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Eversheds comment: UK Budget 2015: Osborne unveils a 'national living wage'

  • United Kingdom

    08-07-2015

    Many of us were left wondering quite what the Conservative Manifesto meant by "we will continue to encourage businesses and other organisations to pay [the living wage] whenever they can afford it". Today that is clearer with the surprise announcement in the Budget that a "Living Wage" will replace the current levels of national minimum wage with the aim it will increase the national minimum wage to as much as £9 per hour in the next few rises". Simon Rice-Birchall, partner at law firm Eversheds, comments:

    “In the context of various tax and welfare adjustments, whether the financial implications for employers are entirely neutral is not clear but changes to the employment allowance are intended to ease the pending increase in salary burden. Great news all round then?

    “Possibly, yes, but one question which this bold move raises is where does the Low Pay Commission sit in all of this? The LPC as an independent body conducts extensive research into the annual report it submits to government setting out its recommended level of national minimum wage, the last figure of which was £6.70 per hour. Whilst the Chancellor made express reference to the LPC taking responsibility for rises in future, there was no such reference to its participation in the fixing of the new figure.

    "One can't help thinking, therefore, that whilst a boost to earnings levels, if the Government is not careful it will be seen to undermine an independent, external advisory body on the basis of political gain, not collaboration and independent research."

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