Minimum wage to rise by 21p an hour

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Prime Minister Gordon Brown told MPs in the Commons that the statutory rate will have risen by 60% since it was first introduced in 1999.

The hourly rate for 18 to 21-year-olds will increase from £4.60 to £4.77, while the statutory wage for 16 and 17-year-olds will go up from £3.40 to £3.53. Two-thirds of those who will benefit from the increase are women.

The Government also announced tough new penalties against rogue employers who underpay workers by increasing spending on enforcing the minimum wage.

Mr Brown said at the start of Prime Minister's Questions that some people had warned a national minimum wage would cost two million jobs, but three million jobs had been created.

Business Secretary John Hutton said: "The national minimum wage remains one of the most important rights introduced by the Government in the last decade. Before it was introduced, some workers could expect to be paid as little as 35p an hour. Our legislation has ensured that can no longer happen.

"I am proud of the minimum wage. It makes a real difference to the lives of many of our lowest-paid workers and protects them from exploitation. It also creates a level playing field for business and boosts the economy."

Paul Myners, chairman of the Low Pay Commission, said: "This increase means that the minimum wage will have risen by 59% since it was introduced in April 1999 - almost double the expected growth in prices over the same period.

"Despite many predictions to the contrary, job numbers in the industries most affected by the minimum wage have grown, and grown significantly, over the same period."

The Government announced new measures to enforce the minimum wage, including a new method for dealing with arrears and an increase in the maximum penalty for non-payment to an unlimited fine.