Britain can afford an above-inflation increase in the national minimum wage, Chancellor George Osborne has said.
Mr Osborne indicated that he was ready to contemplate a rise in the £6.31-an-hour minimum wage to £7.
His comments came shortly after the Department for Business made its submission to the Low Pay Commission, which will shortly produce its recommendations on the rise.
Mr Osborne told the BBC: "I think Britain can afford a higher minimum wage. I think we have worked hard to get to this point and we can start to to enjoy the fruits of all that hard work."
Mr Osborne told the BBC: "Because we are fixing the economy, because we are working through our plan I believe Britain can afford an above-inflation increase in the minimum wage so we restore its real value for people and we make sure we have a recovery for all and that work always pays.
"The exact figure has to be set by the Low Pay Commission, which talks to business, talks to other bodies in our economy.
"But, if for example, the minimum wage had kept price with inflation it would be £7 by 2015/16. It's £6.31 at the moment, so, that's an increase.
"I think we can see an above-inflation increase in the minimum wage and do it in a way that actually supports our economy precisely because the economy is recovering and many, many jobs are being created.
"Of course we have got to make the exact calculation of what the rate should be. That's for the Low Pay Commission, created by a Labour government, supported by this Government, to make the independent decision on the number itself.
"But, when I look at the British economy I see the British economy expanding, I see jobs being created, I see the prospect of future jobs being created as well and I think Britain can afford a higher minimum wage."
The Chancellor's comments came just days after he warned against a "self-defeating" increase in the minimum wage rate to a level that would cost jobs.
The indepedent Low Pay Commission, which includes representatives of business, unions and academia, is due to make its recommendations on the level of the minimum wage and its potential impact on jobs in February. Any upgrade would be expected to take effect in the autumn.
In a signal that ministers were hoping for a generous increase, Business Secretary Vince Cable asked the LPC last September to carry out an additional assessment of the economic conditions that would allow for faster increases without an adverse effect on jobs.
Submitting his final analysis, Mr Cable left little doubt that he believes an above-inflation rise is possible, saying that the benefits of recovery should be "shared fairly".
Mr Cable said: "The national minimum wage is designed to strike a balance between protecting the low paid and making sure they can find work. But as the economy starts to recover, the benefits of growth must be shared fairly.
"This is why last September I asked the independent Low Pay Commission what economic conditions would be needed to allow for significant rises in the national minimum wage without damage to employment.
"I am keen to use their expertise to understand what economic conditions would be needed to allow for rises in the wages of the low paid."
Any above-inflation rise in the main rate for adults would be likely to be reflected in the £5.03-an-hour rate for 18-20 year-olds and £3.72 for under 18s.