More than a million people will benefit from an imminent rise in the national minimum wage, the Prime Minister told the House of Commons yesterday.

It was announced the rate would go up to £4.85 by October 2004, with the youth rate rising to £4.10 on the recommendation of the Low Pay Commission.

But both sides of industry attacked the announcement, with business groups warning it could lead to job losses and unions complaining the new figures were still "well below" a living wage.

John Edmonds, general secretary of the GMB said: "I am disappointed the Government has chosen to keep the minimum wage at a level that is well below a living wage."

However, Ruth Lea, head of policy at the Institute of Directors said the new rates were "unwise", given the economic difficulties being faced by business.

She said: "Many businesses will find it increasingly uneconomic to take on marginal employees at these rates.

"This will undoubtedly jeopardise employment for the low skilled."

David Frost, director general of the British Chambers of Commerce, said: "We are concerned this cost, as well as increasing National Insurance contributions, will tip businesses over the edge."

Thursday March 20 2003