Training Older Apprentices to Cost 25% More Under New UK Plan

The British government plans to charge employers a 25% premium for training apprentices over the age of 25.

This policy shift aims to direct apprenticeship funds toward younger workers, addressing a gap where roughly one million people aged 16 to 24 are currently not in education, employment, or training.

Ministers intend to implement this change through the growth and skills levy, a tax worth 4 billion pounds annually that funds the national apprenticeship system. Under the current rules, employers use these levy funds to cover the full cost of any apprentice, regardless of age.

Under the proposed rules, employers would retain the ability to cover 100% of the cost for apprentices under 25 using their levy contributions. For workers over 25, a new co-investment rule would cap levy funding at 75% of the total training cost, leaving the remaining 25% to be paid from the employer's own budget.

The proposal was drafted before Wednesday's budget and is expected to feature in the government's response to the Milburn Review on youth unemployment. Chancellor John Healey has indicated that youth job measures will be a priority, with Andy Burnham also pushing for policies to reverse a 40% decline in youth apprenticeship starts over the past decade.

Business leaders have criticized the move, arguing it treats skills development as a zero-sum game. Robert Halfon, executive director of policy at Make UK, stated the change would shift opportunities around rather than create new ones. He urged the government to increase the total number of apprenticeship places instead of reallocating existing funds.

John Foster of the Confederation of British Industry (CBI) noted that adult training is essential for entry-level routes and mid-career skill updates, especially as artificial intelligence reshapes job requirements. Ben Rowland of the Association of Employment and Learning Providers warned that abrupt changes could weaken employer support for the apprenticeship system.

Kate Shoesmith of the British Chambers of Commerce suggested that cutting broader business costs would be more effective for promoting youth hiring. Firms have previously asked Chancellor Healey for relief from rising national insurance contributions and costs linked to the conflict in the Middle East.

The debate follows criticism of Labour's current youth skills strategy, which has seen only 160 enrollments in its foundation apprenticeship scheme over the first eight months. This falls far short of the target for 30,000 starts during the current parliament. Joe Dromey of the Fabian Society argued that the current system favors older, highly qualified workers, requiring difficult choices about public funding allocation.

A government spokesperson defended the focus on youth, pointing to 3.3 billion pounds allocated for 50,000 additional apprenticeships and a 2,000-pound hiring incentive for small and medium-sized firms taking on 16- to 24-year-olds. The spokesperson added that the Milburn Review is due in the autumn and that the government will not pre-empt its findings.