PM announces above inflation rise for minimum wage

The Prime Minister Gordon Brown has announced that the minimum wage will rise by more than the current rate of inflation.

He told the Commons that the new hourly rate will rise from £5.52 to £5.73. The rate for 18-21 year olds will increase from £4.60 to £4.77, while the rate for 16-17 year olds will rise from £3.40 to £3.53. All the increases will take effect from October.

The chairman of the Low Pay Commission, Paul Myners, said the increase means the minimum wage rate will have risen by 59% since it was introduced in April 1999. That is almost double the growth in prices over the same period.

The Government has also announced new measures to enforce the minimum wage and crack down on rogue employers. These include increasing the maximum penalty for not paying the minimum rate to an unlimited fine. The most serious cases on non-compliance will be tried in the Crown Court.

There will also be a fairer method for settling minimum wage arrears so that workers do not lose out as a result of underpayment.