Budget 2015: Chancellor George Osborne has confirmed in his 2015 Budget that the national minimum wage will rise to £6.70 in October, as irst announced on 17 March.
This is the largest increase to the national minimum wage in real-terms since 2008.
Osborne said his Budget statement that the national minimum wage will rise to £8 by the end of the decade.
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The increase is equivalent to an additional 20p an hour for workers aged 21 and over, from its current rate of £6.50 an hour.
It means that someone working full time on the adult national minimum wage will see their annual salary rise by over £350.
Osborne also confirmed that the national minimum wage for apprentices will increase by 20% (57p) an hour to £3.30 from its current rate of £2.73 an hour. This is the largest ever increase in the national minimum wage for apprentices.
The government accepted the Low Pay Commission’s recommendations for these increases.
The increases to the national minimum wage and personal tax allowance threshold that we have seen this week are welcome, and we would like to see further increases in both during the next Parliament. However, if we are to ensure that incentives to work are optimised, the Government really needs to think about these alongside what it does about National Insurance contributions for employers and employees, as these have an impact on the hours that employees are offered, and on whether they qualify for pension contributions.
There’s been positive news this week for young people, with the increase in the National Minimum Wage above the recommendations of the Low Pay Commission for apprenticeships. Better quality apprenticeships are what we need to get young people working, learning and earning, and there are signs we’re moving in the right direction on this.
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 and could damage our economy.
All parties should let the independent Low Pay Commission do its job – raising the minimum wage meaningfully without damaging the employment of low paid workers.