• Young’s wage demands believed to be the stumbling block
• Aston Villa were keen to get the full-back off their wage bill

Luke Young’s proposed transfer to Liverpool collapsed today, leaving the full-back facing an uncertain future at Aston Villa. Liverpool had agreed a £2.5m fee with Villa on Tuesday for the former England international but there were suggestions that Young was unable to agree personal terms at Anfield as well as being reluctant to relocate to the north.

The news will come as a disappointment to Liverpool and Villa. Roy Hodgson, the Liverpool manager, was keen to bring in the experienced defender to improve his options at full-back and also increase his quota of home-grown players, while Villa were eager to move on one of their higher earners as they look to reduce their £70m annual wage bill. Young was earning more than £2m a year at Villa and has three years remaining on his contract, with further signing-on fees due over the course of that period.

Liverpool had initially indicated Young would have to lower his demands, which have deterred interest from other clubs this summer, although when Martin O’Neill, the Villa manager, reported earlier in the week that a bid had been accepted it began to look like a deal might go through. That is no longer the case, leaving Young to continue his pre-season training in Portugal with Villa and O’Neill cursing a missed opportunity to free up some money.

The Villa manager has been told he will have to operate within the constraints of a “sell-to-buy” policy this summer, accentuating the need to move on a number of players on the periphery. At the moment, however, Steve Sidwell, Nigel-Reo-Coker, Habib Beye, Curtis Davies, Nicky Shorey and Young all remain Villa players. There has also been no progress with James Milner’s situation despite ongoing negotiations between Manchester City and Villa.

Aston VillaLiverpoolTransfer windowStuart Jamesguardian.co.uk

• Villa fail to offer England midfielder new contract
• Manchester City set to increase opening £18m bid

Aston Villa appear increasingly resigned to losing James Milner after it emerged the club is yet to offer the England international a new contract in the face of interest from Manchester City and that there are no talks scheduled between the two parties.

Milner remains a key target for City, who are expected to return with an improved bid after their opening offer of £18m, plus a further £2m in add-ons, was flatly rejected in May. Villa met Milner and his representative shortly after that bid was received to discuss his future, but the club’s desire to hold on to the 24-year-old midfielder did not extend to them presenting him with a new deal and improved personal terms. That situation has remained unchanged.

Martin O’Neill, the Villa manager, said towards the end of last season that the club was keen to reward Milner, who has just entered the final two years of his contract, for his progress following an outstanding campaign which culminated in him being named PFA Young Player of Year. O’Neill had suggested talks would take place after the World Cup finals yet there has been no indication that when Milner returns at the end of the month, after being given an extended break following the World Cup, that he will be presented with a new contract proposal.

It appears that within Villa there is an acceptance it is all but certain Milner will seek to move this summer. Stewart Downing said on Thursday that he suspects his team-mate has “probably already made his decision” and earlier in the week O’Neill sounded pessimistic about Villa’s chances of keeping Milner out of City’s clutches. “Eventually, if players do want to leave the football club, or any football club for that matter, then it becomes more difficult than ever before,” he said.

Milner is understood to be surprised at O’Neill’s remarks because of the inference that he is agitating for a move away from