Employers in England could soon be forced to pay significantly more to train older workers under government proposals being developed to tackle the mounting youth jobs crisis. Ministers are planning an overhaul of the apprenticeship funding scheme that would increase training costs by 25% for workers over the age of 25, creating a financial incentive for businesses to prioritize younger people.
The policy is being crafted to reverse a 40-percent drop in youth apprenticeship starts over the past decade. It forms part of the government response to an upcoming review by former cabinet minister Alan Milburn into why so many young people remain out of work. With youth unemployment figures showing nearly 1 million individuals not in education, employment, or training, addressing access to early career paths has become a pressing priority.
The chancellor is preparing to address youth unemployment in an upcoming tax and spending statement, while regional leaders have also pushed for sweeping reforms to technical education. Currently, more than half of all new apprenticeship starts go to individuals over 25, while enrollment numbers for under-19s have halved over the last ten years. Ministers are seeking to rebalance the system to favor the next generation.
Under the planned adjustments to the £4bn-a-year growth and skills levy, businesses would face a new co-investment rule. Large employers with wage bills exceeding £3m pay 0.5% into a digital fund for training costs. While 16-to-24-year-old apprentices would continue to have their training fully covered from this pot, funds for older apprentices would cover only 75% of the expense, leaving employers responsible for the remaining balance.
This shift represents a departure from previous policies that granted businesses total freedom over how to spend their levy allocations. While policy experts note that employers may resist the restriction, officials indicate the current system is failing to support young job seekers adequately. The measure is reportedly under consideration for a phased rollout beginning in September 2027.
Critics have previously warned that broader government skills strategies risk falling short, pointing to low enrollment numbers for newer foundation apprenticeship schemes. Although some thinktanks have suggested raising the levy rate to generate additional revenue, ministers remain cautious about imposing heavier burdens on businesses following previous friction over national insurance contributions. Restricting existing levy funds is thus viewed as a way to redirect opportunities toward young people without straining public finances.
A Department for Work and Pensions spokesperson emphasized the government's commitment to reversing the decline in young apprenticeship starts. Officials pointed to ongoing efforts to pivot the system toward the next generation, including the creation of thousands of additional apprenticeships and hiring payments for small and medium-sized enterprises taking on younger workers, while noting that the forthcoming Milburn review will help guide future decisions.