Low-pay victory for Brown

THE TWO-TIER minimum wage, with young people starting on pounds 3 an hour and pounds 3.60 an hour for over-25s, will be announced today in a Commons statement which will be seen as a victory for Gordon Brown, the Chancellor, to reduce the cost to industry.

In a face-saving compromise for Margaret Beckett, President of the Board of Trade, the Government has agreed to the Low Pay Commission recommended rate of pounds 3.20 an hour for 18- to 21-year-olds, but it will be phased in over 15 months.

Meanwhile, the leader of one of the Labour Party's largest affiliates yesterday clashed with the Government over the decision to "water down" the minimum wage.

But the Chancellor told a packed meeting of the Parliamentary Labour Party yesterday that if the wage was set too high it would hit jobs among young people by discouraging employers from hiring them for the "new deal" work schemes.

The Prime Minister andWilliam Hague clashed in the Commons over yesterday's figures showing a rapid rise in wage inflation and signs of an increase in unemployment. "The introduction now of the Low Pay Commission's recommendations is likely to make both problems worse," said the Conservative Party leader.

Downing Street said the outline was agreed by the Cabinet, but the details of the compromise were thrashed out among a small group of key Cabinet ministers with Ian McCartney, Mrs Beckett's deputy

Ministers are confident the compromise will take the heat out of the row which has been rumbling inside the Government since the Low Pay Commission delivered its report.

Speaking at the annual conference of Unison, the public service union, John Edmonds, leader of the GMB general union, accused the Government of a "scandalous" attitude to recommendations from the Low Pay Commission.

He said there was no justification for making the "have nots" even worse off and said the decision to undermine the commission sent out the wrong message from a government committed to social inclusion. "It is scandalous that a unanimous report supported by both sides of industry should be cherrypicked by the Government."