Comment: Minimum wage rise is all very well, but where's the plan for growth?

Sixty-one pence doesn't sound much, but it is well above the rate of inflation, and will no doubt be welcomed by many families struggling with the cost of living.

The problem is, though, that like so much else of what the Government does, it is about getting someone else to fund its commitments.

Many businesses are still suffering from the fall-out of last year's rise in National Insurance. It is estimated to have cost an extra £5 billion to the retail sector alone, adding an extra 10 per cent to the cost of employing staff. This figure rises to 13 per cent for part-time staff, who will no doubt be the most vulnerable when it comes to redundancies. Analysts have forecast that the tax hike will result in the loss of 55,000 jobs.

Against this backdrop, is it really a wise idea to increase still further the cost of employing staff? At the moment, the employment market is relatively stable, but the past few years have shown how quickly this can change, particularly when at the mercy of global events. A rise in the minimum wage will bring little comfort to those who lose their jobs.

The other problem with a hike in the minimum wage, is that it will inevitably be passed on to consumers in the former of higher prices in the shops. As any economist will tell you, there is no such thing as a free lunch. 

Little more than a year ago, Labour was elected on a promise of meeting its funding commitments through increased growth, removing red tape and making it easier for entrepreneurs to do business. Fine words, but so far we have seen very little evidence a serious strategy to make good on that promise.

A rise in the minimum wage may benefit some people struggling to make ends meet, and that is to be welcomed. But we now need to see a long-term strategy for economic growth, to make us all better off.