By Daniel Hunter

The Labour party will raise national minimum wage to £8 by 2020 if it comes to power at the next general election.

Labour leader Ed Miliband announced the plans in an interview on the BBC's The Andrew Marr Show ahead of the party's annual conference got in Manchester.

Mr Miliband said it was "not good enough" than one in five people in Britain were on low pay.

John Allan, National Chairman, Federation of Small Businesses, said: “The FSB has always supported the National Minimum Wage but we are increasingly concerned that it’s becoming a political football. Giving businesses a longer term view of what the minimum wage will look like in future years is an idea we support, but the decision on what the rate is should be made only after consultation with the Low Pay Commission (LPC). This proposal does the opposite.

“Our concern is that setting rates according to political need means that the impact of rises on employment, inflation and growth will not be fully explored. Sectors such as retail and social care are run on very fine margins, and will struggle with substantial increases to the minimum wage rate that fail to take wider economic conditions into account.

“The FSB therefore believes the rate should continue to be based on an independent LPC’s recommendations, and that future rates should be determined following careful consultation with the Office for Budget Responsibility, business groups and workers representatives to ensure the decision takes into account the full economic picture.”

Katja Hall, CBI Deputy Director-General, said:

"The minimum wage is set at the highest rate it can be without putting job creation at risk at the moment. It has risen more than average earnings throughout the recession and recovery and is set to increase by more than 3% from October.

"The Low Pay Commission is one of the biggest success stories of the last Labour Government and makes its judgements based on considerable independent expertise. The LPC is not for politicians to play politics with.

"The national minimum wage has enjoyed broad business support and a move to a politicised US-style system is not in the interest of companies or workers.

"Raising wages in this way would put serious strain on businesses, particularly hard-pressed smaller firms with tight margins, which would end up employing fewer people. Instead, politicians should address how people move on in their careers, through training and better skills, helping them move to higher paying roles over time."

Would you like to see minimum wage rise? Or would £8 be too much for your business to handle? You can email your reactions to editor@freshbusinessthinking.com

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