The current minimum wage for adults is £4.85 an hour

Prime Minister Tony Blair has unveiled an increase in the national minimum wage, a move which could benefit 1.4 million people around the UK.

The news has met with mixed reaction from business and unions.

What is the minimum wage?

The minimum wage guarantees an hourly rate of pay for workers.

At present, full and part-time workers over the age of 22 must be paid at least £4.85 an hour by their employers.

From October, this rate will increase to £5.05 an hour. It will then rise to £5.35 in 2006.

An employee working a 40-hour week should be paid at least £194, before tax. This is less than half the national average wage.

The same worker should be paid at least £214 for a 40-hour week in 2006.

Workers aged 18 to 21 must be paid £4.10 an hour, what is known as the development rate. The development rate will rise to £4.25 in October.

Workers who are over 22 but are receiving accredited training can also receive the development rate for the first six months of employment.

Last October, workers aged 16 and 17 were granted the right to a minimum wage. The wage for 16 and 17-year-olds was set at £3 an hour.

Are there any workers not covered by the minimum wage rules?

Yes, apprentices below the age of 18 are not covered.

The number of apprenticeships has steadily fallen over the past few decades, reflecting a wider decline in manufacturing.

It is believed that requiring employers willing to take on apprentices to pay a minimum wage would kill off apprenticeships for good.

It has also been argued that the skills apprentices are taught equip them to be able to earn far more than the minimum wage in the long run.

Employers who provide accommodation for their workers may offset £26.41 a week against the minimum wage.

Why is the minimum wage level being raised now?

With an election looming, some commentators have suggested that the government is raising the wage to consolidate its core support.

The move could remind supporters, perhaps still feeling disillusioned by the Iraq war, why they voted Labour in the first place.

The government has regularly raised the level of the minimum wage since its introduction in 1999.

In 1999, the minimum wage was £3.60 an hour. This latest increase means that by October this year it will have gone up by nearly 40% in six years.

In effect, the minimum wage has been rising at a faster rate than inflation and average wages.

The government sees raising the minimum wage along with the tax credit system - which effectively tops up the wages of low earners - as key to closing the gap between rich and poor.

What do the unions think of the minimum wage increase?

The TUC has given the increase a warm welcome.

But the increase is far below what the TUC has been calling for.

The union body has called for the minimum wage to go up to £5.35 an hour this year as a prelude to an increase to £6 an hour in 2006.

At a rate of £6 an hour, an employee working a 40-hour week would be paid £240 a week, before tax.

The TUC has said that UK business can afford to pay what it has termed a fair wage.

What do the employers think about £6 an hour?

They are not keen.

When the TUC first mooted £6 an hour, the British Chamber of Commerce (BCC) described the proposal as "totally irresponsible".

They have called inflation-busting increases to the minimum wage as an "unmanageable cost" for business.

Did the employers oppose the introduction of the minimum wage?

Yes, they did.

Prior to its introduction, employer bodies warned that the minimum wage could cost hundreds of thousands of jobs.

However, the Low Pay Commission, which was set up to monitor the impact of the minimum wage and advise the government on future increases, has said that it has not cost jobs.