§ Dr. KumarTo ask the Secretary of State for Trade and Industry when he expects to publish the latest report of the Low Pay Commission with the Commission's recommendation on a minimum wage for 2000–01. [110208]
§ Mr. Gordon PrenticeTo ask the Secretary of State for Trade and Industry when he received the latest report of the Low Pay Commission; and when he will respond to its recommendations. [110206]
§ Mr. ByersThe Government are grateful to the Low Pay Commission (LPC) for its report. Its findings confirm that the introduction of the national minimum wage (NMW) has been successful in helping take some 1.5 million people out of the trap of poverty wages, with no significant impact on jobs or the economy. The report presents evidence that the minimum wage has had a positive impact on business, in terms of improving performance and productivity, and helping to alleviate 515W some of the worst aspects of low pay. The LPC report finds that the minimum wage has been introduced sensibly and smoothly.
The report makes 16 important operational recommendations and suggestions, covering aspects of the technical application and enforcement of the national minimum wage, and one recommendation on the treatment of 21-year-olds. It also repeats its view, expressed in the first report, that the main rate should be increased to £3.70 this year.
The Government have decided, in the light of the positive findings in the report and our own analysis, to accept this suggestion and increase the main rate from £3.60 to £3.70 an hour in October this year. By introducing it in October we will provide time for business to prepare for such an increase. The LPC stressed the importance of a reasonable time for implementation. The Government also accept all 16 of the LPC's operational recommendations and suggestions, subject to the usual detailed consideration of practicality and resources. In addition, the Government confirm that the development rate for young people will rise from its current level of £3.00 an hour to £3.20 an hour from June 2000.
The LPC report comes just nine months after the introduction of the NMW. Assessing the full impact of the NMW will take a little longer. A more thorough analysis will be possible when more data become available on earnings, compliance and the interaction of the NMW with the Working Families Tax Credit. The Government will therefore ask the LPC to monitor the NMW and produce a further report, including on whether there is a case for an increase and if so to what level, by July next year.
In its next report the LPC will be asked to take into account movements in earnings and other factors, as well as impacts on the economy, including competitiveness, jobs and on training with particular attention to the youth labour market and the impact on low paying sectors and small firms, as well as the effect of the minimum wage on particular groups of workers. The Government will take decisions on the basis of this report so that any further increase can take place by October 2001.
The Government have decided not to implement the LPC recommendations that 21-year-old workers should be treated as adults rather than young workers for the purposes of national minimum wage. The Government are not shelving this matter—they will consider in detail the LPC's case for changing the treatment of 21-year-olds when they report on the general case for an increase next year. Copies of the LPC's second report will be placed in the Libraries of both Houses.