The report also recommends that the LPC publish a minimum wage rate for London Reuters

Britain's government should undertake a major reform of the minimum wage to help tackle the "pervasive problem of low pay", one of the policy's key architects has argued.

Professor Sir George Bain, the founding chairman of the Low Pay Commission (LPC), claimed that the cautious approach of the late 1990s was right for its time when the rate was introduced - but it is now too narrow.

Bain, who has authored a report for the thinktank the Resolution Foundation, argued that the LPC should be given tools to push employers to go beyond the minimum wage, in particular by publishing analysis that shows whether certain sectors could afford to pay more than the bottom rate.

The report also recommends that the LPC publish a minimum wage rate for London.

Bain said this would not be mandatory at first, but would inform debate about employers' responsibilities

"When I helped set the UK's first minimum wage in 1999, it felt like an embattled experiment," said Bain.

"Now the policy has the support of all parties and a powerful academic consensus shows it has raised wages without costing jobs.

"But it is time to admit that the policy we designed in the late 1990s was a child of its times.

"It is narrowly focused, short-sighted in the way it is set, and passive in what it expects of employers."

The comments come after the UK government agreed to hike the minimum wage to £6.50 per hour, up from its current rate of £6.31.

The increase, which represents an inflation-beating 3% jump, will be welcome news for low-paid workers across the country.

"The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take home pay since 2008," said Business Secretary Vince Cable.

"This will benefit over one million workers on national minimum wage and marks the start of a welcome new phase in minimum wage policy."

The change also means that the minimum wage for those aged between 18-20 years old will increase to £5.13 per hour, while those aged either 16 or 17 will take home £3.79.