The Federation of Small Businesses (FSB) has praised the government for ensuring rises in the minimum wage were in line with inflation.

Past increases had caused problems for small businesses as above-inflation rises threatened profits, particularly in areas such as hotels, leisure and catering.

The minimum wage has risen from £5.52 per hour to £5.73 per hour for those aged 22 and over.

According to the federation, overall the national minimum wage has helped improve conditions for small businesses by 'levelling the playing field' between fair and 'illegitimate employers'.

FSB employment chairman Alan Tyrrell says: 'A sensibly set National Minimum Wage is in the interests of both employers and employees.'

He also suggests that to improve conditions for the poorest people, the government should consider increasing the earnings threshold for income tax.

The minimum wage was introduced when Labour came into power in the late 1990s. When it was first introduced in 1999 the minimum wage was £3.60.