Lib Dems accuse Tories of 'stealing' their policy as George Osborne prepares to approve above-inflation rise in minimum wage

The Conservatives opposed Labour's decision to bring in the minimum wage in 1999, predicting wrongly that it could cost two million jobs

George Osborne is ready to approve an above-inflation rise in the national minimum wage as the Conservatives seek to appeal to the low paid and shed their “party of the rich” image.

A day after the Chancellor announced plans for another £12bn of welfare cuts between 2015-17,  Treasury sources talked up the prospect of a “real terms rise” in the £6.31-an-hour minimum wage this October.

The move is significant because the Conservatives opposed Labour's decision to bring in the minimum wage in 1999, predicting wrongly that it could cost two million jobs. The Tories have traditionally backed calls by business leaders to keep down the wages floor. But their planned U-turn reflects their concerns at being seen as “out of touch” with ordinary people hit by what Labour calls the “cost of living crisis.”

According to the Resolution Foundation think tank, the minimum wage is now at its lowest level since 2005 in real terms. It has fallen in value for the past five years, and by 5.2 per cent in real terms over this period. If it had been linked to inflation, it would now stand at £6.68 an hour. A five per cent increase this October would take it to £6.62 an hour.

The Government will not recommend a precise increase in the data it sends shortly to the independent Low Pay Commission, which will publish its recommendations in the spring.

But the Tories' hopes of reaping a political reward from the expected above-inflation rise were dealt a blow when Liberal Democrats accused them of “stealing” their policy. They pointed out that Vince Cable, the Lib Dem Business Secretary, who is responsible for the minimum wage, has already asked the commission to consider increasing its value in the medium term.

Mr Cable said: “The national minimum wage strikes a key balance between protecting the low paid and making sure they can find work. But as the economy starts to recover, the benefits of growth must be shared fairly and equally by everyone. This is why last September I asked the independent Low Pay Commission what economic conditions would be needed to allow for significant rises in the national minimum wage without damage to employment.”

Mr Cable promised that bigger fines for firms which do not pay their workers the legal minimum would be introduced this spring.

Tory moderates, worried that tough rhetoric about welfare cuts will harm the party's image among centre ground voters, are pressing for a rethink about the wages floor.

David Skelton, founder of the Renewal pressure group aimed at broadening the Tories' appeal in the North, said: “The Conservatives made a real mistake in opposing the introduction of the national minimum wage, which they're still paying for politically. They must be careful not to be on the wrong side of the argument again when it comes to low pay.

"An increase in the minimum wage would be the right thing to do. It would show that the Government understands the pressures the low paid are still facing. It would ensure that the benefits of growth reach everybody in society, genuinely help to 'make work pay' and, given the state pays millions to top up low pay with tax credits, would reduce the benefits bill."

Policy Exchange, a think tank with close links to David Cameron, is drawing up plans to ensure that a minimum wage rise would not cost jobs. Increasing it by 50p would save the Government an estimated £750m a year through higher tax revenues and lower benefit payments.

Conor D'Arcy, researcher at the Resolution Foundation, said: "After five years of decline the minimum wage has lost substantial value and as economic recovery begins to return it's important that it is strengthened once again to start making up that lost ground. The fact that all the main parties are now showing interest in doing this is very encouraging - but there is a long way to go before the minimum wage returns to its earlier levels."

Opinion polls show that only 16 per cent of low paid voters think that the Conservative Party is "on the side of people like me" and three quarters of all voters still say that the party is the "party of the rich."

Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions