Labour is killing off job opportunities for the young by pricing them out of work with huge increases in the minimum wage, according to the new boss of the Confederation of British Industry.

In a hard-hitting speech on Thursday evening, City grandee Cressida Hogg will warn that forcing firms to pay the under-21s ever high wages hits hiring.

‘This is a policy with good intentions - but that will create worse outcomes and fewer jobs for young people,’ she will say.

The comments come amid fears a so-called ‘lost generation’ face a lifetime on benefits, with the government’s own youth unemployment tsar warning many are destined for the ‘scrapheap’.

Labour has vowed to axe age bands for minimum wage rates, meaning those aged 18 to 20 will be paid the same as those 21 and over.

This has seen hourly pay for younger workers jump 26 per cent from £8.60 when Labour came to power to £10.85 today.

Wages for older workers have also gone up, but not by as much, rising 11 per cent to £12.71 an hour.

The policy has coincided with youth unemployment soaring to an 11-year high above 16 per cent – sparking warnings that higher wages and the national insurance tax raid are pricing the young out of work.

Nearly one million youngsters as classified as NEETs – not in employment, education or training.

At the same time, nine in ten employers complain of a shortage of skilled workers, with Ms Hogg warning: ‘Right now, this system is failing too many businesses. And in doing so, it is failing too many young people.’

In her speech to business leaders in the North West, Ms Hogg, who took over as chairman of the CBI at the start of the year, will warn that ‘the cost of doing business has become a bar on the door of opportunity’ for the young.

‘When costs are this high, businesses focus first on protecting the people they already employ. That is their duty,’ she will say.

‘Business needs skills. Young people need opportunity. But right now, the system is not joining those two things up.’

Ms Hogg, who is also chairman of defence giant BAE Systems and senior independent director at the London Stock Exchange Group, will tell the CBI Cumbria Business Dinner on Lake Windermere: ‘We welcome that the government has listened to our feedback and said youth employment should be a higher priority.

‘But the fact is, the government’s long-term ambition to abolish minimum wage youth rates would make it harder still for firms to offer a first chance to young people.

‘Many businesses already choose to pay the headline rate for younger workers. Many others simply cannot afford to.

‘Youth rates reflect a simple reality: investing in a young person often takes more time, more training and more resource.

‘This is a policy with good intentions - but that will create worse outcomes and fewer jobs for young people.’