This week the Government published its remit for the Low Pay Commission (LPC) on NLW rates from April 2026, reaffirming its commitment to aligning the NLW with two-thirds of median earnings.
The LPC suggested the NLW could rise to £12.71, an increase of 4.1%, with a projected range between £12.55 and £12.86.
These figures have edged up since May’s consultation, driven by stronger-than-expected wage growth and revised forecasts for 2025.
UKH chair Kate Nicholls welcomed the Government’s aim to raise living standards but warned against a rapid increase in wage rates without considering the broader economic context.
She said: “The ambition is right, but the timing and pace of increases must be carefully considered.
Challenging market
“The remit’s publication is already six months later than usual, forcing adjustments to forecasting and planning.
“Despite this, it’s a positive that this is a maintain remit, not a lower one, as is the recognition of taking into account the wider macro-economic circumstances and challenging labour market.”
The trade body chair further highlighted the strain hospitality businesses are already under, citing rising employer National Insurance Contributions (NICs) and other cost pressures.
“Any significant wage hike may cost jobs,” she cautioned, urging the LPC to recommend a more gradual and sustainable increase.
“Escalating employment costs are already forcing businesses to reduce staff hours and, in some cases, make redundancies.
“Across the board the labour market indicators are flashing red, and the Bank of England has repeatedly voiced concerns about a wage-price spiral fuelling inflation.
“Inflating wages too far, too fast, would be counter-productive, resulting in fewer people earning a little more, but many more facing job losses or reduced hours, ultimately undermining the goal of putting more money in people’s pockets.”
Prosperous economy
Analysis of official data by accountancy firm Price Bailey in June revealed 67 pubs were lost for good in April 2025. The figure marked the highest level since last July, when 74 entered insolvency.
The insolvencies were attributed to April’s NIC rises alongside the threshold for the tax being slashed from £9,100 to £5,000 a year.
The NLW for workers aged 21 and over also increased in April, to £12.21 per hour up from £11.44, a 6.7% increase. For workers aged 18–20 NLW increased to £10 per hour (up 16.3%).
Nicholls continued: “The Government rightly places economic growth at the heart of its mission, but for that to succeed, wage policy cannot be set in a vacuum.
“Therefore, we strongly advocate that the LPC’s approach and subsequent targets fully take account of the impact on employment levels and overall economic growth.
“This will ensure future NLW rates support, rather than hinder, our shared goal of a prosperous economy with opportunities for all.”
