Government must not limit NLW rises, think tank warns

The Resolution Foundation has urged ministers to ignore calls to cut future increases to the National Living Wage (NLW).

The news comes as a number of business organisations have been lobbying the government to limit future increases in the hourly rate and follows the introduction of a new £7.20 NLW in April.

The think-tank warned that if future salary increases were restrained, women, the young and older workers were most likely to lose out if future rises are limited.

Conor D'Arcy, policy analyst at the foundation, advised that despite some businesses voicing concerns over the higher minimum wage, the policy specifically applied to hourly pay and therefore much reflect changing economic circumstances.

D’Arcy warned that abandoning such increases ‘would also be costly for millions of low paid workers, so the Prime Minister should stick to her guns.’

According to independent economic forecasts published by the Treasury, the Resolution Foundation expects the NLW to rise to around £8.70 in 2020 - lower than the £9 forecast in the March 2016 Budget.

The think-tank also added that the projected figure for 2020 is likely to fluctuate as forecasts are updated and the impact of triggering Article 50 becomes clear.

D’Arcy cautioned that if there were no further increases relative to average hourly pay, then by 2020 low paid workers would lose as much as £1,500 from their prospective annual pay.

He concluded: “The Prime Minister should stick to her guns and ignore calls from either side on what the value of the NLW should be – and quickly turn to the far more challenging task of actually implementing it. After all, the task of tackling Britain’s huge low pay challenge isn’t any less pressing as a result of the referendum. The announcement of the National Living Wage will always be associated with George Osborne. But if its implementation is managed skilfully, it could rank high among Theresa May’s lasting achievements.