National Living Wage

I am delighted that the Government has provided such significant support for those on low incomes, aged 25 and over through the NLW. 
 
Following the recommendations of the independent Low Pay Commission (LPC), the Government has increased the NLW by 4.4 per cent from £7.50 to £7.83 as of 1 April 2018. The LPC estimate this will benefit over 2 million workers. In total, earnings for a full-time worker on the NMW will have increased by over £2,000 a year since the introduction of the NLW in April 2016.
 
Alongside this, further action has been taken to cut taxes for working people. The personal allowance, the amount you earn before you start paying income tax, has risen from £11,500 to £11,850. This means that in 2018-19, a typical taxpayer will pay £1,075 less in tax than in the 2010-11 tax year. 
 
Britain deserves a pay rise and I welcome that the Government is delivering the higher-wage, lower-tax, lower-welfare economy we all want to see. Boosting wages and making sure that more families have the security of a decent, regular pay packet, while ensuring that people are always better off in work, are at the heart of the Government's long-term plan.
 
The Government is backing hard work and aspiration, creating opportunity for hardworking people across the country and, with more people in work than ever before, this plan is working.
 
The Office of Budget Responsibility assessed this will cost businesses 1 per cent of their profits which the Government will offset by cutting corporation tax to 17 per cent by 2020, giving the UK the lowest rate of corporation tax in the G20. The Employer Allowance has also increased from £2,000 to £3,000, benefitting up to 500,000 employers, meaning a business can employ up to 4 people full time on the NLW without paying National Insurance Contributions. Alongside this, the Government has delivered the biggest ever business rates reduction, ensuring 600,000 small businesses, occupiers of a third of all properties, will pay no rates at all.
 
The Office of Budget Responsibility has said that by 2020 there will be 60,000 fewer jobs as a result of the NLW, however, it said there will be almost one million more in total.
 
The Low Pay Commission (LPC) plays an important role in advising what a manageable rate is for employers and will support full employment. I am glad the Government will ask the LPC to recommend the level of the premium for the NLW each year.
 
The National Living Wage is compulsory for workers aged 25 and over. For younger workers, the priority is to secure work and gain experience. In order to maximise such opportunities for young people, the National Living Wage will not apply, although of course the existing National Minimum Wage will. This is in keeping with the long-standing banding of the Minimum Wage, which currently has different rates for under 18's, 18 to 20, and over 21s. Of course, there is nothing to stop employers paying under 25s the National Living Wage, or indeed a higher wage, if appropriate.