Conservative minister backs five-year freeze on UK minimum wage to boost youth jobs
Shadow business minister Andrew Sharpe endorsed a thinktank report proposing a five-year freeze of the national living wage at £12.71; Labour says low-paid workers would lose about £8,900.
At a glance
- Shadow business minister Andrew Sharpe backed a Prosperity Institute report urging a five-year freeze on the UK minimum wage.
- The report says freezing the £12.71 national living wage could add 270,000 young people to work, but cost workers about £8,900.
- Labour minister Kate Dearden called the proposals "tin-eared" and said they would leave the lowest paid worse off.
A Conservative shadow minister has endorsed a thinktank report calling on the government to freeze the UK's minimum wage for five years, a proposal the report's own authors say could cost low-paid workers about £8,900.
Andrew Sharpe, the shadow business minister, gave his backing to the paper published by the Prosperity Institute. He said that with almost 1 million young people not in education, employment or training, the report was "timely" and its recommendations "very sound", adding: "The government should adopt them in full."
The paper recommends holding the national living wage at £12.71 for five years and abolishing the Low Pay Commission (LPC), the independent body that recommends the annual increase. It also calls for employer national insurance contributions to return to pre-April 2025 levels, and for the two-year qualifying period for unfair dismissal claims — abolished under Labour's Employment Rights Act — to be reinstated.
Claims on jobs and pay
The report estimates a five-year freeze could result in about 270,000 more young people in work. It bases this on an assumption that every 1 percentage point increase in the minimum wage is associated with a 0.37 percentage point decrease in the youth employment rate.
The authors state they "do not present these findings as costless to workers". They say minimum wage workers' purchasing power would be eroded by 9% to 12% over the five years, given projected inflation of 2% to 2.5% — a cumulative loss of roughly £8,900.
Labour's response
Business minister Kate Dearden called the recommendations "tin-eared" and said they showed a pattern of Conservative disparagement of the minimum wage. She said it was clear that Kemi Badenoch's top team were "determined that the lowest paid workers should be worse off".
Labour has said it intends to equalise the different rates of minimum wage, promising to give 18- to 20-year-olds the full rate, but rising youth unemployment has led to debate at the top of government over how fast it should meet that promise.
In its last round of advice, the LPC recommended a 4.1% increase in the main rate and an 8.5% rise in the youth rate. The rates now stand at £12.71 and £10.85. The commission will tell the government in October what it recommends for the financial year starting on 1 April 2027, though ministers are not bound to accept its recommendations. The LPC has said it does not believe wage rises are contributing to higher youth unemployment rates, adding that it is not aware of any robust evidence that higher youth rates have contributed to recent falls in youth employment.
Source: The Guardian.
Questions and answers
- What is the Conservative proposal on the minimum wage?
- A report from the Prosperity Institute, endorsed by shadow business minister Andrew Sharpe, recommends freezing the national living wage at £12.71 for five years and abolishing the Low Pay Commission, which advises on annual rises.
- How much would a five-year minimum wage freeze cost workers?
- The report's authors say minimum wage workers' purchasing power would fall by 9% to 12% over five years because of projected inflation of 2% to 2.5%, a cumulative loss of about £8,900. They say they do not present the findings as costless to workers.
- What does the Low Pay Commission say about youth unemployment?
- The commission says it recognises that labour market outcomes for young people have deteriorated over the past two years, but that it is not aware of any robust evidence that higher youth rates have contributed to those falls.
