Largest real-terms increase in National Minimum Wage since 2008 announced - Simon Hughes

Largest real-terms increase in National Minimum Wage since 2008 announced


Following today's announcement about the National Minimum Wage, read our Q&A here to find out more. 

So, by how much is the National Minimum Wage (NMW) going to increase?

Three per cent. Meaning it will rise from its current level of £6.50 to £6.70 an hour. It's the largest real-terms increase in the NMW since 2008 and will take effect in October this year. 

OK, but how many people will benefit from it?

In short: a lot. It's predicted roughly 1.4 million people on the lowest incomes will be better off as a result. 

But what about people doing apprenticeships?

Don't worry, they weren't forgotten. The government has said that the NMW for apprenticeships will rise by 57p, taking it to £3.30 an hour. Again, this is the largest ever increase in the NMW for apprenticeships and will halve the gap with the National Minimum Wage rate for 16 to 17 year olds, that will be £3.87 an hour from October 2015. 

The Low Pay Commission, which advises the government on the National Minimum Wage, actually recommended that the NMW for apprenticeships should only rise by 7p. 

That all seems like fairly big news: impressive. Anything else?

Indeed there is. Apprenticeships have been a great success story over the last five years. Over 6,000 have been created in Southwark, for example. So, to secure their future, the government will launch a consultation with businesses on the future of NMW for apprenticeships. 

So businesses are having to play their part in the recovery by spreading their profits around. Do they get anything in return?

Absolutely. The government is giving businesses greater control of funding their apprenticeships by issuing a new digital Apprenticeship Voucher.

Go on...

Employers sometimes have to pay other organisations or companies to train their apprentices for them first. The government actually covers 100 per cent of the training costs for apprentices who are 16-18, and 50 per cent for those who are 19-24. 

Apprenticeship Vouchers would therefore make things easier for companies employing apprentices by giving them purchasing power over the Government contribution to apprenticeship funding.

The employer would register their details on a system that is currently being developed by the Skills Funding Agency. Details would include their type of business, the details of the apprentice and the apprenticeship standard being signed up to.

The system would calculate the amount the government needs to contribute to the apprentice's training and issue a digital voucher covering that cost. The employer would then provide the voucher to the company doing the training which would subsequently claim the costs from the Skills Funding Agency.


7 Facts you need to know about apprenticeships

1. 2.1 million apprenticeship starts have been created in England since 2010.

2. There has been a 293% rise in the average number of apprenticeships created in London, year-on-year, since 2010.

On average, 48,438 apprenticeship have been started every year in London, since 2010 whereas the same figure for the five years prior to 2010 was just 14,824. 

3. Around 6,000 apprenticeships were started in Southwark since 2010.

4. Every £1 spent on apprenticeships by the government benefits the economy by up to £28.

5. On average, someone who completes an Advanced Level 3 apprenticeship can expect to earn £117,000 extra income over the course of their working life time.

6. There are now over 700 different job roles where apprenticeships can be done. 

7. Apprenticeships must now last 12 months, so people can get quality on-the-job experience. 


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