Ed Miliband risks alienating business groups over minimum wage hike

Newly elected Labour leader Ed Miliband has caused consternation among business leaders, with his debut speech hinting at an increase in the minimum wage.

Miliband told the Labour Party conference in Manchester: “I believe in not just a minimum wage, but that the foundation of our economy in the future must be a living wage.”

Employers should “not be allowed to exploit migrant labour in order to undercut wages,” he added. He has indicated that the “living wage” should be in the region of £7 an hour.

Graeme Leach, director of policy and chief economist at the Institute of Directors, said: “Ed Miliband says that he wants Labour to be the ‘Party of enterprise and small business’. How are these sentiments reconcilable with a commitment to new employment regulations for agency workers and a large hike in the minimum wage? Both measures would hurt small and large businesses, not support them. It is early days, but we detect a drift away from New Labour’s efforts to talk up a pro-enterprise agenda.”

Richard Lambert, CBI director-general, admitted that “companies will worry about some of the issues he raised”, but he added that Miliband was “careful not to get into detail, so there will be time for debate”.

Meanwhile unions embraced Miliband’s speech and welcomed any potential increase.

Tony Woodley, joint general secretary of Unite, said: “At long last, we have a leader who understands that a sound economy depends on growth, not cuts, and that we need a living wage to help close the wealth gap.”

The minimum wage is set to rise tomorrow, and some new rules relating to age, accommodation and apprentices will be introduced.

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