George Osborne cautious over 50p minimum wage increase

His comments came amid reports that some Cabinet ministers including Business Secretary Vince Cable and Work and Pensions Secretary Iain Duncan Smith are pressing for an above-inflation rise of 50p or more.

Mr Osborne said he too wanted to see low-paid workers' earnings rising from the £6.31 hourly minimum wage. But he said it should be left to the Low Pay Commission to set the appropriate level.

His comments came during a visit to a garage in Enfield, north London, to highlight the forthcoming introduction of the new Employment Allowance, which will allow businesses to claim the first £2,000 a year back off their National Insurance bill.

Mr Osborne said the move, announced in the 2013 Budget and due to take effect on 6 April, would mean companies could "hire more people, invest more, do all the things we need to see as part of our long-term plan for Britain to increase jobs and bring economic prosperity to this country".

But Mr Osborne downplayed the prospect of the government over-ruling the Low Pay Commission if it fails to call for a "significant" rise to the minimum wage when it reports next month.

Mr Osborne said: "I think everyone wants to see an increase in the minimum wage. I would like to see an increase in the minimum wage. But it has to be done in a way that doesn't cost jobs, because that would be self-defeating.

"We have a Low Pay Commission as a body that exists to make exactly that judgment. What we have got to do as a country is get the balance right between supporting business, growing our economy and making sure it is a recovery for all, and that is what our long-term plan is all about delivering."