Originally published at HRreview by William Furney
The government has taken a formal step towards introducing a single adult minimum wage rate by instructing the Low Pay Commission (LPC) to consult on removing pay differences based on age. In a move described as delivering on its election promise to implement a “genuine living wage”, ministers say the change will address long-standing unfairness and improve financial security for younger workers.
Currently, 18–20-year-olds are paid £10.00 an hour under the National Minimum Wage, compared with £12.21 for workers aged 21 and over on the National Living Wage. Under the new remit issued on 5 August, the LPC is being asked to advise on how best to close this gap over time, with a long-term goal of unifying pay bands for adult workers.
The updated remit also confirms that the cost of living will remain a key factor in setting minimum wage rates, following its inclusion for the first time last year.
Cost-of-living link remains central to policy
Ministers say last year’s decision to include cost-of-living pressures in the LPC’s remit led to a record cash increase for younger workers and apprentices, and an annual £1,400 pay rise for full-time workers on the National Living Wage. Business Secretary Jonathan Reynolds said the goal was to ensure workers were properly rewarded while helping businesses and communities thrive.
“Low pay drags down living standards for our workers and in turn hurts our high streets and local businesses,” he said. “This government’s Plan for Change will put money back in people’s pockets, with this new remit marking the next step in considering how we ensure a fair deal for our lowest paid workers while maintaining a competitive economy that boosts businesses and their employees alike.”
Deputy Prime Minister Angela Rayner described the remit update as a further step in the government’s broader drive to improve working lives. “We promised to make low pay a thing of the past, and deliver a wage people can live on, and that is exactly what this government is determined to deliver,” she said. “We have already taken bold action to Make Work Pay with more than 3 million workers seeing a huge boost in their pay following our increase to National Minimum and Living Wage.”
“This remit is the next milestone in our plan to get more money in working people’s pockets, raise living standards in every part of the UK, and get our economy growing.”
Employers urged to participate in consultation
The LPC will now consult with employers, unions and workers on how best to phase out age-based wage bands. Its recommendations, due in October, will guide pay rates from April 2026. The LPC’s remit also requires it to assess the affordability of any proposed changes across different sectors and regions.
Baroness Philippa Stroud, Chair of the LPC, said the Commission had already gathered a wide range of views and would continue to consider how minimum wage policy impacts workers and employers alike.
“We are pleased to receive our remit from the Government. Already, since the beginning of the year, we have spent significant time speaking with workers and employers, to understand the pressures in the economy and the effects of the most recent increases in the minimum wage,” she said.
“We have held a successful call for evidence and received detailed submissions from all sides. Our recommendations on the minimum wage are always finely balanced. More than ever, it is important that we draw on first-hand evidence from those affected by our decisions.”
Reactions from unions and legal experts diverge
Trade unions have welcomed the direction of policy. TUC General Secretary Paul Nowak said removing youth rates and increasing the wage floor would benefit both workers and local economies. “Boosting the minimum wage isn’t just good for workers – it’s good for business too,” he said. “When low-paid workers have more money in their pockets they spend it locally – supporting shops, cafés and high streets.”
“That’s why the government is right to set out its ambition to raise the floor of the minimum wage and end the outdated and unfair youth rates. The minimum wage has been one of the big success stories of the last 25 years – lifting pay at the bottom and proving the doom-and-gloom merchants wrong.”
“But it’s important that it keep rising so that it better reflects what it actually costs to get by in Britain today. A bolder, more ambitious minimum wage isn’t a risk. It’s the next step in building a fairer, stronger economy where hard work is properly rewarded.”
Employment law specialist Claire Cole, of UK legal firm Harper James, offered a more cautious view. She warned that businesses with younger workforces — particularly in hospitality, retail and care — could face operational and financial challenges from the changes ahead.
“The government’s plan to scrap age bands for the minimum and living wage from 2026 is a big shift for employers,” said Cole. “Businesses with a younger workforce… will need to start thinking now about how to adjust their pay structures, manage rising costs, and plan for the long term.”
She also pointed to the broader implications, saying the “increase, alongside the move to a single adult rate, will have a real impact on payroll… Businesses will also need to think about how this affects internal pay gaps and team morale.”
While Cole welcomed the LPC’s remit to consider affordability, she said real-world insights would be essential. “Sharing real-life examples of how these changes might play out will help shape a more balanced, sustainable approach to wage policy – one that supports fair pay while also allowing businesses to thrive.”
Government sees change as key to growth
Ministers remain confident that the reforms will support long-term growth and job quality. Chancellor of the Exchequer Rachel Reeves said the government was committed to ensuring that work paid fairly across all sectors.
“We are delivering on our promise to make sure every worker receives a fair wage,” she said. “Fair pay which supports working families is integral to our Plan for Change, because when working people are properly rewarded with more money in their pockets, businesses thrive and our entire economy benefits.”
The projected increase in the National Living Wage to £12.71 per hour by April 2026, as forecast by the LPC, would represent a 4.1% rise, outpacing inflation. But some business groups have warned that rapid wage hikes could squeeze hiring, training or investment, particularly in lower-margin sectors.
While organisations such as the British Chambers of Commerce and CBI have not yet responded to this week’s remit, they have in the past called for a careful balance between fair pay and employer viability.
The LPC’s recommendations are expected in autumn, giving employers time to assess impacts and contribute to the consultation. If implemented, the changes would mark one of the most significant wage policy shifts in the UK in decades, and one with wide-ranging implications for reward strategy, job design and workforce planning.