Apprentices will get a 20 per cent pay rise this October, after business secretary Vince Cable won his battle to overrule the Low Pay Commission’s (LPC) recommendation of a 2.6 per cent rise in the minimum wage.
By contrast, chancellor George Osborne has failed to meet his aspiration to hike the headline minimum wage to £7 per hour. Instead, it will rise by three per cent as recommended by the LPC, up 20p to £6.70.
The announcement will be made today by Prime Minister David Cameron and deputy prime minister Nick Clegg. It is likely to be one of the last joint appearances the pair will make before the General Election.
“At the heart of our long-term economic plan for Britain is a simple idea – that those who put in, should get out; that hard work is really rewarded; that the benefits of recovery are truly national,” Cameron will say.
And Clegg will argue this shows the government stands for aspiration. “This is just one of the many ways in which we’ve created a fairer society while building a stronger economy. If you work hard, this government is behind you all the way,” he will say.
Shadow business secretary Chuka Umunna said the headline rate should be hiked to be £8 an hour. “This 20p rise falls far short of the £7 minimum wage which George Osborne promised over a year ago,” Umunna said. “Ministers have misled working families who have been left worse off.”
However, some employers feel the decision to plump for a higher figure for apprentices might worsen their placement prospects. “The Commission struck a careful balance, helping many low-paid workers without damaging their job prospects,” said Confederation of British Industry boss John Cridland. “It’s disappointing that the government has rejected the LPC’s recommendation.”
And Sam Bowman from the Adam Smith Institute said it could do long- term harm to would-be apprentices. “Raising the minimum wage usually hurts people’s job prospects because it makes them costlier to employ,” he said. “The apprentice National Minimum Wage is very low to reflect that training apprentices is costly to employers.”
Tim Wallace, Charlotte Henry