Rise in national minimum wage

The national minimum wage will increase by 3% in October this year, the government has announced.

Speaking yesterday (12 March), Vince Cable, business secretary, said the minimum wage for those over 21 would rise by 19p from £6.31 to £6.50. The rate for 18- to 20-year-olds will increase 2% from £5.03 to £5.13 per hour.

A 2% rise has also been announced for 16- to 17-year-olds and apprentices, from £3.72 to £3.79 per hour and £2.68 to £2.73 per hour, respectively.

The government accepted all of the rate recommendations made by the Low Pay Commission (LPC)

Cable said: “The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008. This will benefit over one million workers on national minimum wage and marks the start of a welcome new phase in minimum wage policy.”

David Norgrove, chair of the LPC, said: “We believe that the economic recovery should allow an increase in the real value of the minimum wage. Our recommendation that the adult minimum wage should increase by 3% to £6.50 an hour is likely to increase its real value for the first time for at least five years. At the same time, it takes account of the pressure the minimum wage places on businesses, particularly in the low-paying sectors and small firms.”

He added that, provided the economy continues to improve, the LPC expects to recommend further progressive real increases in the minimum wage.

The national minimum wage, however, is still lower than the living wage. In London it is £8.80 an hour, while in the rest of the country, it is £7.65.

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