Key facts
- Welfare Secretary Pat McFadden defended the Low Pay Commission (LPC) against calls for its abolition by former Prime Minister Rishi Sunak.
- McFadden stated that abolishing the LPC would lead to direct lobbying of ministers on minimum wage rates.
- Sunak argued that ministers should have full control and accountability over the national living wage.
- The LPC advises the government on the national minimum wage and has been praised internationally.
- Minimum pay for 21-22 year olds now matches the £12.71 national living wage for older workers.
- The rate for 18-20 year olds rose 8% to £10.85 in April.
Welfare Secretary Pat McFadden has defended the Low Pay Commission (LPC), an independent body that advises the government on the national minimum wage, against calls for its abolition by former Prime Minister Rishi Sunak.
McFadden, a close ally of Labour leader Sir Keir Starmer, told City AM that abolishing the LPC would be a mistake. He argued that it would lead to more direct lobbying of government ministers regarding minimum wage rates, potentially disregarding broader economic conditions and employment levels. McFadden also highlighted that the LPC model is admired in other countries and has served the UK effectively for many years.
Sunak, writing in the Sunday Times, advocated for the abolition of the quango, suggesting that ministers should assume full control and accountability for setting the national living wage. He expressed regret for not being "braver" in overruling the LPC, citing wage increases that have outpaced productivity gains.
The current Labour government has tasked the LPC with gradually reducing the pay gap between younger workers (18-20 year olds) and adults. McFadden reiterated this goal on Monday, emphasizing that it must be achieved at a "precise pace and scale" that the LPC can manage. This comes despite warnings from Bank of England rate-setter Catherine Mann, who indicated that a rise in youth unemployment could be linked to significant increases in the minimum wage for younger age groups.
Over the past three years, the minimum pay for 21 to 22-year-olds has increased by 33%, aligning with the £12.71 national living wage for older workers. In April, the rate for 18 to 20-year-olds rose by 8% to £10.85.
McFadden acknowledged the long-standing challenge of young people not in education, employment, or training (NEETs) in the UK, noting it has worsened over the last five years. He stated that the government is working with employers to mitigate the risks associated with hiring young people and expand opportunities for them. His comments follow the Milburn review, which found that the Department for Work and Pensions spends approximately £25 on benefits for every £1 spent on support for young people entering the workforce.