Chancellor Gives No Date for Equal Youth Minimum Wage

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Labour's pledge to equalise the youth minimum wage with the adult rate still has no date. The chancellor would not commit to a date for lifting the youth minimum wage to the adult level.

A promise without a timetable

Labour's 2024 manifesto committed to closing the pay gap for 18- to 20-year-olds. Appearing on the BBC's Sunday with Laura Kuenssberg, chancellor John Healey said the government remained committed to the rise. He did not say when it would arrive.

The Guardian reports that Labour looks less likely to deliver the pledge before the next election. The manifesto set that timeframe.

He said he would move one step at a time. Fears that a rise could worsen youth unemployment are part of the backdrop.

Budget rates and the missing gap

The budget lifted the adult minimum wage to £13.21 an hour and the rate for under-21s to £11.27. Both rose by the same blanket 3.9%.

Closing the gap would have needed a bigger rise for younger workers than for adults. Healey said he wanted to take the increase at a slower pace for them.

Healey's case for patience

Healey denied that Labour would break its commitment. "There's no question about whether or if. It's a question of when," he said. He added that it was also a question of how fast.

He pointed to the trade-off between jobs and wages. He said he wanted to take business and trade unions with the government, and he called the situation of a million young people without prospects of work "a moral shame on this nation".

Healey recalled that he had legislated for the national minimum wage as a new MP when it was first introduced in 1998. Some senior MPs have pressed on the pace. Angela Rayner, while she was out of government, warned in June that the government must deliver on the promise.

Spending plans in the same interview

Healey also said he was prepared to keep the spending cuts planned in the last spending review before the next election. Some of them exceed 2% year on year. The Institute for Fiscal Studies and other thinktanks have criticised the deficit plans as resting on unpopular cuts that may not be enacted at a crucial electoral moment.

The chief secretary to the Treasury, Emma Reynolds, said on GB News that the government would not make blunt cuts to welfare. Proposals are due in the new year, followed by legislation to bring the welfare bill down.

Our view

For employers, the open question is the size and timing of any future jump for 18- to 20-year-olds. Healey framed the issue as "when" and "how fast", and the spending review next year is where his government will have to set out its choices. Until then, businesses have a commitment but no schedule.

Source: The Guardian