Lord in Waiting/Government Whip (Lord Leong) (Lab)

My Lords, I note the regret amendment tabled by the noble Lord, Lord Sharpe. The context of this instrument is that the regulations were laid before Parliament on 2 February and approved by the other place on 2 March. Their purpose is to increase the national living wage and national minimum wage rates. Subject to the approval of this House, the regulations will come into effect on Wednesday 1 April. The creation of the minimum wage is one of the proudest legacies of the previous Labour Government. We will always defend working people, and the minimum wage remains a key plank of this Government’s plan to make work pay. The Opposition are wrong to suggest that we are not sufficiently taking into account employment opportunities for young people. These increases are based on the recommendations of the Low Pay Commission, which the Government have accepted in full. We are grateful to the commission and extend our thanks to its chair, the noble Baroness, Lady Stroud, and her fellow commissioners and supporting officials. The LPC is an independent and expert body. It reaches its decisions through consensus between its employer, worker and independent commissioners, following extensive stakeholder consultation and research. The Government recognise and value the commission’s established track record of balancing a multitude of factors when making wage rate recommendations that deliver for workers and businesses alike. The remit for the 2026 rates was to ask the LPC to recommend rates that minimised impacts on employment prospects for workers and considered the risks for younger workers. In addition, the Government are committed to helping young people get and retain good jobs—including the recent announcement of reducing the cost of hiring younger workers. The Government are also delivering a long-overdue reform to rebalance the business rates system and deliver growth-boosting support with the business growth service to unlock business potential. Noble Lords will have seen the publication yesterday of the 2026 remit of the Low Pay Commission. The remit continues to benchmark the national living wage to two-thirds of median hourly earnings, while also considering the condition of the labour market, the cost of living, the impact on business and competitiveness and wider macroeconomic conditions. The new remit maintains the commitment to removing the discriminatory age bands for adults. We recognise that the national minimum wage and national living wage alignment must be achieved while protecting jobs and supporting labour market stability. The remit gives the LPC full flexibility to use its significant expertise and social partnership model, including employer and worker representatives, to recommend the appropriate pace and timing of aligning the 18 to 20 national minimum wage with the national living wage. We have asked the LPC to provide its recommendations to government by October. The Government will then confirm the new national living wage and national minimum wage rates to apply from April 2027. I turn to the detail of the minimum wage regulations. The national minimum wage—the statutory minimum for workers aged 21 and over—will increase by 4.1%, or 50p, to £12.71 an hour. This represents a gross annual increase of £900 for a full-time worker. The national minimum wage for workers aged between 18 and 20 will increase by 8.5%, or 85p, to £10.85 an hour. A full-time worker on this rate will see their gross annual earnings rise by over £1,500. This continues our progress in closing the gap between this rate and the full adult rate. The regulations will also increase the national minimum wage rate for workers aged above school-leaving age but under 18 to £8 an hour. This increase—equivalent to 45p or 6%—also applies to the apprentice national minimum wage, which relates to apprentices aged under 19 or in the first year of their apprenticeship. Finally, the accommodation offset—the maximum daily amount an employer can charge a worker for accommodation without reducing their pay for minimum wage purposes—will increase by 4.1% or 44p to £11.10. By approving this year’s minimum wage increases, we can deliver a significant and deserved uplift for millions of workers in the coming weeks. I refer noble Lords to the comprehensive impact assessment, which was published alongside these regulations by the Department for Business and Trade. The impact assessment contains a full equality assessment and received a green “fit for purpose” rating from the independent Regulatory Policy Committee. The Government estimate that the minimum wage increases from these regulations will provide a direct pay uplift for approximately 2.7 million workers, while an additional 5.1 million workers may benefit from positive spillover effects as employers maintain pay differentials. The minimum wage is rightly regarded as one of the most successful and effective economic policies of the last few decades. Since it was introduced, the share of low-paid jobs, in hourly terms, has dropped from 21.9% to just 2.5%, and the value of the national living wage is expected to be 80% higher in real terms this year than the top statutory rate was in 1999. This progress has been achieved without the negative impact on the economy and employment that was predicted at the time by some Members. Indeed, the impact assessment sets out a range of potential economic benefits of this year’s uprating, including putting more money in the pockets of the lowest-paid workers, creating greater incentives for people to enter work and boosting consumer demand. We also recognise the importance of a robust enforcement regime in upholding workers’ right to a fair day’s pay. Since the introduction of the minimum wage, the Government have overseen the repayment of almost £200 million to 1.5 million workers and issued over £105 million in financial penalties. The annual budget for HMRC has increased to around £30 million, and we are going further with the creation of the Fair Work Agency. The Fair Work Agency will have stronger powers and a wider remit, delivering for exploited and underpaid workers and ensuring a level playing field, so that the majority of businesses, which already do the right thing by their workers, cannot be undercut by their less scrupulous competitors. In closing, it is worth re-emphasising the positive impact that these regulations will have on the lives of millions of working people. When the increases come into effect next month, we will continue in our progress towards our manifesto goals—ensuring a genuine living wage and extending it to all adult workers—while safeguarding employers and protecting the employment prospects of younger workers. Amendment to the Motion