The Prime Minister, Gordon Brown, has pledged to raise the National Minimum Wage every year, should Labour be reelected, but to clamp down on wage rises in the public sector in efforts to reduce Government spending.  The news comes as employers face the 1 October deadline for increases in the current Minimum Wage limit and also an increase in “a week’s pay” for unfair dismissal compensation and statutory redundancy pay.

Speaking at the Brighton Labour Party conference, Mr Brown said: “The minimum wage was the dream of Neil Kinnock – and he’s with us today. It was the dream of John Smith – whom we remember today. And it was one of the achievements of Tony Blair, and we thank him today. And when the minimum wage rises this month it will be 60% higher than when it started. And I can say today that not just the minimum wage, but child benefit and child tax credits for families will continue to rise every year.”

The CBI commented on Prime Minister Gordon Brown’s commitment to raise the minimum wage every year, for the next five years.

John Cridland, CBI Deputy Director-General, said: “The Low Pay Commission was set up as an independent body to advise the Government on the level of the minimum wage. There is a danger of undermining its standing if politicians make promises about what will happen to the minimum wage in future.

“Ministers would not make promises about interest rates when they are set by an independent committee at the Bank of England, so it is troubling when they appear to treat the minimum wage in a different way.”

This week, from October 1, the national Minimum Wage rates will rise. 

  • The adult hourly rate increases from £5.73 to £5.80.
  • The hourly rate for 18 to 21 year olds increases from £4.77 to £4.83.
  • The hourly rate for 16 and 17 year olds increases from £3.53 to £3.57.

On the same day, the 2009 Budget increase in “a week’s pay” for unfair dismissal compensation and statutory redundancy pay is implemented.  The Work and Families (Increase of Maximum Amount) Order 2009 provides for the one-off 2009 Budget increase in the maximum amount of “a week’s pay” for calculating compensation for unfair dismissal and redundancy pay, from £350 to £380.

Working carers may find life easier if their families are affected by two other commitments by Mr Brown: to increase free care for the elderly and most vulnerable in their own homes; and free childcare, for the first time, for 250,000 two-year olds from poorer families.

However, in a passing reference which heralded tougher news for public sector workers, the Prime Minister commented on the need for lower pay settlements over the forthcoming years.  He said “So we will raise tax at the very top, cut costs, have realistic public sector pay settlements, make savings we know we can and in 2011 raise National Insurance by half a percent and that will ensure that each and every year we protect and improve Britain’s frontline services.”