Minimum wage to break £5 barrier

Pubs will be forced to pay workers a minimum of more than £5 an hour for the first time from this October.

Trade and industry secretary Patricia Hewitt has announced that the adult rate is to rise to £5.05 from October 1. A further rise to £5.35 is planned for October 2006.

The rate for 18 to 21 year olds is to rise to £4.25 in October 2005 and £4.45 in October 2006.

The rises are in line with the recommendation of the Low Pay Commission, and will take the minimum wage to almost 50 per cent above its 1999 introduction rate.

"Well over a million workers will receive a guaranteed pay rise by this October, rising to almost a million and a half people by October 2006," said Mrs Hewitt.

"The minimum wage has made a real difference to the lives of thousands of low paid workers - particularly women, who make up some 70 per cent of those benefitting. Year-on-year increases protect some of society's most vulnerable people from exploitative rates of pay."

Paul Baker, managing director of Lancashire brewer and pub operator Daniel Thwaite, said: "£5.05 isn't as bad as it could be, given some of the figures which were bandied about beforehand. On its own, it won't mean make or break for any of our pubs.

"What it is though, is another chunk of money that the government is taking out of the licensed trade. You have to look at it alongside the cost of complying with the licensing regime and other red tape costs. It all adds up."