Michelle Donelan – 2016 Parliamentary Question to the Department for Business, Innovation and Skills

The below Parliamentary question was asked by Michelle Donelan on 2016-04-08.

To ask the Secretary of State for Business, Innovation and Skills, what assessment his Department has made of the potential effect of the National Living Wage on (a) costs to businesses and (b) employee pay.

Nick Boles

The Government’s Impact Assessment for the introduction of the National Living Wage estimates the total cost to businesses at around £1.1 billion, consisting of direct wage costs, associated non-wage labour costs, maintaining pay differentials and transition costs.

Direct costs to employers contribute just under £700 million to the total cost to raise employees’ wages to the initial rate of £7.20. This will be a direct benefit to employees from receiving higher wages.

On current OBR forecasts, a full-time National Minimum Wage worker will earn over £4,200 more by 2020 from the National Living Wage in cash terms.