National Minimum Wage set to increase to £6.70 an hour
Hourly rate for younger workers and apprentices will also increase under the changes
The National Minimum Wage for adult workers is set to increase from £6.50 to £6.70 an hour from October – the biggest real-terms rise in seven years.
The changes will benefit an estimated 1.4m workers, with the hourly rate for younger workers and apprentices also rising. The statutory minimum for 18-20-year-olds will increase by 3% to £5.30, for 16 and 17-year-olds by 2% to £3.87, and for apprentices by 20% to £3.30 an hour.
The government rejected the initial 7p an hour increase proposed by the Low Pay Commission for apprentices, opting instead for a significantly larger 57p increase.
This rate will apply to those aged 16 to 18 and those aged 19 or over in their first year – all other apprentices are entitled to the National Minimum Wage. Business secretary Vince Cable had previously urged the Low Pay Commission to increase the apprentice rate by £1 an hour, but the government decided against it.
Following claims that the coalition government has eroded the Minimum Wage, Labour has promised that it would rise to £8 an hour should the party be victorious in May.
In his announcement, prime minister David Cameron said: “At the heart of our long-term economic plan for Britain is a simple idea – that those who put in, should get out, that hard work is really rewarded, that the benefits of recovery are truly national.
“That’s what today’s announcement is all about, saying to hardworking taxpayers, this is a government that is on your side. It will mean more financial security for Britain’s families and a better future for our country.”
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While shadow business secretary Chuka Umunna commented: “This 20p rise falls far short of the £7 minimum wage which George Osborne promised over a year ago. Ministers have misled working families who have been left worse off.”
“Where under David Cameron we’ve seen the value of the minimum wage eroded, we need a recovery for working people.”
In January 2014, Osborne had said when asked about the likely rise for 2015: “The exact figure has to be set by the Low Pay Commission, which talks to business, talks to other bodies in our economy. But, if for example, the Minimum Wage had kept price with inflation it would be £7 by 2015/16. It’s £6.31 at the moment, so, that’s an increase.
“I think Britain can afford a higher Minimum Wage. I think we have worked hard to get to this point and we can start to to enjoy the fruits of all that hard work.”