Plan to make firms pay more to train older workers than youth apprentices in England

The government is considering changing apprenticeship funding so older apprentices receive less public support than younger ones. Training someone over 25 would effectively become 25% more expensive for the employer. The goal is to redirect opportunities toward young people, whose apprenticeship starts have fallen sharply.

Under the proposed system, levy funds would cover the full eligible training cost for apprentices aged 16 to 24. For an apprentice aged over 25, the levy would cover only 75%. The employer would pay the remaining 25% directly, creating a financial incentive to recruit younger workers.

The proposal is still being developed and could be phased in from September 2027. It is controversial because employers were previously told they could decide how to use their levy funds. Ministers believe the current system is not producing enough youth apprenticeships, while businesses may resist the new restriction.

Under the proposed co-investment rule, government-funded apprenticeship money would work differently according to age. Apprentices aged 16 to 24 would still have their eligible training costs fully covered by levy funds. Older apprentices would receive only partial support.

For someone over 25, the levy would cover 75% of eligible training and assessment costs. The employer would need to pay the remaining 25%. For example, if eligible training cost £10,000, the levy would provide £7,500 and the employer would contribute £2,500. This example applies the article’s proposed percentage to a round figure.

The change aims to make youth apprenticeships more attractive to businesses. It would also limit employers’ freedom to spend levy funds as they choose. The measure is under consideration for a phased launch from the start of the next academic year, in September 2027, but it has not yet been confirmed.

Youth apprenticeship participation has fallen dramatically. The article reports a 40% decline in youth apprenticeship starts over the past decade. It also says the number of under-19s enrolling has almost halved, while more than half of all new apprenticeship starts now involve people over 25.

The wider youth jobs picture is also severe. Almost 1 million young people are currently not in education, employment or training. This group is often described by the acronym NEET. The government is responding to this combination of falling apprenticeship participation and rising disengagement from education or work.

The figures have made youth employment a major political issue. Ministers are preparing measures for the chancellor’s tax and spending statement, while Alan Milburn’s review is examining why so many young people are out of work. The government says it wants to create 50,000 additional apprenticeships for young people.

Ministers want to rebalance apprenticeships because the system is no longer serving as many young people as it once did. More than half of new starts now involve people over 25, and under-19 enrolment has almost halved in a decade. At the same time, youth apprenticeship starts overall have fallen 40%.

The proposed funding change would make training older workers more expensive for employers. Levy funds would cover all eligible costs for apprentices aged 16 to 24, but only 75% for older apprentices. Businesses would pay the remaining quarter for those older apprentices, creating an incentive to recruit younger people.

The policy is linked to concerns about the first steps into working life. Almost 1 million young people are not in education, employment or training. Ministers believe stronger access to apprenticeships could improve those first career opportunities, although employers may object to losing control over their levy funds.

The growth and skills levy is the £4bn-a-year tax used to fund England’s national apprenticeship system. It places money into digital accounts that large employers can use for eligible apprenticeship training and assessment. The levy is central to the government’s plan because ministers are considering restricting how those funds can be used.

Employers with yearly wage costs above £3m must pay 0.5% of their total annual pay bill into the levy. They can then draw on their dedicated digital pot to pay for training and assessment costs. The article says recent reforms also allow more flexibility, including foundation apprenticeships and shorter courses.

The proposed change would add a co-investment rule. Levy funds would cover eligible costs fully for apprentices aged 16 to 24, but only 75% for older apprentices. Employers would pay the balance, shifting levy support toward younger workers without increasing public spending.

Several alternatives could increase youth apprenticeship numbers. The Fabian Society has called for the growth and skills levy rate to rise from 0.5% to 0.7%. It says this could raise an additional £2.5bn, which could be directed toward apprenticeships for young people.

The government has also announced a hiring payment of £2,000 for small and medium-sized businesses that take on an apprentice aged 16 to 24. In addition, ministers say they are creating 50,000 extra apprenticeships for young people. These measures would support youth recruitment more directly than simply restricting funding for older apprentices.

However, ministers are wary of imposing further costs on businesses. Firms have already pushed back against employer national insurance contributions and are seeking budget support to hire young people. Tight public finances have therefore encouraged ministers to focus on redirecting existing levy money rather than raising spending.

An apprenticeship is a work-based route into a job or career. An apprentice is employed and receives pay while developing practical skills in the workplace. They also complete structured learning, which may involve an external training provider or classroom-based study. The article does not provide a formal definition, so this explanation uses the standard meaning of the term.

Training and assessment are built into the programme rather than left entirely to informal workplace experience. Employers can use apprenticeship funding to pay eligible training and assessment costs. Under the proposed rule, the levy would cover those costs fully for apprentices aged 16 to 24, but only 75% for older apprentices.

Apprenticeships matter in this article because youth starts have fallen 40% in a decade. Ministers want them to strengthen the first steps into careers. They are considering funding changes, new foundation apprenticeships, shorter courses, and payments to employers hiring young people.