Ministers are set to announce a reorganisation to ensure the minimum wage keeps pace with the cost of living, with civil servants for the first time having to factor in the crisis when calculating the proposed minimum wage.

It means the gap between the minimum wage for younger and older workers is closing, after a new poll found seven in 10 voters think the lower rate for those aged 18 to 20 should be scrapped.

The Low Pay Commission (LPC) makes recommendations to ministers about the rate. But it does not have to base its recommendations on whether the amount would be enough to help low-paid workers get by.

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Business Secretary Jonathan Reynolds has now instructed the independent body to take the cost-of-living crisis into account when making its suggestions, the Mirror reports. He said: “For too long, working people have faced the worst cost of living crisis, but this government is taking bold action to tackle it and make work pay.

“The LPC’s new mandate is the first of many important steps we will take to keep more people in work and improve their living standards. Our focus remains on putting more money in the pockets of working people and stimulating economic growth.”

Deputy First Minister Angela Rayner said: “For too many people doing serious service, work is not enough to cover the basics. That’s why we are moving quickly to restore safety and dignity to all those working hard to rebuild this country from the ground up, and give hope to those striving to improve life for themselves and their families.

“Our new deal will protect working adults with a real living wage, creating a stronger, fairer and more ambitious future for work in Britain.” Mr Reynolds will also task the LPC with reducing the gap between the minimum wage for 18-20 year olds and the national living wage as a “first step” towards abolishing the lower rate for younger workers.

Mr Reynolds and Ms Rayner will write to the chair of the Low Pay Commission, with the full brief expected to be published on Tuesday 30 July. Calls to abolish minimum wage age bands have been backed by 71 per cent of voters.

A poll for the Trades Union Congress (TUC) showed support across the political spectrum for paying all workers aged 18 and over the same minimum wage, with a large majority of 2024 voters backing the change.

This included 82 per cent of Labour voters, 64 per cent of Conservative voters, 76 per cent of Lib Dem voters, 88 per cent of Green voters and 69 per cent of Reform voters.

TUC general secretary Paul Nowak said: “Everyone should get a fair wage for their work. But hundreds of thousands of young workers are suffering a huge wage penalty – because of an outdated and discriminatory system.

“Young people across the country face the same cost of living as everyone else. They shouldn’t be paid less for the same work as older workers.”