The Government has announced the largest real-terms increase in the National Minimum Wage (NMW) since 2007, set to benefit more than 1.4 million of Britain’s lowest-paid workers.
It has raised the adult rate by 20 pence and has increased the rate for apprentices by 57 pence. The increase for apprentices has taken the business community by surprise, as it is more than the Low Pay Commission (LPC) had recommended; the adult rate increase is in line with the LPC’s proposals. The increases will come into effect from 1 October 2015.
The rise in the apprenticeship rate represents the largest ever increase in the national minimum wage for apprentices. The Government’s aim is to give apprentices a wage that is comparable to other choices for work.
The new rates are:
- £6.70 per hour for adults;
- £5.30 per hour for 18 to 20 year olds (up by 17 pence);
- £3.87 per hour for 16 to 17 year olds (up by 8 pence);
- £3.30 per hour for apprentices (up by 57 pence).
John Cridland, CBI director general, said: "It’s positive that the Government has accepted the independent Low Pay Commission’s recommendations on the adult and youth rates. The Commission struck a careful balance, helping many low-paid workers without damaging their job prospects.”
However, he described the news about the apprentice rate as “disappointing”. He said: “The national minimum wage has been one of the most successful policies of recent years thanks to the independence of the Commission – its politicisation is worrying.”
John Allan, FSB national chairman of the Federation of Small Businesses, said: “The move to significantly increase the apprenticeship rate will have to be monitored closely. Narrowing the gap between the apprenticeship and youth rate should take place gradually and given the extra costs faced by employers due to changes to apprenticeship funding, many employers would have preferred to see a rate more in line with the LPC's recommendation.”
Business secretary Vince Cable has also announced plans to launch the National Minimum Wage Accelerator - an online tool that will make it easier to compare rates of pay across regions, sectors and occupations.