Above-inflation minimum wage rise proposed

A three per cent rise in the national minimum wage (NMW) has been recommended by the Low Pay Commission (LPC).

If the Government accepts the proposal, the NMW for adults will increase from £6.31 to £6.50 on 1 October 2014. It would be the first increase in real terms since 2008.

The LPC also recommends the following from October 2014:

  • a 2 per cent increase in the 18-20 year old rate, to £5.13 per hour
  • a 2 per cent increase in the 16-17 year old rate, to £3.79 per hour
  • a 2 per cent rise in the apprentice rate, to £2.73 per hour
  • a 3.5 per cent increase in the accommodation offset, to £5.08 per hour.

David Norgrove, chair of the LPC, said: "We have had to balance the risk of recommending more than business and the economy can afford, bearing in mind the pressures on low-paying sectors and small firms, against the risk of doing too little to start to restore the real value of the earnings of the lowest paid."

Business reaction to the LPC proposals

Dr Adam Marshall, executive director of policy at the British Chambers of Commerce, described the proposed increase as a "reasonable compromise" between supporting employees and strengthening business.

Katja Hall, chief policy director at the Confederation of British Industry, said the commission had made a "sensible judgement on the increase, and not recommended an unaffordable rise that would put jobs at risk."

Phil Orford MBE, chief executive of the Forum of Private Business, voiced concern about the above-inflation increase:

"With small businesses struggling with a number of costs at present we are disappointed that the recommendation is higher than inflation, but are relieved it falls short of the much higher increases that have been called for."