Business secretary Vince Cable said the government would accept the Low Pay Commission’s recommendation for an above-inflation increase of 19p.

Cable said: “The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take home pay since 2008. This will benefit over 1m workers on National Minimum Wage and marks the start of a welcome new phase in minimum wage policy.”

John Allan, National Chairman, Federation of Small Businesses, said: “The Government’s decision not to go beyond the Low Pay Commission’s recommendation is welcome. While the rise to £6.50 is slightly more than we would have hoped for, it is at least only one per cent over inflation. Most small firms should be able to afford this.

“At this stage of the recovery, it is important that business momentum is maintained. If the rate were to increase by a significantly higher margin next year, it would place substantial pressure on small businesses operating on fine margins. 

“To help the smallest firms plan ahead, we would like the Low Pay Commission to take a longer term approach when making recommendations on future minimum wage increases.”

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