Draft National Minimum Wage (Amendment) (No. 2) Regulations 2016

Jessica Morden Excerpts

Thursday 8th September 2016 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

I beg to move,

That the Committee has considered the draft National Minimum Wage (Amendment) (No. 2) Regulations 2016.

It is a pleasure to serve under your chairmanship, Mr Wilson. The purpose of the draft regulations is to increase the hourly rate of the national minimum wage for all workers, and to increase the maximum amount for living accommodation that counts towards minimum wage pay, in line with recommendations from the Low Pay Commission.

The national minimum wage is designed to protect low-income workers, and to provide an incentive to work by ensuring that all workers receive at least the hourly minimum rates set. The minimum wage also helps business by ensuring that competition is based on the quality of goods and services provided, and not on low prices based on low rates of pay.

Following advice from the Low Pay Commission, the Government are uprating the minimum wage from 1 October 2016, so that the main rate for 21 to 24-year-olds will be £6.95 per hour, which represents an increase of 3.7%. Young people aged between 18 and 20 years old will be entitled to a minimum of £5.55, which is a 4.7% increase on the rate now in force, and those aged between 16 and 17 years will have a minimum wage rate of £4.00 per hour. For apprentices aged 19, or those aged 19 and over in the first year of their apprenticeship, we are increasing the minimum wage by 3%, to £3.40.

Turning back to the rate for 21 to 24-year-olds, the increase is the largest cash increase in the main rate of the national minimum wage since 2008. As a result, people working full time—35 hours a week—on the national minimum wage will see their earnings increase by about £450 a year.

The new main rate of the national minimum wage is expected to be at its highest level ever when accounting for the general increases in prices, surpassing its pre-recession peak. In all, we estimate that about 500,000 workers will benefit from all the national minimum wage increases this year.

The accommodation offset was introduced in 1999 and provides a mechanism to offset the cost of providing accommodation for workers against the national minimum wage. Following advice from the Low Pay Commission, we are increasing the accommodation offset significantly, by 12%, to £6.00 per day from 1 October 2016.

Since the introduction of the national minimum wage in 1999, it has been a success in supporting the lowest-paid UK workers. On the whole, it has increased faster than average wages and inflation, without an adverse effect on employment. It continued to rise each year during the worst recession in living memory, and the new main rate is expected to be at its highest ever real value.

[Jessica Morden (Newport East) (Lab)]

May I raise with the Minister the issue of Marks and Spencer workers? There is a campaign to press M&S during its consultation on reducing premium pay for Sundays and bank holidays and on reducing pension contributions—changes that would hit some of the longest-serving staff hardest. Does she agree that it is unacceptable for companies to contemplate making such changes in light of the national living wage coming in?

[Margot James]

I thank the hon. Lady for her intervention. I propose meeting Marks and Spencer to discuss a range of matters, including some of the points that she makes. It is important to remember that, by law, as long as companies pay the national minimum wage and, in future, pay those over 25 the national living wage, there will be a limit to what the Government can do, apart from expressing a keen concern that employers should operate within the spirit, as well as the letter, of the law.