Raising the minimum wage to equal the Living Wage would cost only 1.3 per cent of the national wage bill but would lift six million people out of poverty, a report published today by KPMG has found.

Marianne Fallon, the head of corporate affairs at KPMG, said: “We firmly believe that voluntary adoption of a Living Wage policy by employers, over time, is one of the tools that will help improve social mobility in the UK as well as directly addressing in-work poverty.”

KPMG calculated that the Government would also gain £1.5bn through higher tax revenues, but the Chancellor reacted coolly to the idea, telling the BBC’s Andrew Marr Show that the best way to boost earnings was “to reduce taxes on working people”.

Rohan Silva, a former senior policy adviser to David Cameron, said it was “ridiculous” that some firms claimed they could not afford to pay the Living Wage.

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