Armed forces will be exempt from the minimum wage after Whitehall row

The armed forces are to be excluded from the minimum wage, Ian McCartney, the industry minister, announced yesterday.

The move represented a defeat for the Department of Trade and Industry in the face of demands from the Ministry of Defence that soldiers, sailors and airmen should be treated as exceptional cases.

As The Independent reported last December, the DTI put up a strong resistance to the claims. It feared that if the forces were allowed to opt out then other groups would demand similar treatment.

Three weeks ago the President of the Board of Trade, Margaret Beckett, wrote to John Redwood, the Tories' industry spokesman, to confirm that the Bill would cover "all workers in the UK above compulsory school age". But yesterday, Mr McCartney told the standing committee on the National Minimum Wage Bill that he expected to announce details of the exemption soon.

MoD officials said that it would be hard to allocate an hourly minimum to those in the forces because they were paid a daily rate 365 days a year, reflecting the fact that they were always available for duty. Similar exemptions already existed in the United States and some other European countries.

A spokesman for the DTI confirmed that the Government had put down an amendment to the Bill because of the "unique circumstances" of serving personnel.

The Government withdrew a clause on serving personnel from the committee stage discussions of the Bill so that MPs could have more time to debate it later, a government spokesman said.

Mr Redwood said that the announcement represented a victory for new Labour over old Labour. "Why is a Tommy not worth the minimum wage?" he asked. "Mrs Beckett has been humiliated by the Secretary of State for Defence. She did not wish to exempt our troops but she's been forced to do so.

"This will not be the last retreat she is going to make over this dangerous terrain," he added.

Diane Abbott, the Labour MP for Hackney North and Stoke Newington, described the development as "worrying." "Once you allow an exemption you are opening the door to a flood of others," she said.

David Chidgey, Liberal Democrat trade spokesman, said: "We need to consider the armed forces as a separate issue but the fact that the Government is coming to the committee at a late stage to put forward a retimetabling shows that they have not thought this through in advance."