agree—and that those on low incomes are not

“properly rewarded for their hard work”.

Again, I entirely agree, but this SI does not take us nearly as far as we need to go in those directions. Where might we actually go?

It is interesting that the statement talks about the national living wage. That term came in when George Osborne gave in to the argument of the Green Party and said there should be a real living wage and rhetorically, if not in practice, introduced the term. However, the so-called national living wage is not the real living wage. The real living wage is calculated by the Living Wage Foundation, and it is £13.45 an hour across the UK compared to the national figure of £12.71, or £14.80 in London. I am sure the Benches around me will say, “Businesses can’t afford to pay that”, but the real living wage is paid by more than 16,000 UK businesses that have chosen to transform their workers’ lives and raise the bar to a basically decent level of work. Nearly half a million employees are covered by this, and the range of employers credited by the Living Wage Foundation includes half the FTSE 100 big household names, including Nationwide, IKEA, Everton Football Club and Aviva, as well as many thousands of small and medium-sized enterprises.

I have a direct question for the Minister. Alongside this announcement is the suggestion that the increase in the rate for 18 to 20 year-olds may slow in future. I note that Labour made a manifesto commitment that the so-called national living wage would apply equally to all adults by the end of this Parliament. Is the Minister prepared to repeat that commitment tonight?

The noble Lord, Lord Sikka, has powerfully made the point that when 18 to 20 year-olds go to Tesco to buy their dinner, or when they pay their rent, they can ask for a discount because they are young but are, astonishingly, unlikely to get it. More than that—you have workers who are doing exactly the same job, shoulder to shoulder in the warehouse or in the shop, but one of them is paid less than the other simply because of their age. That simply cannot be right.

My final point is that the real living wage still does not take us nearly far enough. The Joseph Rowntree Foundation has for a long time calculated the minimum income standard. This is enough to ensure that people who are working get enough to live a decent life, as identified by the people of Britain. These are real measures of how the Government—and this SI—are not going nearly far enough.

At the current levels, a couple with two children where one parent is working full-time on the national so-called living wage and the other is not working reach 66% of the minimum income standard in 2025. That is actually worse than it was in 2024; it is a 1 percentage point decline. A single working-age adult working full-time on the national living wage reaches 76% of the minimum income standard for 2025, compared with 77% in 2024—so, again, a 1 percentage point decrease. We are going in the wrong direction.

I have one final point. I am aware that Jeremy Hunt no longer speaks officially for His Majesty’s Opposition, but he is of course still a Tory MP. He told Radio 5 yesterday that the kinds of measures that we are all looking towards to deal with energy bills—the Government helping in this crisis situation—are unsustainable. He said:

“We are going to have to wean ourselves off the habit”.


But the reality that that fails to acknowledge is that, after decades of workers getting less and less of the share of the product of their labours, they do not have any reserves left for the next shock. People have been left on the edge, and I am afraid that this SI does nothing like enough to help them re-establish stability and security in their lives.

[The Earl of Effingham (Con)]

My Lords, following on from my noble friend Lord Sharpe, I ask the Minister, the noble Lord, Lord Leong, who has vast, successful business experience, why he thinks that Sir Tony Blair said, via his institute, just two weeks ago that Labour’s policies—such as this SI—are

“harming growth and undermining young people’s job prospects”.

[Lord Hannett of Everton (Lab)]

My Lords, I declare an interest. My colleague behind me was a member of the Low Pay Commission. I served 11 years on the Low Pay Commission. In fact, I remember its introduction and the howls of despair, sometimes from people who should have known better. Today the Low Pay Commission is in existence. Every party and every Government have accepted not only its recommendations but have actually said it would be a retrograde step to remove legislation that protects—I repeat, protects—the most vulnerable. I often wonder what the rates would be if we had never had the Low Pay Commission: if it was left to the generosity of politicians and employers. It was required, it was needed, and it has sustained its value consistently.

Sometimes there is a lack of understanding of how the commission reaches an agreement. My noble friend Lady Carberry touched on it. It is a tripart commission consisting of economists, employers and trade unions, and it is an evidence-based commission. I emphasise that. It is not something where you pick a figure because you think it is what people should earn. It has to be argued for in a responsible way by taking evidence from stakeholders such as employers, trade unions and entrepreneurs, and you arrive at a settlement. The commission debates heavily the effect on employment, including youth unemployment, but, if we are about anything in politics, it has to be about values as well. It has to be about protecting the lowest paid in society, who require support. The commission has survived so long because it has proved its case. Every recommendation has been accepted, including by the previous Government, and, if it had not been introduced, I repeat that I wonder what the rates of pay would be.

I say to the Minister that, when I listen to many of the views being expressed in the Chamber about regulations that improve the life of the low-paid worker, everything is going to be the straw that breaks the camel’s back. I heard this for years when I was on the commission. But it has survived and gone from strength to strength. I regret the noble Lord’s amendment to the Motion, and I concur with everything my noble friend the Minister said in his introduction.

[Lord Goddard of Stockport (LD)]

My Lords, I will be relatively brief. We do not regret the minimum wage going up. We support it. What we do regret is the lack of government support for hard-working families and businesses. I have some sympathy with the views of the noble Lord, Lord Sharpe of Epsom, on some of this. Clearly, increasing the minimum wage is always welcome as it takes 2.5 million people to another level. That should be encouraged; we should be able to do that.

We had some arguments in the employment Bill over months and months about the effects of some of the employment rights. Some of that is coming to fruition now. Unless businesses can grow, do more business and create, then there will be fewer businesses and fewer opportunities for those lower-paid people to get a job. That is the problem.

It is blindingly obvious to me that the Government need to make people’s money go further. The trick is to make the money go further and create more jobs and more opportunities. For instance, I think the Minister mentioned reducing energy bills. I think the Government put £58 million in for fuel oil customers, but really they should be capping the price, as there is no cap on fuel oil for domestics. I have evidence of people who were getting charged £200 now being charged up to £800, so the money the Government are putting in is scratching the surface for those people, who might be employing someone else—a low-paid worker. They might not be able to do that now.

The Government can go further by talking about the high streets. Why do they not cut the VAT on hospitality till 2027? Do something that encourages the economy and lets the high street employ more people. To diverge a little bit from the noble Lord, Lord Sharpe, we should be going for growth with better deals with Europe. We should have closer ties with Europe and have more influence there. The NIC decision should be reversed. These measures would actually put more money in people’s pockets.

The increase in the minimum wage is welcome; it should be increased because it is the right thing to do. I have listened to trade union leaders over months, and I totally agree with that. It has taken too long to do and it is in the right direction, but you have to couple it up with how you stimulate the economy to employ those people. I think that is where the argument on the regret amendment is. I cannot support the amendment, but the Government need to be mindful that it is a two-edged sword.

There was an argument that the employment Bill was tilted a bit too much towards employment and employment laws. That is coming to fruition now, sadly. We need a better balance. We need to be reasonable and responsible—I think those were the words we used—because it goes hand in glove. It is almost as if the minimum wage goes up but the employers pay for it. This is not new money; it comes out of the entire pot of the economy. You really do not want to kill the golden goose laying the egg that pays for the minimum wage to go up. My concern is that we need to do more to put money in people’s pockets. That is how you stimulate growth and how you make the economy get stronger, not just by increasing the minimum wage and then putting tax after tax on people, making it disappear.

[Lord Leong (Lab)]

My Lords, I am grateful for the support for the National Minimum Wage (Amendment) Regulations 2026 and respect the thoughtful contributions from across the House. I thank my noble friend Lady Carberry for her support for the instrument and note with thanks her service on the Low Pay Commission. I also thank my noble friend Lord Sikka for his support and insightful comments.

Let me hit the nail on the head about the Tony Blair Institute. Tony Blair’s Government created the LPC and we trust its judgment to balance competing factors, including businesses, the economy and growth. In 2025, the UK was the third fastest-growing economy in the G7, behind only the US and Canada. To declare an interest, I am a personal friend of Tony Blair. There are a lot of things I agree with him on but I totally disagree with him on this matter.

Contrary to the amendment tabled, the Government are committed to helping young people to get and retain good jobs. The Low Pay Commission was specifically asked to consider the impact of the minimum wage increase on youth employment and participation in education. After thorough consultation and analysis of labour market evidence, the commission has found no clear indication that recent increases in the national minimum wage have led to a decline in employment among young people. The Government remain committed to ensuring that work pays, while making sure that any future adjustments to youth rates do not harm employment opportunities.

Building on the £1.5 billion announced at the Budget for the youth guarantee and changes to the growth and skills levy, the Secretary of State for Work and Pensions has announced an additional package of almost £1 billion in investment, unlocking up to 200,000 jobs and apprenticeship opportunities by reducing the cost of hiring young people. I agree with my noble friend Lady Carberry when she says that the youth jobs grant provides an employer with hiring incentives worth £3,000. Let us not pooh-pooh that; it is money going into employers to employ young people between the ages of 18 and 24 who have been on universal credit and looking for work for six months.

21:00

We are delivering an additional £2,000 for SMEs in England when they take on new apprentices aged under 20. We are also expanding the jobs guarantee to those aged 22 to 24, meaning that all eligible 18 to 24 year-olds across Great Britain will benefit from a fully funded, six-month guaranteed paid employment opportunity. This gives young people their first step into employment, and we should really celebrate that.

Furthermore, we refute the notion that the Government’s action is making it harder for small businesses to take on staff. To the contrary, we are delivering long-overdue reforms to rebalance the business rates system and support the high street, which will see over 750,000 retail, hospitality and leisure properties benefit from permanently low tax rates. Moreover, we are going further than any previous Government, with the most significant package of legislative reforms in 25 years to tackle late payments, unlocking billions of pounds in finance to support businesses to invest and removing unnecessary red tape. We are also revitalising the high street as a place to do business and delivering growth-boosting support with the business growth service to unlock business potential.

Our new remit recognises the concerns of the Low Pay Commission regarding the youth labour market and strikes an appropriate balance, making progress on removing discriminatory age bans but prioritising employment prospects for younger workers.

The noble Lord also mentioned national insurance. We recognise the contribution that employers have been making since the changes to employer national insurance in April 2025. The Government are making fair and necessary choices on tax so that they can deliver on the public’s priorities. Where applicable, the employment allowance can be set against eligible employers’ NICs liabilities. From April 2025, the Government have more than doubled the employment allowance from £5,000 to the current level of over £10,000. This Government are delivering for working people, competitive businesses and a healthy economy.

Confucius reminds us that harmony among people is the foundation of great achievement. When we work together, as employers and employees, success really belongs to all; on that note, we should be looking at working together, not as employers versus employees. We have committed over £500 million in 2026-27 to 2028-29 to youth programmes and support, including over £60 million on the richer young lives fund to improve access to enriching activities and youth work, £15 million on youth workers, volunteers and other trusted adults, and £70 million to rebuild and improve local youth services and establish a network of Young Futures hubs. The overall cost of the 2026 national minimum wage increase represents 0.1% of total wage costs.

The noble Lord, Lord Sharpe, also mentioned the high unemployment rate. With a 5.2% unemployment rate, the UK still outperforms the average for the European Union and remains well below the UK average for the 2010s of around 6%. I refer to the point made by the noble Baroness, Lady Bennett, about the genuine living wage. The Government continue to be dedicated to fulfilling our manifesto promise of a real living wage that people can live on. We responded promptly after the election by updating the Low Pay Commission’s remit to ensure that the cost of living is accurately reflected in its recommendations. At the same time, improving living standards must align with economic growth and a healthy labour market, ensuring that rising wages are sustainable and do not negatively impact employment.

When the lowest-paid workers get a pay rise, the money hardly ever remains unused. It is spent on groceries, transport, childcare and every day essentials, much of it at local, small businesses and services up and down the country. In other words, higher wages flow directly through local economies and support many small and micro businesses. The national living wage thus boosts demand in high streets and communities where micro-businesses are based, supporting both workers’ living standards and the vibrancy of the local economy.

I extend my thanks once again on behalf of the Government to the noble Baroness, Lady Stroud, and the Low Pay Commission. In closing, I would like to reiterate the positive impact that these regulations will have for millions of young people: an annual pay rise of around £900 for a full-time worker on the national minimum wage and one worth over £1,500 for a full-time worker between 18 and 20 years old. Making work pay will be among the proudest legacies of this Labour Government.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the Minister for his response. I was not expecting Confucius, but of course I defer to that ancient wisdom.

I listened very carefully to what was said, in particular by the noble Baroness, Lady Carberry of Muswell Hill. I think she said—she will correct me if I am wrong—that the Low Pay Commission found it difficult to separate the various cost pressures affecting the hospitality industry particularly, including the effects of higher or rising pay. I would argue, therefore, that that is not particularly evidence-based. It would seem slightly reckless to make that recommendation if you cannot determine the causes of the headwinds—but I will park that for the time being.

[Baroness Carberry of Muswell Hill (Lab)]

Perhaps I could recommend to the noble Lord that he takes time to read the Low Pay Commission’s report, which sets out its reasoning in full, and the evidence base it is drawing on. I may have made that point clumsily. I certainly did not mean to disparage the Low Pay Commission. I was trying to convey its sense that it could not find evidence to attribute any negative effects on the labour market for young people specifically to the national living wage as applied in the rates for those young people. It was trying to make an assessment of the extent to which the minimum wage rates were the cause of any detrimental effects on the labour market and could not find that it was the low pay rates which had that negative effect. The reasoning is set out in great detail in that report.

[Lord Sharpe of Epsom (Con)]

I thank the noble Baroness for that clarification. I will definitely make a point of reading that and perhaps return to it, depending on what I see.

I say to the noble Lord, Lord Hannett of Everton, who made some very good points, that the camel’s back is already broken when it comes to youth unemployment. It is at 16.1%—a point I made in my earlier remarks. That is higher than the EU average, which is a pretty woeful state of affairs. In answer to the noble Lord’s question, unemployment is at 5.2% now, but, as we also heard and as I reminded the House, the OBR has forecast that it will rise to 7%.

I am grateful to the noble Baroness, Lady Bennett of Manor Castle, for her remarks. I would also point her in the direction of the Resolution Foundation, which has a direct line into the Treasury; it was not just the Tony Blair Institute. For the time being, I rest my case on Green economics.

It is always a pleasure to hear from the noble Lord, Lord Sikka. I think his argument was, “If you agree with me politically, you have empathy; if you don’t, you haven’t”. In which case, I would argue that it is empathetic to try to keep people in jobs rather than price them out. That is empathy. I beg leave to withdraw my amendment.

Amendment to the Motion withdrawn.

Motion agreed.

House adjourned at 9.09 pm.