Rate Rise For Minimum Wage

11-05-2007

The Low Pay Commission (LPC) has presented its 7th Annual Report to the Government, which the Government has since announced its acceptance of the recommended rate increases.

Accordingly, the adult minimum hourly wage will increase by nearly 3.2%, from £5.35 to £5.52, from the first pay reference period that starts on or after 1 October 2007.

The Youth Development Rate, for workers aged between 18 and 21, will increase from £4.45 to £4.60, and the rate for workers aged 16 and 17 will rise from £3.30 to £3.40.

The accommodation offset, currently £4.15 per day or a maximum of £29.05 per week, will increase to £4.30 per day or a maximum of £30.10 per week.

In summary, the Low Pay Commission's recommendations were:

• that the adult rate of the minimum wage should be increased from £5.35 to £5.52 in October 2007;
• that the Youth Development Rate should increase from £4.45 to £4.60 and the 16-17 year old rate should increase from £3.30 to £3.40;
• that 21-year-olds should be entitled to the adult rate of the National Minimum Wage;
• that the Government invite the LPC to carry out a full review of the apprentice and pre-apprentice exemptions and report in 2008;
• that the Government works more collaboratively with other organisations to raise awareness of the minimum wage;
• that the Government, as part of its enforcement programme, choose a low-paying sector to target in 2007 / 08 that has a high concentration of migrant workers;
• that, as a deterrent to non-compliance, the Government introduce a penalty to apply to any employer found to have underpaid the minimum wage;
• that the Government continue to make clear that the commissioning policies of local authorities should reflect the costs of care provision. The LPC have emphasised, in particular, the need for the Government to monitor actively how far practice matches policy, to examine the reasons for any uneven provision, and, if appropriate, to provide further guidance;
• that the accommodation offset should increase to £4.30 per day in October 2007;
• that the Government ask the LPC to report in early 2008 on recommended rates for October 2008.

There has not yet been any formal response from the Government to the LPC's recommendations other than to accept the recommended increase in the rates. Confirmation has also been given that the next business sectors to be targeted for compliance are the hotel and hospitality sectors.

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