Largest ever increase to National Minimum Wage from October
Tuesday, March 17, 2015
The Prime Minister and Deputy Prime Minister have today announced increases to the national minimum wage, including a 20 per cent rise to the amount apprentices are paid an hour.
From October 2015, the rate for adults will increase by 20p to £6.70 per hour, the largest real-term increase to the NMW since 2008. Wages for 18- to 20-year-olds will rise by 17p to £5.30 an hour, and 16- to 17-year-olds will see their wages increase by 8p to £3.87.
Over 1.4 million people are set to benefit from the increase.
Apprentices will get an additional 57p an hour, increasing their hourly rate to £3.30 - the largest ever increase to the NMW rate for apprentices.
The Government has also unveiled plans to introduce a new digital apprenticeship voucher to put employers in control of apprenticeship funding.
The aim of the apprenticeship vouchers is to simplify things for employers and give them purchasing power over the Government’s contribution to apprenticeship funding.
Under the scheme, the employer would register their details on a system, being developed by the Skills Funding Agency, including their type of business, the details of the apprentice and the apprenticeship standard they are being signed up to.
The discounted rate - which could be up to 100 per cent for 16- to 18 year-olds - at which employers can purchase training would be calculated and the employer would be able to pass on the voucher code to the provider that is delivering the training for their apprentice. The provider would then reclaim the value of the voucher from the Skills Funding Agency.
Mr Cameron said, 'At the heart of our long-term economic plan for Britain is a simple idea – that those who put in, should get out; that hard work is really rewarded; that the benefits of recovery are truly national. That’s what today’s announcement is all about – saying to hardworking taxpayers, this is a Government that is on your side. It will mean more financial security for Britain’s families; and a better future for our country.'
Mr Clegg said, 'This is just one of the many ways in which we’ve created a fairer society whilst building a stronger economy. If you work hard, this government is behind you all the way. Whether you’re on low pay or starting your dream career through an apprenticeship, you will get more support to help you go further and faster.'
John Cridland, director-general of the Confederation of British Industry (CBI), said, 'It’s positive that the Government has accepted the independent Low Pay Commission’s (LPC) recommendations on the adult and youth rates. The Commission struck a careful balance, helping many low-paid workers without damaging their job prospects.'
However, he added, it was 'disappointing' that the Government had chosen to increase the apprentice rate by more than suggested by the LPC.
The LPC recommended the apprentice rate be increased by just 2.6 per cent to £2.80 an hour.
Mr Cridland went on to say, 'Employers must be in the driving seat when it comes to apprenticeship funding, so we welcome the announcement of the voucher system but await further details.'
The Association of Employment and Learning Providers (AELP) welcomed the news.
Its chief executive Stewart Segal said, 'We need more employers offering opportunities on the apprenticeship programme and AELP has previously recommended that we reinforce the fact that employers have more purchasing power.
'The announcement today reflects the views of employers because they can choose the provider to manage the funding support provided by Government. We have yet to see the details behind the announcement but we would hope that the government is now talking about a simpler funding support from government which takes into account the various incentives proposed in the previous funding models rather than separate payments for each.
'We will be very happy to work with government to make this new funding model work and to avoid some of the barriers to employers that could have been created by mandatory cash contributions and employers setting the funding rates.'
He added, 'AELP recommended narrowing the gap between the apprenticeship and national minimum wage rates but this should be done in stages. We have to ensure that increases in the apprenticeship rate do not have an impact on the number of employers providing these apprenticeship places by making sure that the programme is properly funded in the sectors where the minimum wage is an issue.'
