Worcester’s MP, Robin Walker MP, has welcomed the launch today of the Conservative Government’s new National Living Wage – giving a big boost to the lowest-paid in Worcester on the same day that Asda’s income tracker showed double digit growth in spending power for the sixteenth consecutive month and an increase in discretionary spending power of 6.7% on the year.

From today, 1 April 2016, workers aged 25 and over and not in the first year of an apprenticeship will be legally entitled to at least £7.20 an hour under the National Living Wage – that’s an extra 50 pence an hour compared to the National Minimum Wage – a £20 a week pay rise for a full time worker.

1.3 million hardworking people across the country are expected to benefit directly from the National Living Wage – which is set to rise to £9 an hour by 2020 – while 6 million could see a pay rise as a result of a ripple effect pushing wages up across Britain.

At the same time, we’re increasing the tax-free personal allowance so that hardworking people keep more of the money they earn. From 6 April 2016 the personal allowance will rise to £11,000 – a saving of £80 – and from April 2017 it will rise again to £11,500 – taking 1.3 million of the lowest-paid workers out of income tax altogether and giving a tax cut to 31 million across the country.

Workers and employers can find more information online at www.livingwage.gov.uk.

Asda’s latest income tracker, which can be found showed:

  • The average UK household had a weekly disposable income of £197 in February, £12 more than in February 2015
  • Annual growth in spending power remained in the double digits in pound terms for the sixteenth consecutive month due to high wage growth
  • Wage growth remained the biggest contributor to increased household discretionary income, an increase of 2.2%
  • Essential item inflation reached 0% last month, the first non-negative reading since January 2015

Robin commented:

‘Worcester deserves a pay rise and I’m very proud to be part of a Conservative party that is delivering the higher-wage, lower-tax, lower-welfare economy we all want to see. Boosting wages and making sure that more families have the security of a decent, regular pay packet, while ensuring that people are always better off in work, are at the heart of our long-term plan.”

“As long ago as 2013 I was making the case for taking the income tax threshold up in line with a rising minimum wage and I am delighted to see this is exactly what is now happening. Today’s 50p increase is only the start and lower paid workers can expect further pay rises and tax cuts over the years to come as the national living wage rises to £9 per hour, something that should help to stimulate the economy and help more people overcome the cost of living to save for the future.”

‘We’re backing hard work and aspiration – creating opportunity for hardworking people across Worcester – and, with more people in work than ever before, our plan is working. I am delighted that wage data and the increase in tax thresholds mean that for more people than ever work is paying in Worcester.”

Notes to Editors:

  • The National Living Wage begins from 1 April 2016. In the Summer Budget 2016, the Chancellor announced a new National Living Wage (NLW) – mandatory for workers aged 25 and above and not in the first year of an apprenticeship, and initially set at £7.20 from 1 April 2016. That’s a rise of 50p relative to the current National Minimum Wage (NMW) rate of £6.70. The Low Pay Commission has been asked to recommend the level of the NLW premium in each subsequent year, to increase the NLW to 60 per cent of median earnings by 2020. On independent OBR forecasts we would expect it to reach £9 by 2020 (HMT, Summer Budget 2015, 8 July 2015, link; HMT, The National Living Wage, accessed 30 March 2016, link; HMT, Budget 2016, 16 March 2016, link).
  • Up to £20 a week pay rise for a full time worker. An eligible worker currently working 40 hours a week and earning the NMW will see a pay rise of £20 a week under the National Living Wage.
  • 9 million workers to benefit directly. The OBR forecasts that 2.9 million workers will benefit directly from the NLW and estimates that 6 million could see a pay rise as a result of a ripple effect causing wages to rise further up the earnings distribution (HMT, Budget 2016, 16 March 2016, link).
  • Tax-free personal allowance to rise to £11,000 this April. In the Summer Budget 2015, the Chancellor announced that the tax-free personal allowance would rise from £10,600 to £11,000 from 6 April 2016 – an £80 tax cut. In the recent March Budget, the Chancellor announced that the personal allowance would rise again to £11,500 from April 2017 – a tax cut for 31 million people. This will bring the total number of taxpayers taken out of income tax altogether during this parliament to 1.3 million (HMT, Summer Budget 2015, 8 July 2015, link; HMT, Budget 2016, 16 March 2016, link).
  • The employment level is at a record high as wage growth continues to outstrip inflation. There were 31.4 million in work across the UK – a record high – in January 2016, while unemployment was at 5.1 per cent, the lowest level for a decade. Total pay rose 2.1 per cent while inflation was close to flat over the same period (ONS, Labour Market Statistics, 16 March 2016, link).

For Robin commentary on Worcester’s job figures see:

https://www.walker4worcester.com/unemployment-stays-close-to-record-lows-and-new-opportunities-appearing-but-no-room-for-complacency/

For his speech in 2013 calling for a higher income tax threshold rising alongside the minimum wage see:

http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm130418/debtext/130418-0003.htm#130418-0003.htm_spnew37

For Robin’s support for a national living wage see:

https://www.walker4worcester.com/today-marks-the-first-step-to-a-higher-wage-and-a-higher-productivity-economy/

 https://www.walker4worcester.com/britain-will-get-a-pay-rise-chancellors-commitment-to-working-people/