NFU submits evidence to Low Pay Commission

Tom Bradshaw

The NFU has submitted its response to the Low Pay Commission (LPC) consultation on the National Minimum Wage (NMW) and National Living Wage (NLW) for 2020/2021.

The evidence highlights the NFU’s strong support of the principle of the NMW and NLW, and stresses that this year the Commission must also consider the economic impacts of COVID-19 and the ending of the transition period when making its recommendations to government.

A recent report by Andersons demonstrates the impact the pandemic has had on input costs, showing that it has increased seasonal labour costs by 15%. This is in addition to a 34% rise in labour costs over the past five years.

With this is mind, the NFU asks that any recommendations be approached in a manner that:

  • Prioritises economic recovery from COVID-19 and the ending of the Brexit transition period.
  • Makes increases to rates and changes to age thresholds incrementally, at a rate with which businesses can keep pace.
  • Allows more time for businesses to negotiate a fair price within supply contracts
  • Is alert to the issue of maintaining pay differentials within businesses.
  • Does not jeopardise the viability of domestic agricultural and horticultural production, particularly given its recently demonstrated importance to the nation’s food security.

UPDATE: On 25 November 2020, in line with the Low Pay Commissions recommendations, the government confirmed that National Living Wage and National Minimum Wages will change in April 2021 as follows:

Rate from April 2021
% Increase
National Living Wage now applicable to everyone 23 and over
21-22 Year Old Rate
18-20 Year Old Rate
16-17 Year Old Rate
Apprentice Rate
Accommodation Offset

NB: When the LPC opened their review into the NMW and NLW earlier this year, they were indicating a national living wage rate of £9.21 with a margin of 6 pence above or below this figure.

As labour is a key cost input, members should take note of this change in order to help them plan ahead, particularly in respect of any contracts for future supply that they may be negotiating.

NFU Vice President Tom Bradshaw said:

“British farmers are very ambitious when it comes to future growth within the agricultural and horticultural sectors, but to achieve this growth we need the LPC to reconcile the NMW and NLW with the many challenges that farm businesses are facing.

“Whether it’s because of increased costs caused by Coronavirus, uncertainty due to our unknown trading position outside of the EU, our future immigration policy or supply chain pressure on farm gate prices, many British farmers are working to remain viable and competitive. We don’t want to see an unreasonable increase to the NMW or NLW adding further pressure.

“Farmers need time for their businesses to recover from the pandemic and time to plan ahead for life beyond the transition period. British agriculture, and the rest of the economy, is in an unprecedented and difficult situation and we need the LPC’s recommendations to government to reflect that.”

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