Rachel Reeves is quietly making a minimum wage U-turn: report
Chancellor Rachel Reeves is preparing to soften one of Labour’s key election pledges on wages as the government grapples with concerns over youth unemployment and hiring costs.
The Financial Times reported on Monday (2 March) that Reeves plans to water down the party’s manifesto commitment to establish a single minimum wage rate for all workers aged 18 and over.
Instead of accelerating the alignment of pay rates for younger workers with the National Living Wage (currently applicable to those 21+), the chancellor is expected to instruct the independent Low Pay Commission (LPC) that full equalisation does not need to occur until the 2030s.
This move would represent a significant shift from Labour’s pre-election promise to scrap what it called “discriminatory” age bands in the minimum wage system within five years, ensuring 18- to 20-year-olds receive the same hourly rate as older adults.
The government’s manifesto positioned the policy as a way to deliver fair pay and end age-based discrimination.
Progress has already been made: In April 2025, the rate for 18- to 20-year-olds jumped 16.3% to £10 per hour, and further increases are set for April 2026, with the youth rate rising 8.5% to £10.85 while the NLW for 21+ climbs 4.1% to £12.71.
However, recent economic pressures appear to be prompting a rethink. Youth unemployment has risen sharply, with the jobless rate for 16- to 24-year-olds reaching 16.1% in late 2025, the highest since early 2015, amid warnings from think tanks like the Resolution Foundation that rapid wage hikes could exacerbate hiring reluctance among employers already hit by higher National Insurance contributions and other employment reforms.
Business groups have voiced concerns that combined cost pressures make younger, less experienced workers more expensive to employ, potentially fueling a ‘jobless generation’.
The FT cited people familiar with the matter saying Reeves intends to adjust the LPC’s remit accordingly, slowing the convergence process without fully abandoning the long-term goal.
The report comes as Reeves prepares for a low-key Spring Statement, aimed at projecting economic stability after last year’s major tax-raising Budget.
Prime Minister Keir Starmer has previously insisted the government would honor its commitments to young workers, including the upcoming April increase, though he avoided firm timelines for full equalisation.
Earlier this year, Reeves dodged direct questions on potential delays, while other ministers maintained the policy has not changed. Unions have warned against any U-turn, arguing it would undermine efforts to make low pay a thing of the past.
