01.08.2024

Government commits to a genuine living wage for working people

In a move to put more money in working people’s pockets, the government has overhauled the remit of the Low Pay Commission (LPC).

This will, for the first time, ensure the independent body takes into account the cost of living when it makes future recommendations to government on the minimum wage.

The Business and Trade Secretary Jonathan Reynolds said: "For too long working people have faced the worst of the cost of living crisis, but this Government is taking bold action to address it and make work pay.

"The new remit to the LPC is the first of many vital steps we will take to support more people to stay in work and improve living standards.

"Our focus remains on putting more money in working people’s pockets and boosting economic growth."

The Business and Trade Secretary and Deputy Prime Minister have also instructed the LPC to narrow the gap between the minimum wage rate for 18–20-year-olds and the National Living Wage. This will be the first step towards achieving a single adult rate.

Chancellor of the Exchequer Rachel Reeves said: "Economic growth is our first mission, and we will do everything we can to ensure good jobs for working people. But for too long, too many people are out of work or not earning enough.

"The new LPC remit is an important first step in getting people into work and keeping people in work, essential for growing our economy, rebuilding Britain and making everyone better off."

The advent of the minimum wage has been one of the most effective and successful policy interventions of the last 25 years, and this announcement is the next step in achieving the promise of a genuine living wage for working people.

In addition to the cost of living, the remit of the LPC will continue to also consider the impact on business, competitiveness, the labour market and the wider economy.

TUC General Secretary Paul Nowak said: "Hard work should pay for everyone. These are significant first steps towards making the minimum wage a real living wage and will make a difference to millions. We welcome the Government’s decision to ask the Low Pay Commission to be more ambitious next year and into the future.

"We also support the Government’s commitment to ending discriminatory age bands for minimum wage workers. Young people face the same cost of living pressures as other adult workers and will welcome their pay being brought into line."

The Secretary of State and Deputy Prime Minister have written to the Chair of the Low Pay Commission. The letter and the full remit can be found here.

This builds on the Government’s Plan to Make Work Pay, which sets out a significant and ambitious agenda to ensure workplace rights are fit for a modern economy, empower working people and deliver economic growth.

These changes are the first steps in realising the Government’s mission to grow the economy and raise living standards across the country.

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