Studies have suggested that it is less economical to have one, standard minimum wage rate for the whole of the UK.

Proposed changes could see higher rates than the current £5.35 an hour paid in London and the South East, but lower rates in other places such as the North East and Northern Ireland, the Telegraph reported.

The controversial suggestion was put forward by the Economic Research Council (ERC) which published its opinions in its Britain & Overseas digest (pages 9-27).

In the US and Switzerland, local authorities are in charge of setting the minimum ages, benefits and public sector workers' salaries.