A five-year freeze in the National Living Wage at £12.71 an hour has been proposed by the British think tank Prosperity Institute. According to The Guardian, the report has been backed by Andrew Sharpe, who holds a business brief in the Conservative opposition team. It is a proposal, not a government decision or a change in the law.
The National Living Wage is the UK’s statutory minimum hourly pay rate for adult workers covered by that threshold. The report’s authors argue that halting increases would help more young people into work. According to the forecast cited by the newspaper, youth employment could rise by around 270,000. That is the authors’ estimate, rather than a demonstrated effect of the policy.
Sharpe called on the government to adopt the report’s recommendations in full. These also include abolishing the Low Pay Commission, the independent body that recommends annual changes to minimum wage rates. His support does not, however, establish that the freeze has been adopted as official Conservative Party policy.
The same hourly rate, but less spending power
For people earning the minimum wage, the crucial distinction is between the amount they are paid and what that money can buy. Freezing the rate would not mean a cut in nominal pay, but rising prices would gradually reduce its value.
The report’s authors acknowledge this. According to The Guardian, they estimate that, with assumed inflation of 2–2.5%, minimum wage workers’ purchasing power would fall by 9–12% over five years. The newspaper also cites an estimated cumulative loss of around £8,900. This represents lost purchasing power under the assumptions used, not a nominal reduction in wages.
Dispute over the effect on youth employment
Labour government representative Kate Dearden criticised the proposal. The newspaper reports that she accused the Conservatives of pushing a policy that would leave the lowest-paid workers worse off.
The Low Pay Commission also challenged a key part of the case for a freeze. According to the newspaper, the commission said it was not aware of robust evidence that higher rates for young workers had contributed to a deterioration in their labour market prospects. The projected increase in employment therefore remains the think tank’s forecast, not an established outcome of the proposed policy.
For workers, the immediate point is that this plan makes no change to the rules governing their pay. The debate concerns the future direction of wage policy: the report’s authors point to possible gains in youth employment while also anticipating a fall in the real value of minimum wage earnings.
