Firms have been warned by Andy Burnham that they could face penalties including higher national insurance payments if they failed to pay a proposed new higher living wage of around £11 an hour.

In a fresh push to make up ground on surprise left-wing Labour leadership frontrunner Jeremy Corbyn, the shadow health secretary said he would seek to use a "carrot and stick" approach to force up wages if he led the party to power in 2020.

At the start of the final 10 days of campaigning, Mr Burnham will set out his proposals at a campaign event in Pudsey, a Yorkshire constituency that Labour failed to win at May's general election.

The national rate - which would rise to over £12 in London - would apply to all age groups and be adjusted for the loss of tax credits and linked to the cost of housing, food and household items.

He will contrast it with the national living wage introduced in Chancellor George Osborne's most recent Budget which he dismissed as a "complete con" that applied only to the over-25s and failed to compensate for cuts in tax credits.

Under his alternative scheme, firms that paid the rate would be rewarded with lower NI contributions, and penalties for those that did not would be devised in consultation "with independent experts and with business, ensuring a credible, deliverable and fair plan".

"Osborne needs to think again. As Labour leader, I will lead a campaign to make him do just that and extend his plans to cover all workers," he will say.

"But, under my Leadership, Labour will go much further. We will be utterly intolerant of poverty pay in the UK. Too many people are working harder and harder just to make ends meet. It is disgraceful that apprentices earn just £2.73 an hour.

"The Labour Party I lead will stand for a true Living Wage for everyone.

"It will be based on the simple principle that the same hour's work deserves the same hour's pay, regardless of your age. So I will abolish the youth rate minimum wage, apply the higher rate to everyone and give incentives for companies to go even further.

"Businesses will be helped to pay a true living wage, but as more firms pay this fair wage it would be wrong for the unscrupulous few to hold out. So over the next Parliament I will phase in National Insurance penalties for those not paying the rate.

"By 2025, we will end the scourge of low pay in the UK forever."