MINISTERS could U-turn on scrapping youth minimum wage rates today after a think tank claimed Labour’s manifesto pledge could price out young people from entry-level jobs.

Chancellor Rachel Reeves announced plans to scrap the lower, discriminatory under-21 rates in last year’s Budget.

The move was supported by the TUC, who said it was “simply unfair” that hard-up young workers can be paid less for the doing the same job as those older than them, calling for a national jobs guarantee for young people to build on the government’s Youth Guarantee.

But the government declined to confirm it would stick to its plans, following a Resolution Foundation report urging it to change course to stop young people being “priced out of entry into the labour market.”

A government spokesperson said: “By strengthening the national living and minimum wage for three million workers across all age bands, we aim to support business growth through reduced staff turnover and by helping to achieve higher productivity.”

Research by the think tank said the number of young people not in employment, education or training (Neet) was on track to hit one million for the first time since the financial crisis.

Some 940,000 young people are now classed as Neet, the figure having risen by 195,000 in the past two years.

Much of that increase has been driven by sickness and disability, which has doubled over the past 20 years and now accounts for more than one in four Neets.

But unemployment remains the single biggest factor, affecting 47 per cent of men and 32 per cent of women in the category.

As well as halting efforts to equalise the minimum wage, the Resolution Foundation called for changes to the work capability assessment to help young people get back into work, and a national “front door” to help them “re-engage with education and training.”

National Education Union general secretary Daniel Kebede said: “It is unacceptable that so many people are being left behind at such a formative time in their lives.  

“Unmet special educational needs and disabilities and absurd waiting times for mental health support are contributing to young people struggling to stay in school and to progress into further study and work.

“The government needs to invest in an inclusive education system which enables all young people to thrive. It must also invest in diverse, accessible and enjoyable routes to meaningful work, and make sure every young person has all they need to succeed.”

The Resolution Foundation warned that young people who are Neet are “increasingly detached” from the workplace, with six in 10 having never worked, compared with 42 per cent in 2005.

Senior economist at the think tank Louise Murphy said: “The government should redouble efforts to reduce the number of Neets by making it easier for young people to return to education if they drop out, or to get their first experience of work.

“Otherwise, we risk a cohort of young people slipping through the cracks into a lifetime of lower living standards.”

The think tank’s research also shows that, despite common perceptions, almost half of all Neets do not engage with the benefits system at all.

And while some have warned that AI has depressed the graduate labour market, it is those with low qualifications who are much more likely to be Neet.

A government spokesperson said: “Every young person should have the chance to thrive. That’s why we’ve put in place the September guarantee, requiring local authorities to ensure all 16 and 17-year-olds receive an offer of a suitable place in education or training by the end of September each year.

“As part of our youth guarantee, we’re also testing innovative new approaches through our trailblazer programmes, which have just received funding for another year.

“This will ensure that every young person has the opportunity to earn or learn, so no one is left behind under our plan for change.”

National Union of Students president Amira Campbell said: “We should all receive fair pay from our employers, and that should take the form of an equal minimum wage.

“But with the current age-based minimum wages, and the even lower apprentice wage, young people are working longer hours than we should need to because we’re not paid as much as our older co-workers.

“Quite simply, there is no youth discount on rent, food, or bills. We know that students and apprentices are struggling with the rising cost of living, and the Government must maintain its manifesto pledge to scrap age-based minimum wages.”

A spokeswoman for Momentum said: “At last year’s Budget, Labour pledged to scrap ‘discriminatory’ minimum wage rates for young workers.

“The Chancellor must stick to her word and equalise wages to ensure fair pay across the board.”