Owen Smith MP, Labour’s Shadow Work and Pensions Secretary, commenting in response to the OBR’s downgrading of the National Living Wage, said:

“The Government’s so-called living wage makes up for only around a fifth of the losses workers face from cuts to Universal Credit.    

“With 2.6 million working families expected to be £1,600 a year worse off by 2020, it’s concerning that low-paid earners working full-time are now set to receive over £400 less a year.

“Workers have already put up with the sharpest fall in living standards ever recorded and this decade is set to be the worst ten years of pay growth in almost a century.

“This second successive downgrading of the so-called living wage will mean low- and middle-income families are compensated even less for cuts to Universal Credit.

“The Tories should now re-think those cuts as a matter of urgency before they take effect in April.”

ENDS

Notes to Editors:

* Today’s OBR report “Number of employees paid the National Living Wage” confirms the downgrading of the National Living Wage: “The lower median hourly wage would be pushed through to every year of the forecast such that, all else equal, the ASHE 2015 data would imply a NLW in 2020 of £9.15, rather than the £9.30 that we expected in the November EFO.”

* This is the second time the National Living Wage has been downgraded since July 2015, at which point it was projected to reach £9.35 an hour by 2020.

* The 20p an hour reduction amounts to a loss of £416 for someone earning the living wage and working full-time at 40 hours a week.

* According to the IFS, 2.6 million working families will be an average of £1,600 a year worse off under Universal Credit.

* According to the IFS, the total gain from the National Living Wage is 22% of the total loss from the government’s long-term tax and benefit changes.