Minimum wage to increase to £6.31

Business secretary Vince Cable has announced that the national minimum wage is to rise by 12p an hour to £6.31 for adults and by 5p to £5.03 for 18-to-20-year-olds.

He said: "The independent Low Pay Commission plays a crucial role in advising the government when setting the national minimum wage every year. It balances wages of low paid workers against employment prospects if the rate was set too high.

Despite a recommendation that pay for apprentices be frozen, rates will actually rise by 3p to £2.68 an hour.

Katja Hall, chief policy director of the CBI, said: "Pay restraint has been crucial in creating jobs in this tough economic climate. The LPC has struck a careful balance in setting the rates given sluggish growth, particularly in recommending a cautious approach to youth pay. Given average earnings this year are already lower than expected, we must make sure the minimum wage doesn’t limit jobs in key sectors, by outstripping pay across the rest of the workforce."