Bungling Labour backtracks on manifesto vow to equalise minimum wage for under-21s after youth jobs crunch

John Healey is poised to water down Labour 's vow to equalise the minimum wage for under-21s. The Chancellor is expected to announce a 3.9 per cent rise in the minimum wage when he delivers the Budget tomorrow. That would take the national living wage level from £12.71 to £13.20. However, Mr Healey will reportedly not announce a bigger hike to the minimum for workers aged 18 to 20 - abandoning the trend since 2024. The move is being seen as backtracking on Labour's manifesto, which promised to end 'discrimination' in minimum wage rates, although it did not give a fixed timetable.

Businesses have raised alarm that the boosts have made it harder for them to employ young people. The Government has also heaped pain by increasing national insurance contributions. The apparent shift comes opens another fault line in Labour on the eve of the Budget. Angela Rayner previously talked up the need to keep the pledge. A bitter row over Andy Burnham reigniting the Brexit wars is also threatening to derail the PM's attempt to focus on minor cost of living measures.

Analysts believe Mr Healey will reduce the headroom against the Government's fiscal rules and pocket a 'stealth' tax rise from higher inflation, as he struggles to weather the impact of the MIddle East crisis and fund Mr Burnham's spending policies. A raid on banks could also help underwrite energy bills help for benefits claimants, while a planned rise in fuel duty is likely to be ditched to ease the pressure on motorists. John Healey, pictured out running this morning, is expected to announce a 3.9 per cent rise in the minimum wage when he delivers the Budget tomorrow Mr Healey preparing his Budget in the flat above No10, where he lives Almost a million young people are now classed as 'NEET' - not in employment, education or training.

Currently those aged between 18 and 21 are entitled to a minimum hourly rate of £10.85. For 16 to 17-year-olds the rate is £8. The separate living wage in London is £14.80. The 2024 Labour manifesto promised to 'remove the discriminatory age bands, so all adults are entitled to the same minimum wage, delivering a pay rise to hundreds of thousands of workers across the UK'. Asked in June about the commitment to equalise minimum wage rates, Ms Rayner - a backbench MP at the time - said: 'If you challenge me - where did it all go wrong - I think it's where we've deviated away from our promises to the electorate. 'We made promises, we were elected on that mandate.

I think we should work with the Low Pay Commission to deliver that.' Mr Healey admitted in an interview last week that there was a 'trade-off between the level of the minimum wage and the employment rate' and he was 'acutely conscious' of the impact on young people's prospects. Kate Nicholls, the chair of UKHospitality, told the Times: 'Stepping off the accelerator on the national minimum wage for young people is welcome. 'We warned the government that moving too quickly on equalisation would damage job opportunities at entry level.'

Ms Nicholls said hospitality still faces a 'double whammy' from the minimum wage and national insurance rises. The Chancellor and Andy Burnham chatting about the Budget in No11 yesterday Business Secretary Jonathan Reynolds has been left awkwardly defending a package of measures to ease the cost of living briefed overnight. The Treasury said it would try to cut taxes for those who drive for work and slash tariffs on some foods. But in a round of broadcast interviews, Mr Raynolds conceded the weekly shop will be just 40p a week cheaper under plans to remove import levies on foods such as baked beans, gherkins and chocolate.

In contrast, the Joseph Rowntree Foundation has warned that families will be up to £770 a year worse off by the end of this Parliament. The changes – described as 'everyday fixes' – are part of Mr Burnham's bid to give people 'breathing space', including axeing the 5 per cent VAT on electricity bills. Parental pay will be extended to a further 150,000 fathers or partners. That includes the self-employed who were not previously eligible – they will now receive two weeks of support worth nearly £400.

Support will also be given to farmers facing higher fertiliser bills and households that rely on kerosene heating oil. Other interventions include attempts to help those who drive for work by not increasing taxes on the mileage-free rate. The Treasury said it would maintain the tax-free rate at 55p per mile for the first 10,000 miles and increase the rate above this from 25p to 35p per mile. Unpaid carers will no longer lose their entire allowance for earning a penny over the earnings limit.

But Shadow Chancellor Andrew Griffith said: 'Rampant borrowing, soaring taxes and an utter inability to cut spending mean inflation has already wiped out the benefits of Burnham's ''everyday fixes''.'