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England plans to make firms pay more to train older workers in apprenticeship overhaul

Government proposes 25% cost increase for training over-25s to tackle youth jobs crisis

By LineZotpaper
Published
Read Time2 min
Sources2 outlets
The UK government is drawing up plans to force employers in England to pay more to train workers over the age of 25 than youth apprentices, as part of an effort to reverse a sharp decline in young people entering apprenticeships. The Guardian understands ministers intend to overhaul the apprenticeship funding scheme, increasing the cost of training an older worker by 25% to encourage businesses to hire and train younger staff instead.

The proposal is being developed as part of the government's response to Alan Milburn's review into youth unemployment, which has seen almost 1 million young people not in education, employment or training. Chancellor John Healey is expected to include measures to address soaring youth unemployment in his upcoming tax and spending statement to the Commons.

Under the planned changes to the growth and skills levy — the £4 billion a year tax used to fund the national apprenticeship system — employers will face a new "co-investment" rule restricting the funding they can access for training older employees. Currently, large employers with yearly wage costs over £3 million must pay 0.5% of their total annual pay bill into a dedicated digital pot, which they can draw from to fund training and assessment.

Ministers have said they want to rebalance the apprenticeship system back towards younger people. More than half of new apprenticeship starts are now for over-25s, while the number of under-19s enrolling has almost halved over the past decade. The government aims to reverse a 40% drop in youth apprenticeship starts over the same period.

The change is controversial because successive governments have told employers they were free to spend their levy funds on training as they saw fit. "Employers are not going to like it," one senior policy expert close to the government told The Guardian. "They were told 'it's your money, you get to decide'. But the system is not working at the moment."

Earlier this year, Labour revamped the apprenticeship levy introduced by the Conservatives in 2017, granting employers more flexibility over the types of training the system can be used for, including new foundation apprenticeships and shorter courses. Andy Burnham has also made supporting youth job opportunities central to his agenda, including changes to technical education and apprenticeships.

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Analysis

Why This Matters

  • The plan directly affects employers in England, who will face higher costs for training older staff, potentially shifting hiring and training decisions toward younger workers.
  • Youth unemployment has risen sharply, with nearly 1 million young people out of work, education or training; the policy aims to fix the first rungs of the career ladder.
  • The upcoming budget from Chancellor John Healey will reveal the final details of the proposal, making it a near-term political and economic test.

Background

The apprenticeship levy was introduced by the Conservative government in 2017, requiring large employers to pay 0.5% of their payroll into a dedicated fund. Labour revamped the levy earlier this year, adding more flexibility. However, the number of young people starting apprenticeships has fallen by 40% over the past decade, while over-25s now account for more than half of new starts. Alan Milburn, a former Labour cabinet minister, is conducting a review into youth unemployment, with his final report delayed until after the budget.

Key Perspectives

Employers: Likely to resist the change, having been assured by successive governments that they could decide how to use their levy funds. They may argue the new rule imposes a burden on training older workers and limits their flexibility. Young people and advocates: Stand to benefit from increased apprenticeship opportunities, which could help address the youth jobs crisis and provide clearer career pathways for those not in education or training. Critics/Skeptics: The policy could strain employer-government relations and prompt businesses to reduce overall training investment if they perceive the system as less flexible. Some may question whether the 25% cost penalty is sufficient to shift behaviour.

What to Watch

  • Chancellor John Healey's budget statement, expected within two weeks, which will confirm whether the plan is included.
  • Publication of Alan Milburn's final report on youth unemployment, which may recommend additional measures.
  • Reaction from business groups and employer organisations, which could shape the government's final proposal.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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