Low Pay Commission calls for 3% wage rise for thousands of workers

Thousands of low-paid workers should be given a pay rise by increasing the minimum wage by 3%, according to the Low Pay Commission (LPC).

The independent body, which is commissioned with setting wage rates, called on the government to hike the adult minimum wage rate from £6.50 to £6.70 an hour.

The above-inflation move would represent the biggest rise in the minimum wage since 2008.

The pay rise would come into effect from October if the Chancellor George Osborne accepts the proposal.

"If this recommendation were accepted, the value of the minimum wage would be higher than when we came to office in 2010 and we are now making good progress towards restoring the value it lost during the financial crisis," said Vince Cable.

"I will now study these recommendations and consult my Cabinet colleagues with a view to announcing the final rates in the next few weeks."

The business secretary added: "The LPC strike a delicate balance between what is fair for workers and what is affordable for employers, without costing jobs.

"It does so impartially and without political interference. No government has ever rejected the main rates since it was established 15 years ago.

"It is important that it is able to continue to do its work 10 weeks before a general election."

In addition, the LPC also urged the government to increase the apprentice minimum wage to rise to £2.80 – a 2.5% hike on its current rate.

Business body the Confederation of British Industry (CBI) welcomed the organisation's commitment to review next year's rise and warned an "artificial increase" could harm firms.

"The LPC has struck a careful balance. As the economic recovery cements, the Commission has reconciled a desire to reflect this in pay packets while recognising that productivity growth – the key to sustainable pay rises – remains weak," said Katja Hall, the CBI's deputy director-general.

"We welcome the commitment to review next year's rise if the improved business environment doesn't materialise.

"The minimum wage has been one of the most successful policies of our time thanks to the independent recommendations of the Commission, helping many low-paid workers without damaging their job prospects.

"Any artificial increase due to political expediency will help no-one and ultimately damage one of the most successful government policies in recent years."