£15 minimum wage: calculation note

Central fiscal result

+£0.8bn - Net public-finance pressure in 2027-28

Low case: -£2.0bn. High case: +£5.5bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Adult NLW rises to £15.00 from April 2027.
• Central case excludes automatic 18–20, 16–17 and apprentice alignment.
• Baseline is £12.71 adult NLW from April 2026.
• Counterfactual is LPC April 2027 central reference of £13.18.
• £15 is £1.82 above counterfactual and about 76% of implied adult median.

Affected population

• Counts are ASHE-style employee jobs, not unique workers.
• Direct adult jobs below £15: 3.8m low, 4.9m central, 6.4m high.
• Spillover jobs above £15: 0.8m low, 2.6m central, 5.0m high.
• Central total affected adult jobs: 7.5m, excluding youth alignment.
• Direct public-sector exposure: 0.35m low, 0.55m central, 0.90m high.

Gross impact

• Direct gain: 4.9m x 24.5 hours x 52 x £1.05 = £6.55bn.
• Spillover gain: 2.6m x 28.0 hours x 52 x £0.40 = £1.51bn.
• Central gross worker wage gain before behaviour is £8.06bn.
• Apply 5% central leakage; post-behaviour worker gain is £7.66bn.
• Low-high pre-behaviour worker gain range is about £4.0bn to £13.5bn.

Fiscal build-up, central case

• Direct public-sector wage bill and on-costs: +£0.60bn
• Commissioned-service pass-through: +£3.25bn
• Administration, enforcement and evaluation: +£0.05bn
• Behavioural welfare and employment pressure: +£0.10bn
• Income tax and employee NI receipts: -£1.85bn
• Employer NI receipts outside public payroll: -£0.75bn
• Means-tested benefit savings: -£0.60bn

Central net impact: +£0.80bn in 2027-28.

Behaviour and pass-through

• Employment and hours leakage: 0% low, 5% central, 18% high; high case allows adverse hiring and hours.
• Public-service pass-through: limited low, 80% central, full-plus-compression high after contract and fee resets.
• Effective employee tax and NI offset: 20% low, 24.2% central, 27% high on realised worker gains.
• Means-tested benefit saving: 4% low, 7.8% central, 10% high on realised worker gains.
• Non-compliance leakage: 0% low, 3% central, 10% high; enforcement costs rise in high case.
• No central corporation-tax or VAT score; profit and consumption channels are treated as uncertain.

Phasing

• 2026-27: +£0.1bn. Preparation, guidance and enforcement setup.
• 2027-28: +£0.8bn. Adult £15 rate starts from April 2027.
• 2028-29: +£1.2bn. More public contracts and fees reset.
• 2029-30: +£1.5bn. Compression and procurement effects persist.

Main source groups

• GOV.UK current rates: adult £12.71, 18–20 £10.85, under-18/apprentice £8.00.
• LPC 2026 report: April 2027 two-thirds-median reference central estimate £13.18.
• ONS ASHE 2025: employee-job methodology and hourly-pay distribution.
• DBT/RPC 2026 impact assessment: employer costs, SMEs, public-sector limits and monitoring risks.
• OBR NLW analysis: tax, welfare, employment, hours and adult-social-care fiscal channels.
• HMRC tax and NI thresholds: income tax, employee NI and employer NI assumptions.
• DWP Universal Credit: 55% earnings taper informs benefit-offset assumptions.
• Skills for Care 2025: adult social care had about 1.60m filled posts.
• Dube-Lindner chapter: wage gains, limited studied employment effects and adjustment margins.
• Academic minimum-wage studies support wage gains but not a guaranteed safe ceiling.