Minimum wage set to rise 20p to £6.70 an hour in October

The national minimum wage will rise by 20p to £6.70 an hour this October, a 3% representing the biggest real-terms increase since 2008.
David Cameron and Nick Clegg have announced the Coalition has accepted the 3% rise recommended by the Low Pay Commission (LPC) for all workers aged over 21.
The shift represents the largest real-terms increase in the rate since 2008 yet still some way off the 2007 real value peak prior to the financial crash.
The Prime Minister and the Deputy Prime Minister have also announced that the National Minimum Wage for apprentices will increase by 57p an hour to £3.30.
This represents the largest ever increase in the National Minimum Wage for apprentices and will halve the gap with the National Minimum Wage rate for 16 to 17 year olds, which will be £3.87 an hour from October 2015.
The government will also launch a consultation with businesses on the future of the National Minimum Wage rate for apprentices.
Rates from October:
The Chair of the Low Pay Commission, David Norgrove said:
“We carefully weighed the risk of doing too little to raise the earnings of the lowest paid against the risk of recommending more than business and the economy can afford. Our recommendation that the adult minimum wage increase by 3 per cent to £6.70 an hour is likely be the largest real-terms increase in the NMW since 2007 taking its estimated real value three-quarters of the way back to its highest ever level. It should also represent a further increase in the value of the minimum wage relative to average earnings, which is already at a record level.
The improved economic and labour market conditions mean once again that employers are able to respond in a way that supports employment.
Norgrove continues:
“Our recommendation this year is predicated on a forecast which foresees lower costs for business in fuel and energy, a strong economic performance, significant recovery in earnings across the economy and rising productivity. If these expectations are not borne out over the year we will take this into account when considering next year’s recommendation.”
“While we welcome the government’s response on the headline rates we are disappointed that it has not accepted our recommendation on the level of the Apprentice Rate. We based our judgement on a careful assessment of the evidence, seeking to benefit apprentices while also protecting the supply of places”.
Chuka Umunna, the shadow Business Secretary, said:
“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.”
The move is set to be confirmed in Chancellor’s budget on Wednesday.
Feature image: Quidco