GEORGE Osborne's policy is not a "living wage", the think tank which helped to inspire the Chancellor's announcement has warned.
The Resolution Foundation said the label National Living Wage was a "misnomer".
Mr Osborne was cheered by Tory MPs when he announced the new compulsory Living Wage during Wednesday's Budget.
But Conor D'Arcy, policy analyst at the Resolution Foundation, said the label did not reflect the reality.
"The new 'National Living Wage' is a welcome policy with a somewhat misleading title," he said.
"It has legal clout - which the voluntary Living Wage doesn't - but it also fails to reflect how much families need to earn to have a decent standard of living."
The proposed NLW is "in fact a minimum wage "premium" for those aged 25 and over," his organisation said in a briefing.
That definition is confirmed in papers released by the Treasury, it added.
Mr D'Arcy also warned: "The new minimum wage premium cannot tackle Britain's low pay problem alone.
"Almost a quarter of workers on the minimum wage fail to progress beyond it within five years and this could rise if the National Living Wage becomes the 'going rate' in many sectors."
As he announced the policy, the Chancellor said that NLW would ensure low paid workers received at least 60 per cent of average earnings by 2020.
That figure was the minimum pay level recommended by the chair of the Low Pay Commission Sir George Bain in a report to the Resolution Foundation.
First Minister Nicola Sturgeon was among those who protested at the Chancellor's choice of the term "Living Wage".
The voluntary Living Wage currently paid by many employers is £7.85 an hour.
But when Mr Osborne's new National Living Wage begins next April it will pay £7.20 an hour.
The rate will still be substantially higher than the minimum wage.
There were also fears staff could actually receive a pay cut as a result of the policy.
Treasury sources said that it was up to "Living Wage" employers if they slashed their rates and paid the lower NLW instead.
Mr Osborne also hit back at criticism of the Budget from the economic think tank the Institute for Fiscal Studies (IFS).
He told breakfast television that workers would be better off because of the living wage.
The IFS said the first purely Conservative Budget for almost 20 years takes more from the poor than the rich.
The organisation said that low-paid workers would also be worse off as a result of the measures with cuts to tax credits and other benefits outweighing salary boosts from the new national living wage.
Meanwhile, there was a row between business leader and the Business Secretary Sajid Javid after he said the Government wanted to "break the link" and stop foreign student staying on they graduate.
"We've got to break the link and make sure (policy is) focused on people who want to study and then, once they've had their studies and completed that, then they leave," he said.
The Institute for Directors described the move as "misguided".
The IoD said such a push would damage the education system, the economy, and Britain's global influence.
Seamus Nevin, from the IoD, said: "Shutting the door to highly-trained international graduates at a time when our economy needs them most would be hugely damaging for UK businesses."
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