The Federation of Small Businesses (FSB) has welcomed the decision by HM Revenue & Customs to enforce the payment of the minimum wage.

According to the FSB, a majority of Britain's business community are facing unfair competition from a small minority who are illegally paying their staff a salary less than the benchmark rate.

However, despite its support for the measure, the FSB is concerned that any future above-inflation increases in the minimum wage could damage the competitiveness of Britain's business community.

"While we welcome any moves to eradicate unlawful and unfair competition, this must be done without unnecessarily disadvantaging the vast majority of law-abiding small businesses," said Alan Tyrrell, employment chairman for the FSB.

"Inflation-busting increases in the [minimum wage] are beginning to hit some small businesses hard," he added.

With over 200,000 members, the FSB is the UK's largest organisation representing the interests of SMEs.