National Minimal Wage

The Secretary of State for Trade and Industry (Mr. Alistair Darling)
Last summer the Government asked the Low Pay Commission to produce its next report on the national minimum wage by the end of February 2007. The Government are today publishing that report.

I would like to thank the Chair of the Commission, Paul Myners, for the important role he has played in what is the first report under his chairmanship. I would also like to thank all the Commissioners for their hard work. It is particularly appropriate to acknowledge the hard work and contributions made over the years by those Commissioners who are stepping down from office this year.

The main recommendations put forward by the Commission concern the rates of the minimum wage. The Commission has recommended the adult hourly rate of the minimum wage should be increased from £5.35 to £5.52 in October 2007. The Commission has recommended increasing the development rate, which covers workers aged 18-21, from the present £4.45 to £4.60 in October 2007, and the 16-17 year old rate from £3.30 to £3.40, again from October 2007.

The Government have accepted these recommendations.

The Government also accept:

the recommendation that it should work more collaboratively with other organisations to raise awareness;

the recommendation that the next sector for targeted enforcement should be one with a high concentration of migrant workers. We have chosen the hotel sector for the third year of the programme. We will build on our work by targeting hospitality more generally in year four.

the recommendation relating to social care that we should continue to make clear that the commissioning policies of local authorities should reflect the costs of care provision; and to monitor practice, examine the reasons for any uneven provision, and, if appropriate, provide further guidance.

the recommendation that the accommodation offset should increase to £4.30 per day in October 2007.

the recommendation that the Government should ask the Commission to report in early 2008 on recommended rates for October 2008.

The Government will consider:

the recommendation of introducing a penalty to apply to any employer found to have underpaid the minimum wage;

the recommendation that the Commission should carry out a full review of the apprenticeship exemptions in its next report;

The Government reject the recommendation that 21-year-old workers should be paid the adult rate. The most recent data on employment continue to show the employment rate of 21-year-olds is more closely aligned to 20-year-olds than to those aged 22 years and above. We believe moving 21-year-olds on to the adult rate would risk damaging their employment prospects.

I have placed copies of this statement, the report by the Low Pay Commission, and the Government’s individual response to the Commission’s recommendations in the Libraries of both Houses.