Healey expected to lift minimum wage 3.9% to about £13.20, as youth-pay pledge appears to stall

The chancellor, John Healey, is expected to announce a rise of nearly 4% in the minimum wage in today’s Budget, according to reports. Younger workers would get no faster increase than older ones.

The National Living Wage, which applies to workers aged 21 and over, is set to rise by 3.9%, from £12.71 to around £13.20 an hour, The Times reported. The Independent and City AM have reported the same figures. The National Minimum Wage for 18 to 20-year-olds would rise broadly in line, from £10.85 to about £11.27.

None of these figures had been confirmed when this article was published. The Treasury declined to comment on what City AM described as “speculation”.

What it would mean for the youth-pay pledge

Labour’s manifesto promised to end what it called a “discriminatory” minimum wage for younger workers, City AM reported. If the figures are confirmed, the rises would mark the end of younger employees receiving larger percentage increases than older ones, the Independent said. According to the BBC’s review of Tuesday’s papers, The Times says this in effect spells the end of the pledge.

The government has not said it is dropping the commitment. In its remit to the Low Pay Commission (LPC), published on 16 March, it said it “remains committed to removing the discriminatory age bands for adults”. But the same document gave the LPC “full flexibility to determine the pace and ultimate timing of that alignment, with priority being given to the employment prospects of younger workers”.

The LPC, which advises the government on rates, was asked to give its advice by the end of October 2026, for new rates taking effect on 1 April 2027. In April it estimated that the National Living Wage would probably need to rise by around 3.7%, to £13.18, to keep pace with expected pay growth, the Independent reported.

Jobs worries

The reported decision comes amid concern about young people’s job prospects. City AM reported that unemployment among 16 to 24-year-olds has passed 16% for the first time in more than a decade, and that the overall rate is 4.7%.

Some analysts and employers have pointed to the youth rate as a cause of rising youth unemployment, the Independent said. Kate Nicholls, chair of UKHospitality, said full equalisation “would damage job opportunities at entry level”, according to City AM, as she welcomed the reported decision.

Alan Milburn’s review of youth joblessness is due to be completed next month, City AM reported.

Cabinet tensions

Separately, the i Paper reports that the home secretary, Shabana Mahmood, is angry with the prime minister, Andy Burnham, because cabinet ministers were not warned before he called for a debate on a return to freedom of movement with the EU. That account comes from an unnamed government source and has not been verified by RealTeaNews. Neither Ms Mahmood nor No 10 has commented on it publicly in any source we reviewed.

Also expected

Among other Budget measures reported in Tuesday’s papers, The Guardian says the chancellor will scrap the “cliff-edge” earnings rule for carer’s allowance and replace it with a taper. Under the reported change, £1 would be removed for every £1 earned above the limit. This too is unconfirmed.

Mr Healey is due to deliver the Budget today, Wednesday 28 October, at about 12:30 UK time. RealTeaNews will report the confirmed figures once he has spoken.