Monday 14 March 2016
Business, Innovation and Skills
Labour Market and the Economy
Today I am announcing the Government’s response to the Low Pay Commission’s 2016 report and recommendations on the National Minimum Wage.
The main recommendations put forward by the Low Pay Commission are about the rates of the National Minimum Wage from October 2016.
The Commission has recommended that the adult hourly rate of the National Minimum Wage (for 21-24 year olds) should increase from £6.70 to £6.95. The Commission has recommended increasing the youth development rate, which covers workers aged 18 to 20 years old, from £5.30 to £5.55 and increasing the rate for 16 to 17-year-olds from £3.87 to £4.00. It recommends that the apprentice rate should increase from £3.30 to £3.40. The Commission recommend that all of these changes take place from 1 October 2016.
The Commission has also recommended that the accommodation offset increases from the current £5.35 to £6.00 from 1 October 2016.
The Government accept all of the rate recommendations.
On the subject of compliance and enforcement of the National Minimum Wage, the Low Pay Commission’s report recommends that the Government consider introducing a requirement on employers that the payslips of hourly-paid staff include a clear statement of hours being paid for, and that the Government introduce a formal, public protocol for HM Revenue & Customs to handle third-party whistleblowing on breaches of the National Minimum Wage.
The Government are committed to the effective enforcement of the National Minimum Wage. As suggested by the Low Pay Commission, we will consider these options in full.
A copy of the Government’s response will be placed in the Libraries of the House.
I am also pleased to announce that the Government have today written to the Low Pay Commission setting out the remit for their 2016/17 report. The Commission is asked to recommend the National Minimum Wage rates and the National Living Wage rate that will apply from April 2017 as well as an indicative rate for the National Living Wage for April 2018.
Single Source Contracts
I am today announcing that I have set the baseline profit rate for single source defence contracts at 8.95% in line with the rate recommended by the Single Source Regulations Office (SSRO). I am asking the SSRO further to develop the methodology used to calculate the baseline profit rate over the next year.
I am also announcing revised capital servicing rates as recommended by the SSRO at Table 1 below. These rates will come into effect from 1 April 2016.
Baseline Profit Rate (BPR) (% on contract cost)
Fixed Capital Servicing Rate (% on Fixed Capital employment)
Working Capital Servicing Rate (% on positive Working Capital employment)
Working Capital Servicing Rate (% on negative Working Capital)
Taxpayers can be confident that we are getting value for money for single source defence contracts as we deliver our £178 billion equipment programme. This profit rate provides a fair return to industry while delivering savings that will be reinvested in defence.
Yesterday the press reported allegations that former employees of the Ministry of Justice have behaved improperly and that knowledge they may have acquired while working for the Department has been used to gain a competitive advantage.
We take all allegations of impropriety extremely seriously. We have launched an immediate investigation to ascertain the facts, which the Cabinet Office’s Proprietary and Ethics team will support.
The rules around former civil servants taking up employment in the private sector are made very clear when they leave. Under no circumstance should they exploit privileged access to Government contracts or sensitive information which could be used to influence the outcome of commercial competitions.
Let me also add, that over the last six months, we have improved our commercial capability, more than doubling the senior commercial experts monitoring work with the private sector. But we know there is still more to do.
I will update the House once our investigation has been completed.
Work and Pensions
Employment, Social Policy, Health and Consumer Affairs Council
The Employment & Social Affairs (EPSCO) Council met in Brussels on 7 March. Shan Morgan, Deputy Permanent Representative, represented the UK.
The Council discussed the implementation of country specific recommendations (CSRs) as part of the European semester. Member states, including the UK, agreed that CSRs should be specific but should take into account the national context, aiming for outcomes not outputs.
As part of the European semester process, Ministers adopted the 2016 Joint Employment report and Council conclusions on the 2016 Annual Growth Survey Council also reached general agreement on the 2016 employment guidelines but the UK maintained a parliamentary scrutiny reservation.
The Commission provided an update on progress following the launch of the New Start for Social Dialogue in March 2015 and the Dutch presidency confirmed that the Tripartite Social summit on 16 March would focus on job creation and inclusive growth.
The Council endorsed the Employment Committee’s key messages on the implementation of the Youth Guarantee.
On the labour mobility package, the Commission confirmed that it would publish its proposal for a revision of the 1996 Posting of Workers directive on 8 March. Proposals on changes to social security co- ordination (regulation 883/04) would not be published until after the UK referendum.
Ministers also had an orientation debate to inform the European Commission’s proposed new agenda for skills.
The presidency presented draft Council conclusions on gender and LGBT equality as a package. Despite strong support from many member states, including the UK Council was unable to reach agreement on the conclusions. The Commission confirmed that it would launch its consultation on a European pillar of social rights on 8 March. The pillar would be targeted at the Eurozone but it would be open to all member states to join voluntarily.
Finally, under any other business, the Commission presented briefly to the Council the energy union, the Istanbul convention and gave an update on the state of play on European social fund and youth employment initiative implementation. The chairs of the Employment and Social Protection Committees also presented their work programmes for 2016.