Minimum wage frozen for workers aged 20 and under

The national minimum wage for workers aged 20 and under is set to be frozen at less than £5 an hour in an attempt to create more jobs for them, the Government will announce soon.

Vince Cable, the Business Secretary, has been persuaded that raising the legal minimum wage for those aged 18 to 20 from the current £4.98 could deter employers from taking people on. The move has been recommended to him in a report by the independent Low Pay Commission, which makes proposals every year on the level of the national minimum wage.

Employers' groups and Conservative MPs have lobbied for a freeze after the number of jobless 16- to 24-year-olds passed the one million mark. But the decision, to be announced around the time of the Budget on 21 March, will be attacked by trade unions. The rate for those aged 16 and 17 is likely to remain at £3.68 an hour.

Brendan Barber, the TUC general secretary, said: "There has been much debate about the minimum wage and young people... but there is no evidence that it has had any adverse impact on jobs. The real reason why firms have not been hiring new workers is because they lack confidence that we have em- barked on a sound economic recovery."

The Liberal Democrat Business Secretary angered Tory ministers this week by suggesting that his party would allow George Osborne to scrap the 50p top rate of income tax in his Budget if, in return, he brought in the Lib Dem policy of a mansion tax on homes worth more than £2m.

At Prime Minister's Questions yesterday, Ed Miliband accused David Cameron of breaking his promises to low-paid workers and families receiving child benefit. Mr Cameron denied the charge and defended plans to withdraw child benefit from families with at least one earner paying the 40p rate of income tax. "We have to make savings, so not giving child benefit to the wealthiest 15 per cent of families in our country – of course it is a difficult decision," he said.