Reeves sidesteps question about whether rise in youth rate of minimum wage will be delayed
Rachel Reeves, the chancellor, has recorded a pooled clip for broadcasters. Asked if the government was planning to delay equalising the youth rate for the minimum wage with the full adult rate, she did not directly answer – but she did not deny this was being considered.
She said:
We already have incentives to hire young people with the apprenticeship rate of the minimum wage, but also no national insurance contributions for the youngest workers.
But we do recognise there are challenges and that is why we’re extending the number of further education college places, extending the number of apprenticeship places to help young people get the skills and the experience that they need to move into work.
Key events
This is from Rupert Harrison, chief of staff to George Osborne when he was Tory chancellor, on Robert Jenrick’s commitment not to abolish the OBR (which Osborne established). See 10.34am.
Sensible and obvious first move from Robert Jenrick to de-risk Reform’s economic policy.
Will go some way to reassuring markets, but one test will be whether Farage, Tice and other spokespeople can hold this line given their previous statements about the OBR and the Bank.
Reeves sidesteps question about whether rise in youth rate of minimum wage will be delayed
Rachel Reeves, the chancellor, has recorded a pooled clip for broadcasters. Asked if the government was planning to delay equalising the youth rate for the minimum wage with the full adult rate, she did not directly answer – but she did not deny this was being considered.
She said:
We already have incentives to hire young people with the apprenticeship rate of the minimum wage, but also no national insurance contributions for the youngest workers.
But we do recognise there are challenges and that is why we’re extending the number of further education college places, extending the number of apprenticeship places to help young people get the skills and the experience that they need to move into work.
Jenrick to use first speech as Reform UK’s Treasury spokesperson to say party abandoning threat to abolish OBR
At the start of the year Nigel Farage, the Reform UK leader, said that he was seriously considering getting rid of the Office for Budget Responsibility. He said in an interview:
I have questioned the need for it. The question we have to ask ourselves is ‘is the OBR serving any useful purpose?’ We have to discuss whether we would be better off without the OBR. I am giving that very serious thought.
With the OBR I worry once again that we have a Blairite-style quango effectively dictating to elected politicians what they should or should not do. It seems that in too many areas of our public life the power has moved to judges and quangos and not the government the people choose.
Now the “serious thought” phase is over and Farage has dropped his threat to abolish the OBR. In his speech this morning, Robert Jenrick, Reform’s new Treasury spokesperson, will say the party wants to keep it, but reform it.
According to extracts briefed in advance, he will say:
Everything Reform promise will be fully costed. And because we’re confident about the approach we will take, we’re happy to have our homework marked.
The OBR is far from perfect. But the impetus for its creation was a desire to instill fiscal discipline, and that is something we wholeheartedly endorse.
Rather than abolish it, we will reform it. We will break up this cosy consensus and ensure it has diversity of opinion. And we’ll run competitions for superforecasters to join the body and pay competitive salaries to those who most accurately model the impact of Treasury decisions.
Jenrick will also commit to retaining the independence of the Bank of England.
Presumably both commitments were a condition for Jenrick taking the Treasury job. While abolishing the OBR and Bank of England independence are popular ideas with Liz Truss-type populist extremists, they are about the last ideas that you would want to be defending if you want the financial sector to take you seriously as a potential future chancellor.
According to the overnight preview, Jenrick will put “restoring stability and eliminating wasteful spending at the heart of Reform’s economic pitch”.
In terms of reforming the OBR, Jenrick will argue that it needs to take on “more outside, proven forecasting expertise”. He will call for more “diversity of opinion within the organisation” and criticise it for overstating the economic benefits of low-skilled immigration and underestimating the economic benefits of tax cuts.
US state department confirms it backs Chagos Islands deal – weeks after Trump said it was ‘act of great stupidity’
The US state department has confirmed that it still backs Britain’s deal with Mauritius handing over sovereignty of the Chagos Islands, in return for an agreement allowing the UK and the US to carry on using the Diego Garcia airbase for at least another 99 years. Last month Donald Trump described the deal, which he had previously backed, as “an act of great stupidity”. But yesterday a state department spokesperson said:
The United States supports the decision of the United Kingdom to proceed with its agreement with Mauritius concerning the Chagos archipelago.
This came in a statement saying the US will be holding talks with Mauritius about the base.
While the Trump administration may support the deal, the Conservative party still doesn’t. In a statement, Priti Patel, the shadow foreign secretary, said:
Starmer must urgently clarify whether the UK will be represented at these US-Mauritius discussions and if not, tell us why. It is vital for our defence and security interests that the US Government does not conclude any agreement about British territory without our input. The Conservatives have led the charge against the Chagos Surrender and we will continue to fight it every step of the way.
Starmer reiterates backing for Trump’s Gaza peace plan
Keir Starmer has reiterated his backing for the US-led peace plan for Gaza in a phone call with Donald Trump, the Press Association reports. It comes as Yvette Cooper , the foreign secretary, is set to bring together Palestinian and Israeli officials in a push for progress on the US leader’s 20-point Gaza peace plan.
Starmer spoke to Trump last night and, in a readout, a No 10 spokesperson said:
The prime minister reiterated his condemnation of Putin’s barbaric attacks on innocent civilians in Ukraine, and the leaders discussed the ongoing negotiations to deliver a just and lasting peace.
Turning to the situation in Gaza, the prime minister reflected on the current situation in the region and the importance of securing further access for humanitarian aid. He set out his support for the ongoing work to deliver the US-led peace plan.
The two leaders confirmed their joint commitment to promoting stability and peace in the Middle East. They discussed the ongoing talks between the US and Iran taking place in Geneva over Iran’s nuclear programme. Both agreed that Iran must never be able to develop a nuclear weapon, and they reiterated the need to work closely amongst allies and partners to improve regional security.
UK inflation falls to 3%, boosting hopes of early cut in interest rates
UK inflation tumbled to 3% in January, giving a boost to hopes of an early cut in interest rates by the Bank of England. Phillip Inman and Tom Knowles have the story.
Graeme Wearden has reaction and analysis on his business live blog.
The Federation of Small Businesses has said that it does not support raising the youth rate for the minimum wage to bring it in line with the full adult rate. In an interview with Sky News, Tina McKenzie, the FSB’s policy and advocacy chair, said:
The youth unemployment is the highest in a decade. When will they start to believe what we’re saying?
She said her message to government was:
Take your head out of the sand and realise if you continue to increase costs of employment, and you make hiring young people more difficult for small employers, then all that’s going to happen is that they will hire less young people.
Starmer urged to stick to manifesto following reports lifting of youth minimum wage may be delayed
Good morning. Figures out yesterday showed that the unemployment rate for 18- to 24-year-olds was 14% in the three months to December, which is the highest rate for nearly 11 years excluding Covid. The Times this morning is running a story saying that, in response to concerns about youth unemployment, ministers are “considering ditching Labour’s manifesto pledge to pay young people the same national minimum wage as older workers”.
The Times says:
Business groups have told ministers they are “pricing a generation of young people out of the workplace” by increasing the cost of hiring workers through rises to the national living wage, wider employment rights and a tax raid on employers’ national insurance.
In response, ministers are reviewing their promise to equalise national minimum wage rates by the time of the next election. A decision could come within months when the government sets its annual remit to the Low Pay Commission, which makes recommendations for rises in the national living wage.
Currently workers have to be 21 or over to get the national living wage – the term used by the government to describe the full minimum wage. Workers aged 18 to 20 get a lower rate, described officially as the national minimum wage, and there is a lower rate for under-18s.
Jo Stevens, the Welsh secretary, was on the Today programme this morning and she said what the Times was describing was not government policy. She said:
There’s an unsourced briefing or whatever in the Times this morning, that is not government policy. Government policy is as we set out in our manifesto.
We’ve had many naysayers over the years about the national minimum wage.
People said in 1998 that it caused mass unemployment, and it didn’t. And every time there is a rise in the national minimum wage, people complain about it.
But the Guardian, like the BBC, has been told that, while ministers are not going to give up on the goal of raising the youth rate to the full adult rate, they are thinking about slowing down the rate at which equalisation happens.
Even this would be controversial. The BBC also interviewed Andy Prendergast, the GMB’s national officer, on the Today programme this morning and he said delaying or halting equalisation of minimum wage rates would be unacceptable. Asked what the GMB would think if this happened, he replied:
We’d be extremely unhappy about that. This is a manifesto promise. This has been our union’s policy for a long period of time.
Younger workers are not less productive. Businesses hire on the basis of need. They don’t employ more young workers than they would older workers.
And fundamentally I think this is the wrong prescription for the problem. As Jo [Stevens] says, we’ve had the minimum wage for 27 years. We’ve been repeatedly told that it will lead to unemployment. That’s never happened. And yet these people are listened to time and time again, and they come out with the same prescription for the same problem. And that’s what we’re hearing here.
We may get to hear from Keir Starmer on this later. He is on a visit in Wales this morning, and will be giving interviews. He and Eluned Morgan, the Welsh first minister, are promoting plans for a rail investment in Wales that will see seven new stations opening.
The only other item in the diary today a speech from Robert Jenrick, who was yesterday appointed as Reform UK’s Treasury spokersperson. He will be up at 11am.
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