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Labour have blasted a minister for saying the Tories blocked under-25s from their new minimum wage because they are 'not as productive'.

Millions were left out when George Osborne unveiled his so-called 'national living wage' in the Budget , prompting a jubilant fist-pump from Iain Duncan Smith.

Today a Tory conference event was told the £7.20 rate being launched in April is not a living wage at all, sitting almost £2 below the London living wage and not being handed to under-25s.

But Paymaster General Matthew Hancock , who spoke at the fringe meeting run by living wage campaign the Resolution Foundation, said the policy was completely deliberate - because youngsters don't get as much done.

"This was an active policy choice," he said. "Youth unemployment, whilst falling quite sharply, is still a long way above the unemployment rate for the over-25s.

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

(Image: Coventry Telegraph)

"Now there are some brilliantly productive people under the age of 25, but you have to set policy for the average.

"So there was an active choice not to cover the under-25s in the same way the national minimum wage structure included a lower rate for apprentices and the under-21s."

Labour and the Trades Union Congress condemned the comments.

Shadow Work & Pensions Secretary Owen Smith said: "The Minister has let the cat out of the bag.

"The Tories have clearly got something against young people. It's insulting and divisive to make sweeping suggestions that under 25s are under productive.

"Surely it's not right to ask a 24 year old, perhaps with a family at home, to do the same job as the 26 year old stood next to them, for different rates of pay.

"This is yet another examples of haphazard Tory policy making.”

TUC General Secretary Frances O'Grady said people aged 21 to 24 'are already paid the adult National Minimum Wage and there is no reason to exclude them from the new higher rate'

She added: "If those starting their careers are given the impression they are worth less this can only be bad for their motivation and productivity.

(Image: PA)

"Rather than leaving younger workers behind we need a recovery that works for everyone."

Today's fringe event saw Mr Hancock defend tax credit cuts on a panel alongside Tory former universities minister David Willetts.

Mr Willetts, who has joined the Resolution Foundation, said the cuts should be carried out in a different way to 'soften' the blow on families.

But Mr Hancock defended them saying: "We were very clear before the election that we were going to need £12bn of savings from the welfare budget.

"We didn't introduce it trying to say it would be straightforward and neither in 2015 nor in 2010 did we run on a manifesto of milk and honey."

Yesterday Jeremy Hunt sparked outrage by saying the cuts - many of which are to minimum-wage workers - would make people work hard like those in China.

Both Mr Hancock and Mr Willetts declined to comment on the row.

Mr Willetts told Mirror Online: "I haven't discussed this with Jeremy and it's very difficult to go on the basis of remarks that could've been taken out of context."