The government has renewed its pledge of a ‘genuine’ living wage and says the cost of living will be at the heart of decisions on setting its level.
Setting out new considerations for the Low Pay Commission (LPC) when setting next year’s national living wage and national minimum wage, the Department for Business and Trade vowed to:
- remove “discriminatory” age bands and establish a single wage rate for adults
- place the cost of living at the heart of the remit, and
- ensure Low Pay Commission recommendations support both economic growth and fair pay.
Ministers claimed that about three million workers benefited from last year’s decision to include the cost of living in the LPC’s remit for the first time. This led to a record cash increase in the minimum wage for apprentices and those under 18, and a £1,400 annual boost for full-time workers on the national living wage (NLW) from April.
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This year’s rises went some way towards meeting the government manifesto objective of aligning the national minimum wage (NMW) and NLW to create a single adult wage rate, but the updated LPC remit is designed to add impetus to the proposal’s implementation.
The government stated that the LPC would consult with employers, trade unions and workers on narrowing the gap between the 18 to 20-year-old rate of the NMW and the NLW and will put forward recommendations on achieving a single adult rate in the years ahead.
The remit will also ensure that the LPC continues to actively consider the cost of living in its recommendations for National Living Wage rates to apply from April 2026.
Business secretary Jonathan Reynolds said the new remit marked “the next step in considering how we ensure a fair deal for our lowest-paid workers while maintaining a competitive economy that boosts businesses and their employees alike.”
Baroness Philippa Stroud, chair of the LPC, said she was pleased to receive the renewed remit from the government. She added: “Already, since the beginning of the year, we have spent significant time speaking with workers and employers, to understand the pressures in the economy and the effects of the most recent increases in the minimum wage. We have held a successful call for evidence and received detailed submissions from all sides.
“Our recommendations on the minimum wage are always finely balanced. More than ever, it is important that we draw on first-hand evidence from those affected by our decisions.
“I look forward to working with the rest of the commission over the autumn to reach a shared view on this evidence and deliver our advice to the government in October.”
Since 1 April 2025 the national living wage has been £12.21, a 6.7% rise, while the national minimum wage for 18 to 20-year-olds increased by a record 16.3% to £10 per hour. The £1.40 increase for 18 to 20-year-olds means full-time younger workers have seen their pay boosted by £2,500.
The Low Pay Commission report of 2024, published in February 2025, noted that although the government was intent on closing the gap between the NMW rate for 18-20 year olds and the NLW, such a change “carries risk and so each step must be monitored and evaluated to avoid causing harm.”
The document added that the gap would be closed either by raising the level, lowering the age threshold, or a combination of the two.
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