The minimum wage will rise by 3.8% in October taking the adult rate from £5.52 to £5.73 an hour, the government has announced.

The rise is in line with the increase in average earnings but below the retail price index of inflation.

The Federation of Small Businesses and the British Chambers of Commerce both welcomed the modest rise but Britain's biggest union Unite accused the government of allowing the gap between rich and poor to grow.

The minimum wage has risen by 59% since it was first introduced in April 1999.