Department for Business, Innovation and Skills
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Government submits National Minimum Wage evidence to Low Pay Commission

Vince Cable submits the government’s final analysis on employment and the economy for the independent Low Pay Commission.

Business Secretary Vince Cable today (16 January 2014) submitted the government’s final analysis on employment and the economy for the independent Low Pay Commission (LPC). The LPC will consider this as part of wider evidence when making its recommendations on National Minimum Wage (NMW) rates for this year.

Last September (2013), the Business Secretary also asked the LPC to carry out an additional assessment of the economic conditions that will allow for faster increases in NMW rates without adverse effect on jobs. The government has also submitted its analysis in response to this work.

Business Secretary Vince Cable said:

The National Minimum Wage is designed to strike a balance between protecting the low paid and making sure they can find work. But as the economy starts to recover, the benefits of growth must be shared fairly.

This is why last September I asked the independent Low Pay Commission what economic conditions would be needed to allow for significant rises in the National Minimum Wage without damage to employment.

I am keen to use their expertise to understand what economic conditions would be needed to allow for rises in the wages of the low paid.

The government’s evidence does not set out final policy. It forms part of the annual process for NMW rate setting, and is considered by the LPC’s expert panel alongside other evidence before they recommend new rates.

Each year the government sets the LPC, which includes representatives from business, unions and academia, a remit to maximise the minimum wage without putting the jobs of low-paid workers at risk.

The evidence – as in previous years – provides analysis on the latest data for the labour market, pay levels, young people and wider economic issues. It does not make any recommendations regarding the level or direction for NMW rates. This is for the independent LPC to do when it reports back to government.

The government will publish the evidence shortly. The LPC is due to report back with NMW rate recommendations for 2014 and its additional assessment in Spring. The Business Secretary will consider these recommendations and make an announcement on rates and respond to the additional assessment shortly afterwards.

Notes for editors

1.The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set 4 ambitions in the ‘Plan for Growth’, published at Budget 2011:

  • to create the most competitive tax system in the G20
  • to make the UK the best place in Europe to start, finance and grow a business
  • to encourage investment and exports as a route to a more balanced economy
  • to create a more educated workforce that is the most flexible in Europe

Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.

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