More than 1 million of Britain’s lowest-paid workers are set to benefit as new National Minimum Wage (NMW) rates come into force.

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

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

The rate rise will mean more than 1 million people are set to see their pay rise by as much as £355 a year.

Liberal Democrat 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 1 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.