Over one million of Britain’s lowest-paid workers are set to benefit as new National Minimum Wage (NMW) rates come into force from today 1st October 2014.

The rate rise to £6.50 per hour, the first real terms cash increase since 2008, follows the recommendations from the independent Low Pay Commission (LPC) in March this year and the call for faster, affordable rate rises by Business Secretary Vince Cable.

The National Minimum Wage rates from 1 October 2014, as recommended by the LPC, are:

  • 19p (3 per cent) increase in the adult rate (from £6.31 to £6.50 per hour)
  • 10p (2 per cent) increase in the rate for 18 to 20-year-olds (from £5.03 to £5.13 per hour)
  • 7p (2 per cent) increase in the rate for 16 to 17-year-olds (from £3.72 to £3.79 per hour)
  • 5p (2 per cent) increase in the rate for apprentices (from £2.68 to £2.73 per hour)

The rate rise will mean more than one million people are set to see their pay rise by as much as £355 a year.

Business Secretary Vince Cable said: “The National Minimum Wage provides a vital safety net for the lowest paid, ensuring they get a fair wage whilst not costing jobs. This year’s rise will mean that they will enjoy the biggest cash increase in their take home pay since the banking crisis, benefiting over one million people in total.

“I believe it is vital that the Low Pay Commission’s recommendations – not political considerations – should set national minimum wage rates. As signs of a stronger economy start to emerge, we need to do more to make sure that the benefits of growth are shared fairly across the board. The Low Pay Commission will continue to advise Government on future wage rises and ensure the minimum wage keeps pace with inflation”.

Earlier this year the Business Secretary asked the LPC to extend its expertise to help Government and business understand how we can deal with the issue of low wages in the economy. In particular, he asked it to look at what economic conditions would be needed to allow the National Minimum Wage to rise in the future by more than current conditions allow, and restore its real value.

The Business Secretary welcomed the LPC’s assessment that 2014 will mark the start of a new phase of bigger increases, provided economic conditions continue to improve. It is the first time the Government has been provided with a broader evaluation of the issues that affect low pay.

Paying any less than the minimum wage is illegal. If employers break the law the Government will take tough action, including enforcing steep financial penalties and publicly naming flouters. Anyone who feels they are being exploited should contact the free and confidential Pay and Work Rights Helpline on 0800 917 2368.

Commenting on the new national minimum wage (NMW) rates that come into force today (Wednesday), TUC General Secretary Frances O’Grady said: “It is good news to see the worst paid adult workers receiving a pay release above inflation for the first time for six years. But it’s a muted celebration because the minimum wage would be worth at least £7 today had it kept up with rising prices.

“Politicians from all parties and many business leaders now agree that the minimum wage should increase far more rapidly. Britain needs a pay rise and a wages-led recovery is the best chance we have of sustaining economic growth and restoring living standards.”

Katja Hall, CBI Deputy Director-General, said: “The rise in the National Minimum Wage will help hard-pressed families, but can only be one part of the answer when it comes to raising living standards and ensuring everyone feels the benefits of growth.

“Business and politicians must do more to help people progress in their careers and help them move into roles with increased pay.

“It is vital that any rise is based on sound economic evidence, so political parties should refrain from interfering in the future decision-making of the independent Low Pay Commission to avoid jeopardising the broad business support the National Minimum Wage enjoys.”