Miliband promises Labour minimum wage increase

Ed Miliband will promise to establish a 'clear link' between the minimum wage and the earnings of other workers. Picture: PA

The Labour leader will promise to establish a “clear link” between the the minimum wage and the earnings of other workers to ensure those at the bottom of the pay scale do not get “left behind” again.

Addressing party activists in the West Midlands, he will say that he wants to build on the achievement of the last Labour government which introduced the minimum wage in the wake of Tony Blair’s landslide general election victory in 1997.

The move is likely to be welcomed by some critics in the party who have complained that Mr Miliband has so far failed to set out a positive vision of what a Labour government would offer to voters.

However he can expect to come under fire from business groups, amid fears that it will drive up costs and damage competitiveness.

With today’s announcement expected to be short on detail, low pay campaigners will want to see exactly how a Labour government would go about fulfilling its goal.

Mr Miliband will say that he does not intend to set out his “precise ambition” until nearer the general election next year.

The Labour leader will however publish a report he commissioned from Alan Buckle, the former deputy chairman of KPMG International, with proposals to overhaul the Low Pay Commission.

It will set out a new framework for the commission with a five-year target and a strengthened role in tackling poverty and raising productivity.

In his speech, Mr Miliband will describe Labour’s introduction of the original minimum wage as “one of the proudest achievements of any British government”, but will say further action is now needed to raise its value and restore its ambition .

“Britain is still one of the lowest paid countries among the world’s advanced economies. So we have to go further, we have to write the next chapter in the history of Labour’s battle to make work pay,” he will say.

“That’s why today, I am proud to announce that the next Labour government will take new radical action against low pay: a new five-year ambition to restore the link between doing a hard day’s work and building a decent life for your family.

“A Labour government will establish a clear link between the level of the minimum wage and the scale of wages paid to other workers in our economy.

“We will say workers on the minimum wage must never be left behind because those who work hard to create our nation’s wealth should share in it.”

The Buckle report will also include recommendations to strengthen the enforcement of the minimum wage and to encourage employers to pay the higher “living wage” - such as making it a condition of government contracts - which will be considered in Labour’s policy review.

Mr Buckle said that he believed his “core proposal” of a clear goal to increase the minimum wage over the life of a parliament was achievable and would be good for citizens, business and government.

“Making work pay, through an economy that supports a higher skilled, better paid and more productive workforce, is the key to cutting the social security bill and thereby improving government finances,” he said.

Brian Strutton, national officer of the GMB union, said Labour’s commitment to review the role of the Low Pay Commission was both “welcome and necessary” if it was to accelerate increases in the national minimum wage.

“Of course, it is more than just the headline national minimum wage that matters. GMB has pointed out that the age related rates are unfair to young people and unscrupulous businesses constantly find ways to avoid paying even minimum wages,” he said.