A new remit for the Low Pay Commission (LPC) has been published, which includes:
National Living Wage The LPC will continue to recommend a National Living Wage that should apply from April 2025, at a rate that does not drop below two-thirds of median earnings for workers aged 21 and over. The Government has included the cost of living as one of the factors that must be considered.
Age bands The Government has stated that it wants to remove age bands for adults, but that will not happen in 2025. In the interim, the LPC has been asked to recommend a National Minimum Wage for 18-20-year-olds. The Government says this should narrow the gap with the National Living Wage, with a view to narrowing the gap with to achieve a single adult rate.
National Minimum Wage The LPC will also make recommendations on increases to the National Minimum Wage from April 2025.
Responding, Kate Nicholls, Chief Executive of UKHospitality, said: “Our staff are the lifeblood of hospitality and businesses are passionate about properly rewarding them for their crucial role.
“That’s why we agreed with the current remit of the Low Pay Commission to maintain wage rates at 66% of median earnings, which will see the Living Wage increase at twice the rate of inflation. After all, this is the basis upon which hospitality businesses have been planning and budgeting.
“However, making significant changes to the remit for 2025 now is disruptive and unhelpful. Evidence has been submitted to the LPC on a basis that is now out-of-date. It would have been far more pragmatic to wait and make these changes in 2026.
“With a new remit now in place, the LPC must recognise that the 20% increase to wage rates over the past two years clearly accounted for the cost of living. “I would urge them not to recommend yet another significant increase, which would raise serious questions over affordability.
“As the Government recognises in its letter to the LPC, wage rates should be consistent with delivering growth for both staff and businesses. There now must be a fresh round of consultation with business groups before recommendations are made to ensure that balance is struck in an affordable manner, particularly in how it addresses changes to youth rates.
“It’s also the case that business costs need to come down to offset rising wage costs, and that should start with the Government fulfilling its manifesto commitment to reduce the burden of business rates on hospitality businesses, as well as reducing employer National Insurance Contributions.”
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