National Living Wage set to rise from April 2024 – NFU reaction

The UK Government has accepted the recommendations of the LPC and will be raising the national minimum and national living wages from 1 April 2024.

This puts the NLW at £11.44, which is two-thirds of median hourly pay for workers over the age of 21. This is an increase in £1.02 compared to the current NLW, a 9.8% increase.

It has also lowered the age threshold to receive NLW, meaning that all workers over the age of 21 will be eligible to receive it.  

The NMW for 16-17 year olds and apprentices will be £6.40 per hour, whilst the rate for 18-20 year olds will be £8.60 per hour. 

The accommodation offset has also been increased in line with the NLW increase of 9.8%, to £9.99 in day. The weekly value for 2024 will be £69.93.

The full recommendations of the LPC can be read at: GOV.UK | Minimum wage rates for 2024

NFU reaction

Commenting on the increase in the NLW, NFU Deputy President Tom Bradshaw said that the higher-than-expected increase will have a “massive impact” on agriculture businesses, which are already facing increased production costs.

He said: “We fully recognise the challenges with the cost of living and we need to recognise the value of our people working in agriculture. But wages within the agriculture industry have already seen huge growth, increasing by a third over the past two years.

“As the Governor of the Bank of England himself said this week, agriculture had seen significantly more inflationary pressures due to a steep rise in energy costs, more than any other sector.

“That is why we need the wider supply chain to share this additional cost burden or risk facing further increased food price inflation, at a time when people can ill-afford it.

“Following campaigning by the NFU, the amount grower business can claim for worker accommodation has increased by almost 10%, following the same percentage increase as the National Living Wage. This will provide some support to stretched businesses.”

The National Living Wage will rise to two-thirds of average earnings, Chancellor Jeremy Hunt announced.

The Chancellor committed to accept the LPC’s recommendations, which will be announced in November. Based on the LPC’s latest forecasts, this would see the National Living Wage increase to over £11 an hour from April 2024.

Each year, the independent LPC produces recommendations to the government on National Living Wage and National Minimum Wage rates.

This year it is due to make recommendations for the rates that will take effect from April 2024, based on their remit which sets a target for the National Living Wage to reach two-thirds of median earnings by 2024 for workers aged 21 and over, taking economic conditions into account.

NFU supports the government’s ambition to bring the National Living Wage to 2/3 of median earnings by 2024.

LPC project that the rate for 2024 will be £11.16 but that this may change according to how the economy develops. 

Affordability

Economic conditions are challenging for farmers and consideration of affordability when rates are set needs to be made.

Accommodation

Aligning the amount that can be offset for accommodation to one hour’s national living wage will be useful as it will:

• give certainty to employers as to how much can be recovered for accommodation provided. At present to amount of the accommodation offset as a % of an hour’s wage varies from year to year.
• the offset does not cover the cost of accommodation but setting at one hour’s wage will help and allow revenue to be put in to maintain and improve the housing stock but not impose an excessive burden on workers in our view.

Each year, the LPC (Low Pay Commission) gathers evidence on the effects on employers and workers of increases to the NMW (National Minimum Wage) and the NLW (National Living Wage). It also invites views on business conditions and the economic outlook in order to make its recommendations.

Topics covered in the consultation

The LPC is particularly interested in hearing evidence about:

• The affordability and effects of an increase in April 2024 to an NLW rate within the on-course range of between £10.90 and £11.43 with a central estimate of £11.16.
• The impact of the NLW’s increase to £10.42 on workers, employers, the labour market and economy.
• The impact of lowering the NLW age threshold to 21 years of age and the removal of the 21–22 Year Old Rate.
• The effect of the minimum wage on young people and their employment prospects.
• The effects of this year’s increase in the Apprentice Rate, and its continued alignment with the 16-17 Year Old Rate.
• Awareness, use and impacts of the Accommodation Offset.

How to respond

The consultation is open until 9 June 2023.

Responding directly to the LPC

You were asked to respond directly by emailing your views to [email protected] before 11:45am on 9 June 2023. 

Sharing your views with the NFU

You were able to contribute to the NFU's official response to the consultation by 17 May 2023.

The government has set a target for the NLW (National Living Wage) to reach two-thirds of median earnings by 2024.

To hit this target the LPC project that the NLW rate for 2024 will be between £10.90 and £11.43 with a central estimate of £11.16. In addition, it is likely that the LPC will recommend that the age threshold for the NLW is lowered to 21 years of age from 2024.

The LPC launches its consultation, seeking views to help inform its recommendations on what the National Living Wage should be in 2024.

You can read the consultation in full at: GOV.UK | Low Pay Commission consultation 2023