The Low Pay Commission’s recommendations must be approved by the government before they implemented, but are usually accepted.

“It is faster than inflation and that is the first time in six years that has happened,” Cable said.

Phil Orford MBE, chief exec of the Forum for Private Businesses, said the FPB was “disappointed” that the rise was above inflation, but relieved it wasn’t as much as the £7 level some have been calling for. 

“It is now up to the government to implement the recommendation of the independent commission, rather than seek to put in place a higher rise,” he said. 

Katja Hall, chief policy director of the CBI, said: “A 3% rise recognises the improvements we’re currently seeing in the economy.

“The LPC has made a sensible judgement on the increase, and not recommended an unaffordable rise that would put jobs at risk.”

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