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Budget 2017: National Living Wage Increase Announced

The Chancellor, Philip Hammond, included a National Living Wage increase amongst a raft of announcements in the 2017 Budget.

National Living Wage Increase

The National Living Wage will increase from £7.50 per hour to £7.83 per hour from April 2018. In percentage terms, the National Living Wage increase was one of 4.4%, well above the current rate of inflation. Nevertheless, the increase is well below that being asked for by the Living Wage Foundation (LWF), which stated that the National Living Wage needed to increase to £8.75 per hour (£10.20 per hour in London) to enable the low paid to make ends meet. The LWF rates are calculated annually every November by the Resolution Foundation (RF), which is overseen by the Living Wage Commission. Around 3600 employers (including a third of FTSE 100 companies), who employ around 150,000 people, are guided by the LWF/RF rates, as opposed to the national minimums set by the Government.

The Living Wage Foundation recently published a report which found that a third of those who were paid less than the rate recommended by the the Resolution Foundation/Living Wage Foundation (dubbed the “real living wage”) regularly skipped meals in order to economise. At the time that the report was published a few weeks ago, Katherine Chapman, the director of the Living Wage Foundation stated: “This is the sad reality of life for people who are in working poverty in the UK. We’ve seen the increasing use of food banks and other worrying trends. That’s why it’s more important than ever that employers are showing leadership and standing up and making a public commitment to paying the [real] living wage.

Other Budget 2017 Announcements

Other announcements made, included:-

  • GDP forecasts were downgraded. The economy is now predicted to grow at 1.5% in 2017 (down from 2%), 1.4% in 2018 (down from 1.6%), 1.3% in 2019, 1.3% in 2020, 1.5% in 2021, and 1.6% in 2022. The downgrading was attributed mainly to a fall in productivity
  • It is predicted that there will be an additional 600,000 in employment by 2022
  • £75 million will be invested in artificial intelligence
  • £40 million in additional funding will be provided for driverless cars . The aim is to make them legal on UK roads without a safety attendant by 2021, a move that Jeremy Clarkson is sceptical about. Ray Massey states that the technology is not yet ready.
  • A £400 million fund will be made available to enhance the charging network for electric vehicles. There will also be £100 million in additional funding (i.e. subsidies) for hybrid and electric cars, on top of the current grants. The Chancellor stated: “Our future vehicles will be driverless, but they’ll be electric first, and that’s a change that needs to come as soon as possible“.  The regulations relating to benefit-in-kind tax will be amended to ensure that those who charge their electric vehicles at work won’t be charged more
  • Owners of diesel cars will pay more tax from April 2018
  • £160 million will be invested in 5G and full-fibre broadband.
  • The number of  fully qualified computer science teachers will be increased from 4000 to 12000. This will be achieved by investing £100 million in a new National Centre for Computing. The objective behind this measure is to enhance digital skills within the workforce, with a further £76 million to be invested in retraining adults to work in the digital and construction sectors
  • The personal tax allowance will be increased to £11,850 from April 2018, whilst the higher rate threshold will rise to £46,350
  • There will be no changes to the £85,000 VAT threshold for the next two years
  • An extra £20 million will be made available to help FE colleges prepare for the introduction of T-levels
  • The Chancellor stated: “We are delivering three million apprenticeship starts by 2020 thanks to our apprenticeship levy, and I will keep under review the flexibility levy payers have to spend this money.
Posted in General Employment Law, National Living Wage, National Minimum Wage and tagged , , .