Minimum wage should rise to £7 says Chancellor

Fri, 17/01/2014 - 13:03 -- nick

Chancellor George Osborne has called for an above-inflation rise in the minimum wage.

Following Labour's successes in putting the cost of living at the top of the political agenda, Osborne has joined the debate and wants a £7-per-hour minimum by 2015.

After years of smaller rises this would restore the link to inflation.

The minimum wage is currently £6.31 for those aged 21 and over with lower levels for younger workers.

The rate is set by the independent Low Pay Commission, which is part of the Business Innovation and Skills department overseen by Liberal Democrat Vince Cable, but politicians are allowed to make their views known to try to influence it.

Iain Duncan Smith, the work and pensions secretary, has spoken of the importance of making work pay but has only cut the value of benefits as a way of achieving this, creating poverty for unemployed people which is not alleviated by getting jobs.

A minimum wage rise is of particular value to unemployed people as new entrants, and re-entrants, to the labour market are more likely than other workers to take up low paid jobs.

Osborne said: "This government, and I as chancellor, are on the side of hardworking people. I want a welfare system that supports work, that's fair to those who use it and those who pay for it."

There are currently 1.386 million people getting the minimum wage in the UK.

The rate for apprentices is lower than that for other workers to account for the value of training they receive, but 2013 saw a rise of just 3p to £2.68 for them, far below inflation and the smallest rise in years.

The government has not said whether it wants apprentices to earn more, or if it wants their pay to be linked more closely to inflation.

Labour's Chris Leslie said: "George Osborne is flailing around under pressure but he has made no concrete announcement about the level of the minimum wage.

"The Tories cannot hide from the fact that working people on average £1,600 a year worse off since they came to office. We need action now to earn our way to higher living standards and tackle the cost-of-living crisis."

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