The FT has reported that four of the largest providers of outsourced services to the public sector – Serco, Mitie, G4S and Interserve – have welcomed George Osborne’s plans to bring up the minimum wage to £7.20 per hour from April 2016.

All four companies have said that their long term public sector contracts include provision to adjust in the case of new government legislation.

A spokesperson from Serco said: “We welcome any measure that addresses basic pay within the UK and provides a consistent approach to pay levels across our industry.”

Many care homeowners, however, have claimed they have no such protection and currently employ around 40 per cent of their staff on the minimum wage.

Martin Green, CEO of Care England, commented: “We want to see employees in the care sector being better paid, but there is a big question over affordability… the increase in the minimum wage will lead to some business failures.”

He went on to add that smaller businesses would be hit particularly hard, while their larger equivalents may withdraw from areas where local authority funding becomes particularly tight.

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