New chair and terms of reference for Low Pay Commission

In June 2002, the UK government appointed former employers' leader Adair Turner to chair the Low Pay Commission. The Commission has been asked to report to ministers by the end of February 2003 with recommendations on the level of the national minimum wage.

On 12 June 2002, trade and industry secretary Patricia Hewitt announced the appointment of Adair Turner as the new chair of the Low Pay Commission (LPC) - the independent body that advises the government on the national minimum wage (NMW) (UK9807135F). Mr Turner, who was director-general of the Confederation of British Industry (CBI) from 1995 to 1999 and currently holds a senior position within Merrill Lynch Europe, replaces Professor Sir George Bain who is standing down. At the same time, the government announced the replacement of one of the employer members of the Commission. In addition to Mr Turner, the Commission consists of three employer members, three trade union members and two academics.

The CBI welcomed the appointment of Mr Turner, commenting that 'he has always been a champion of an independent Commission that rigorously analyses the economic impact of the minimum wage.' John Monks, general secretary of the Trades Union Congress, said in a statement: 'I developed considerable respect for the ability and integrity of Adair Turner when he was at the CBI ... He will, no doubt, be a successful chair of the Low Pay Commission.' Mr Monks added: 'The fact that he is extraordinarily well paid at Merrill Lynch will make him even more keenly aware of the desperate plight of the millions of low paid workers in Britain today.'

The LPC, established under the National Minimum Wage Act 1998 (UK9904196F), has to date published three reports making recommendations to the government about the NMW. In 2001, the government accepted a recommendation by the LPC that it should have a permanent role in monitoring the NMW, and 'noted' its recommendation that there should be biennial reviews of the level of the NMW, with the LPC reporting in February to allow sufficient notice for implementation the following October.

The government has now published new terms of reference for the next stage of the LPC's work. In particular, these ask the Commission to:

The Commission has been asked to report to the Prime Minister and the trade and industry secretary by the end of February 2003. The LPC has invited written comments from interested parties on the issues identified in the terms of reference by 4 October 2002.

The main (adult) rate of the NMW - for workers aged 22 and over - is currently GBP 4.10 per hour (UK0104124N). This will rise to GBP 4.20 per hour from 1 October 2002. The development rate - for workers aged 18-21 inclusive (and workers aged 22 and above during their first six months in a new job with a new employer who are receiving accredited training) - is GBP 3.50 per hour (GBP 3.60 per hour from 1 October 2002). The LPC recommended in 2001 that both rates should rise by GBP 0.10 in October 2002. Although the government initially accepted this recommendation 'subject to economic circumstances', it confirmed in April 2002 that it would implement the increases.

Ministers have not, however, accepted repeated recommendations from the LPC that workers aged 21 should be covered by the main adult rate of the NMW.

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