Workers under the age of 25 do not deserve the new living wage because they are “not as productive” as older workers, Cabinet Office minister Matthew Hancock has said.

The new living wage was George Osborne’s major announcement in his summer budget, coming in at £7.20 an hour next April and rising to £9 by 2020.

The rise will go some way to compensating the cut in working tax credits applied to all workers from next April but controversially the new living wage will not apply to workers under 25.

The minimum wage for those under 25 will remain at £6.70 an hour, £5.30 for under 21-year-olds and £3.87 for under 18s.

Mr Hancock, speaking at a fringe at the Conservative party conference, defended the decision not to apply the new living wage to all employees, saying: “This was an active policy choice. Youth unemployment, whilst falling quite sharply, is still a long way above the unemployment rate for the over 25s.

“Anybody who has employed people knows that younger people, especially in their first jobs, are not as productive, on average.

“Now there are some who are very productive under the age of 25 but you have to set policy for the average. It was an active choice not to cover the under 25s.”

It comes after Health Secretary caused outrage on Monday after suggesting Britain’s low paid should work as hard as the Chinese to make up for the cuts to their tax credits.

Also speaking at a fringe meeting at the Tory party conference in Manchester, Mr Hunt said: “My wife is Chinese and we want this to be one of the most successful countries in the world in 20, 30, 40 years’ time.