On 30 June, the Low Pay Commission closed its consultation on proposed reforms to the national minimum and living wage. The reforms could see the living wage increased to £12.80 per hour and the removal of the 18-20 year old banding, which is currently set at £10 per hour. While we all recognise the need for fair pay, will these reforms prove to be a step too far?
On 6 April, the government increased the national living wage (NLW) to £12.21 per hour for those aged 21 and above, a raise of £1,500 per year for full-time workers. This followed the removal of the 21-22 age bracket in April 2024, which meant that more workers fell into the NLW rather than the lower rate. The increase to the NLW coincided with the hikes in employers’ NICs in April 2025.
The Low Pay Commission is considering: the impact of recent increases, as it has sought evidence on the broad economic and labour market conditions; the affordability of suggested future increases to the NLW, because the new rate could increase to between £12.50 and £12.80 in April 2026; the effect of recent minimum wage increases for younger workers on their employment prospects; and different approaches to lowering the NLW age threshold further, as the government intends to extend NLW to those aged 18 years and up.
The aim of the reforms to date is to increase rates of pay for all and lift those at the bottom of the scale out of poverty. The intent is laudable. However, it could have far-reaching consequences.
At a time when Not in Education, Employment or Training (Neet) rates for 16-to-24 year olds are increasing, there is concern that if 18-20 year olds receive NLW, the Neet statistics are likely to worsen further. Employers will look to get more bang for their buck, by employing older workers with more experience at the same NLW rate. Furthermore, we have seen employers reducing their wage bills by cutting down on staff numbers. This is particularly so in the retail and hospitality sectors.
Curry’s chief executive has warned against future tax increases in the October 2025 Budget, the current tax and wage burden already having a knock-on impact on investment, employment and inflation.
While rate increases are inevitable given inflation rates, bringing younger workers into the NLW may be a step too far. The Low Pay Commission’s consultation report should prove to be interesting reading.
Ellie Rogers is a senior associate at Constantine Law
