George Osborne has used the first Tory-only Budget for nearly 20 years to introduce a "living wage", dramatically declaring that "Britain deserves a pay rise".
Hailing a new "higher wage, lower tax, lower welfare" Britain, the Chancellor said from next April everyone over 25 would be entitled to £7.20 an hour - and the figure would rise to £9 by 2020.
Some six million people will see their pay increase as a result - and those currently earning the minimum wage of £6.50 an hour will be £5,000 better off by 2020, he claimed.
Mr Osborne said he was following the Conservative tradition as the party that brought in protections for mill workers during the industrial revolution.
"Taken together with all the welfare savings and the tax cuts in this Budget, it means that a typical family where someone is working full-time on the minimum wage will be better off," Mr Osborne told MPs.
But acting Labour leader Harriet Harman responded by claiming the Budget was "making working people worse off" by cutting tax credits for the low paid and grants for students from poorer backgrounds.