Low Pay Commission new remit

Building on its commitment to make work pay, earlier today, the government confirmed the new remit for the Low Pay Commission (LPC), which should now take into account the cost of living:

We ask the Low Pay Commission to recommend a National Living Wage which should apply from April 2025. This should take into account the impact on business, competitiveness, the labour market, the wider economy and the cost of living, including the expected annual trends in inflation between now and March 2026. The Low Pay Commission should ensure that the rate does not drop below two-thirds of UK median earnings for workers aged 21 and over, a recognised measure of low hourly pay.

The LPC should also consider how to narrow the gaps between age bands, with the goal to achieve a single adult rate in the future:

[…] we ask that the Low Pay Commission recommends a National Minimum Wage rate that should apply to 18–20-year-olds from April 2025. This should continue to narrow the gap with the National Living Wage, taking steps year by year in order to achieve a single adult rate. This ambition should be pursued while also taking into account the effects on employment of younger workers, incentives for them to remain in training or education and the wider economy.

The LPC is expected to publish its recommendations by the end of October 2024

BRC evidence session to the LPC and projected rates

In mid-July, we gave evidence to the LPC, informed by conversations with retailers and the findings of the latest BRC HR Benchmark (read more about submission). 

Earlier this year, the LPC also published its projected rates for 2025, estimated to be between £11.65 and £12.18 per hour.

Using forecasts of Average Weekly Earnings (from the Bank of England, Office for Budget Responsibility and HM Treasury's independent panel), this allows for an estimation of median hourly pay in October 2025, i.e. likely wage growth across the economy as a whole. In line with LPC’s new remit, the NMW recommendations may land towards the upper top end of the projected rates.