Britain's minimum wage will rise, but 18-to-20 year-olds will receive a smaller increase than in previous years, the BBC understands ahead of the Budget announcement by Chancellor John Healey.
The National Minimum Wage for 18-to-20 year-olds is likely to rise by 3.9% from £10.85 an hour to around £11.27, according to The Times. The National Living Wage for workers aged 21 and over will also rise by 3.9%, from £12.71 to £13.20.
The smaller rise for younger workers marks a departure from Labour's approach since returning to power in 2024, when the government increased the 18-to-20 rate by 26% in total. The Labour government had pledged to remove "discriminatory age bands" and provide all adults with the same minimum wage.
Business Secretary Jonathan Reynolds told the BBC that the manifesto pledge on equalisation "still applies but we were always clear it could happen over time." He cited the need to balance good wages with the pressures on the labour market.
The union Unison challenged the decision. General secretary Andrea Egan said it was "deeply unfair" to maintain different pay rates. "Twenty year-old care workers, teaching assistants and security guards do the same work as their older colleagues," she said. "They must be paid equally."
The Budget also includes cost-of-living measures. The government will remove import tariffs on 100 food items, estimated to save households up to £21 per year or 40p weekly when combined with tariff suspensions introduced in June. Reynolds told the BBC the changes would save around £500 million annually.
Additional announcements include making permanent a 55p per mile tax-free mileage rate for those driving up to 10,000 miles for work, with rates rising to 35p above that threshold. Carers will be able to earn more without losing their entire allowance, though this change will not take effect until 2030. Self-employed fathers will receive two weeks of paternity pay, and the government will roll out additional Post Office drop boxes.
Fuel duty will freeze again, with the existing 5p discount continuing. That discount began in 2022 as a temporary 12-month measure but has been extended repeatedly.
Healey acknowledged the modest scale of the measures. "None of this is going to change the world," he told the BBC's Newscast. "But if it helps around the margins and its action the government can take, then I want to try and fix it."
The Conservatives criticised the package as insufficient. Shadow chancellor Andrew Griffith said the announcements amounted to "cheaper gherkins" while families faced higher costs from Labour's tax rises.