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George Osborne cautions against 'self defeating' minimum wage rise

Chancellor George Osborne has warned against a 'self-defeatist' rise in the National Minimum Wage if it comes at the expense of jobs.

He said he would like to see a rise in the minimum wage, which currently stands at £6.31, but said it must be done in a way that doesn't cost jobs.

His comments came during a visit to a garage in Enfield, north London, to highlight the forthcoming introduction of the new Employment Allowance, which will allow businesses to claim £2,000 a year off their employers' National Insurance contributions (NICs).

Osborne said the move, announced in the 2013 Budget and coming into effect in April, would mean employers could "hire more people, invest more, do all the things we need to see as part of our long-term plan for Britain to increase jobs and bring economic prosperity to this country".

Minimum wage debate

The living wage is set to become a big issue in 2014 as political parties aim to win the vote of lower paid workers ahead of the 2015 general election. The Living Wage Foundation, a group set up to urge companies to pay a living wage of £7.65 (£8.80 in London). Plans to step up its campaigning this year.

Treasury minister Sajid Javid said earlier this week there was a "strong case" for a rise, given the minimum wage was 10% lower in real terms than it was in 2008.

"I think everyone wants to see an increase in the minimum wage. I would like to see an increase in the minimum wage," said Osborne.

"But it has to be done in a way that doesn't cost jobs, because that would be self-defeating.

"We have a Low Pay Commission as a body that exists to make exactly that judgment.

"What we have got to do as a country is get the balance right between supporting business, growing our economy and making sure it is a recovery for all, and that is what our long-term plan is all about delivering."

The following minimum wage rates came into effect in October 2013:

  • The adult rate is £6.31 an hour
  • The rate for 18-20 year olds is £5.03 an hour
  • The rate for 16-17 year olds is £3.72 an hour
  • The apprentice rate is £2.68 an hour