My right honourable friend the Minister for Business, Innovation and Skills (Pat McFadden) has today made the following Statement.

In June 2009 the Government asked the Low Pay Commission to produce its next report on the national minimum wage by the end of February 2010. I should like to thank the commissioners for all their hard work.

The Low Pay Commission’s 2010 report

The main recommendations put forward by the Low Pay Commission concern the rates of the minimum wage and an apprentice minimum wage. The commission has recommended that the adult hourly rate of the minimum wage should increase from £5.80 to £5.93. It has also recommended increasing the development rate (which will cover workers aged 18-20 years) from £4.83 to £4.92 and that the rate for 16-17 year-olds movers from £3.57 to £3.64. It recommends that these changes take place in October 2010.

The commission has also recommended that there should be a single apprentice minimum wage rate of £2.50 per hour for those apprentices currently exempt from the national minimum wage; that is, all those under the age of 19 and those aged 19 and over in the first 12 months of their apprenticeship.

The Government accept these recommendations.

In addition, the Government accept the commission’s recommendations that there should be specific guidance on the national minimum wage for the entertainment sector; and that HMRC investigates whether contract and agency cleaners in the hotel sector are receiving their entitlement under the national minimum wage for their hours worked.

The Government note the commission’s recommendation that there should be a commitment, as a minimum, to maintaining current funding in real terms for monitoring and enforcement of the national minimum wage until at least March 2014.

Government’s response to individual recommendations in the Low Pay Commission’s 2010 report

National Minimum Wage rates

We recommend that the adult minimum wage rate should increase from £5.80 to £5.93 from October 2010.

We recommend that the youth development rate for should increase from £4.83 to £4.92 and that the 16-17 year-old rate should increase from £3.57 to £3.64 from October 2010.

We recommend that the accommodation offset should increase from £4.51 to £4.61 per day from October 2010.

ACCEPT

Apprentices

We recommend that non-employed apprentices are excluded from the apprentice minimum wage and continue to be exempt from the national minimum wage.

We recommend that the apprentice minimum wage be applied as a single rate to those apprentices currently exempt from the national minimum wage. That is all those under the age of 19 and those aged 19 and over in the first 12 months of their apprenticeship. The wage should cover both those employed on traditional contracts of apprenticeship and employed apprentices on government-supported level 2 and 3 schemes.

We recommend that all hours of work and training (relating to both on-the-job and off-the-job) under an apprenticeship should be counted as hours for which the apprentice wage must be paid. All hours should be paid at the same wage rate.

We recommend that the apprentice minimum wage be set at an hourly rate.

We recommend the apprentice wage is set at a rate of £2.50 per hour and is introduced from October 2010.

We recommend that in England transitional arrangements are put in place so that current apprentices retain a contractual entitlement to at least £95 per week for the remainder of their apprenticeship or until they are entitled to the national minimum wage.

We recommend that the Government include the review of the apprentice minimum wage rate and arrangements in our annual terms of reference.

ACCEPT

Particular Groups of Workers

We recommend that the Government produce, in conjunction with interested parties, sector specific guidance on the national minimum wage for the entertainment sector.

We recommend that HMRC investigates whether contract and agency cleaners in the hotel sector are receiving their entitlement under the national minimum wage for their hours worked.

ACCEPT

Compliance and Enforcement

We recommend that the Government commit, as a minimum, to maintaining current funding in real terms for monitoring and enforcement of the national minimum wage until at least March 2014.

NOTE

The Government will consider the level of funding for national minimum wage monitoring and enforcement as part of the wider next spending review settlement discussion and will announce a decision on this at the same time as the settlement. We have today published our national minimum wage compliance strategy which highlights how we aim to maximise our compliance impact and emphasises the importance that the Government place on our enforcement activities

Copies of the Low Pay Commission’s 2010 report and the national minimum wage compliance strategy have been placed in the Libraries of both Houses.