Brown gets last say on minimum wage

The national minimum wage may not be introduced until 1999 in order to give employers time to adjust their pay rates, according to Whitehall sources.

It is also expected that there will be two minima - one for adults and a "training rate" for 16 and 17-year-olds to encourage companies to take on school-leavers.

The 15-strong Low Pay Commission, which will be announced tomorrow in the Queen's Speech, will advise on the rate, but the final decision will lie with Gordon Brown, Chancellor of the Exchequer.

If the Chancellor believes the rate is too high he could ignore it, delay its introduction or phase in the new minimum as the previous administration did with the recommendations of the pay review bodies.

While unions have called for a rate struck at half male median earnings - currently calculated at pounds 4.42 - the commission is unlikely to stick to any particular formula. In fact, the minimum is more likely to be in the region of pounds 3 to pounds 3.50 at current prices and be introduced next May at the very earliest.

Ian McCartney, trade and industry minister, said yesterday that the commission would have a wide range of functions, but it is known that the Government has set its face against any suggestion that it could form the basis for a resurrected National Economic Development Council, a tripartite body which advised successive governments in the 1970s on the economy.

Addressing the conference of the General Federation of Trade Unions in Bournemouth, Mr McCartney said the commission would be set up "very quickly" as part of the Government's plans to narrow the poverty gap.

Mr McCartney told the federation, an organisation for small unions, that the aim of the commission would be to restore a "fair balance" to the world of work.

The commission, made up of employers' and workers' representatives, would recommend the initial level of the minimum wage, but would also review its impact and monitor implementation and enforcement.

He said: "The commission will have a key role to play in ensuring that the minimum wage takes effect smoothly and successfully in all parts of the economy." He said a minimum wage would reduce staff turnover and absenteeism, improve productivity and create jobs.

As part of the debate on the Queen's Speech, Robin Cook, Foreign Secretary, is expected to confirm that unions will once more be recognised at the GCHQ spy network headquarters at Cheltenham. Senior management at the centre is urging Mr Cook to impose a "no-strike" deal on unions as part of the arrangement.

The Government Communications Staff Federation, an association formed in the absence of orthodox unions, is expected to merge with the PTC civil service union.

Legislation to ensure that small business is compensated for the late settlement of bills, with interest charges being levied on late-payers, is also to be included in the Queen's Speech. However, details of the plan will not be known until the Department of Trade and Industry has completed consultations on the penal action.