Higher training costs for older workers risk undermining youth apprenticeship push, employers say

UK government considers 25% co-investment rate for over-25s; business groups warn it merely shifts opportunities

By LineZotpaper AI staff

Published26 October 2026

Read Time4 min

Sources3 outlets

The UK government is set to announce proposals that would make it more expensive for employers to train workers aged over 25, in a bid to steer apprenticeship funding towards younger people. Business leaders warn the move could undermine the very goal of tackling youth unemployment, arguing that it simply moves opportunities around instead of creating new ones.

The government is planning to overhaul Labour's apprenticeship funding scheme by increasing the cost of training a worker over the age of 25 in England by 25%, The Guardian understands. Under the proposal, drawn up before Wednesday’s budget, employers would be able to fund the full cost of an apprentice under 25 from the growth and skills levy, the £4bn-a-year tax that funds the national apprenticeship system, but for older workers a "co-investment rule" would apply, with levy funds covering 75% of costs and the employer left to fund the remainder.

The change is expected to form part of the government's response to Alan Milburn’s review into why so many young people are out of work, alongside measures from Chancellor John Healey aimed at supporting the 1 million 16- to 24-year-olds not in education, employment or training (Neet).

Prime Minister Andy Burnham has placed youth jobs at the centre of his agenda, including plans to reverse a 40% drop in youth apprenticeship starts over the past decade. Over-25s account for more than half of new apprenticeship enrolments, and ministers have made clear they want to rebalance the system towards younger people.

But employers have pushed back. Robert Halfon, executive director of policy at the manufacturing lobby group Make UK and a former Conservative skills minister, said: "It will just mean opportunities are shifted around instead of creating new ones. We agree that getting young people back into employment and training is a moral and economic imperative. But making it more expensive for employers to train older workers isn’t the answer." He argued that the government should use the opportunity to grow the number of apprenticeships rather than restrict training.

John Foster, chief policy and campaigns officer at the CBI, said: "We can’t make skills a zero-sum game. While it is right to focus on supporting young people who are Neet into work, adult training also has a vital role to play in opening up entry-level opportunities and helping people adapt and update their skills mid-career, particularly as AI reshapes the workplace."

Ben Rowland, chief executive of the Association of Employment and Learning Providers, cautioned against abrupt changes: "The key to any further changes to the apprenticeship system is to bring employers on the journey. Anything that is too abrupt or too quick significantly endangers that."

Kate Shoesmith, director of policy and insights at the British Chambers of Commerce, added: "At a time when businesses are under pressure to improve productivity and drive growth, employers need greater flexibility and support to invest in skills at every stage of a person’s career. The best way to encourage more youth apprenticeships is to make it easier and more affordable for firms to take on young people by reducing the wider costs of doing business, rather than creating new barriers to training."

However, not all voices oppose the change. Joe Dromey, general secretary of the Fabian Society, argued that while flexibility for business mattered, the current system was skewed too heavily towards funding older, often already highly qualified workers. "These will not be easy decisions, and some will be unpopular with businesses. But tackling youth unemployment means making difficult choices about where public funding is spent."

A government spokesperson said: "It’s right that we focus on reversing the 40% decline in the number of young people starting an apprenticeship and give them the skills they need to succeed. That’s why we have reformed the system backed by £3.3bn to deliver 50,000 additional apprenticeships for young people and support employers with a new hiring payment of £2,000 for SMEs who take on a 16- to 24-year-old apprentice." The spokesperson added that the Milburn Review is due in autumn and the government will not pre-empt its findings.

Sources have noted that Labour's foundation apprenticeship scheme has enrolled just 160 young people in its first eight months, against an ambition for 30,000 starts over the current parliament, raising questions about the effectiveness of current youth training measures.

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Analysis

Why This Matters

The overhaul could reshape how apprenticeship funding is allocated in England, affecting both young jobseekers and older workers looking to retrain.
Employers already facing higher costs from employer national insurance contributions may see an additional financial burden, potentially leading to fewer apprenticeship places overall.
The outcome will be watched closely as the government tries to balance youth unemployment, which affects 1 million young people, with the need to upskill the existing workforce.

Background

The UK has seen a 40% decline in youth apprenticeship starts over the past decade, and about 1 million 16-to-24-year-olds are not in education, employment or training. Apprenticeships in England are funded through the growth and skills levy, a £4bn-a-year tax on large employers. Over-25s now make up more than half of new apprenticeship enrolments. The government commissioned Alan Milburn to review youth unemployment, and his report is expected in autumn 2026. The previous Labour government had introduced a foundation apprenticeship scheme with an ambition for 30,000 starts this parliament, but only 160 have enrolled in the first eight months.

Key Perspectives

Robert Halfon (Make UK): "It will just mean opportunities are shifted around instead of creating new ones. Making it more expensive to train older workers isn’t the answer." John Foster (CBI): "We can’t make skills a zero-sum game. Adult training also has a vital role to play in opening up entry-level opportunities and helping people adapt mid-career." Ben Rowland (AELP): "The key to any further changes is to bring employers on the journey. Anything that is too abrupt or too quick significantly endangers that." Kate Shoesmith (BCC): "The best way to encourage more youth apprenticeships is to make it easier and more affordable for firms to take on young people, rather than creating new barriers." Joe Dromey (Fabian Society): "The current system is skewed too heavily towards funding older, often already highly qualified workers. Tackling youth unemployment means making difficult choices." Government spokesperson: "It’s right that we focus on reversing the 40% decline in the number of young people starting an apprenticeship and give them the skills they need to succeed."

What to Watch

Wednesday's budget (28 October) and whether the co-investment rule is confirmed or amended.
The publication of Alan Milburn's review into youth unemployment, due in autumn.
Enrollment numbers for the foundation apprenticeship scheme as an indicator of whether current youth measures are working.

Sources

Higher training costs for older workers risks plan to tackle youth jobs crisis, employers say · The Guardian
Higher training costs for older workers risks plan to tackle youth jobs crisis, employers say · The Guardian
Higher training costs for older workers risks plan to tackle youth jobs crisis, employers say · The Guardian

Checked

7 claims in this story checked against 1 source: 2 supported.

Show each claim

SupportedEmployers say higher training costs for older workers risk undermining the youth jobs goal.Business | The Guardian: “Britain’s largest employers have told the government that forcing businesses to pay more to train older workers risks damaging its goal to tackle the youth jobs crisis.”
Partly supportedBusiness groups warn that the policy merely shifts opportunities rather than creating new ones.Business | The Guardian: ““It will just mean opportunities are shifted around instead of creating new ones,” said Robert Halfon”
Partly supportedThe government is set to announce proposals making it more expensive to train workers over 25.Business | The Guardian: “Under the latest proposal, which is yet to be finalised”
SupportedThe proposal would impose a 25% co-investment rate for workers over 25.Business | The Guardian: “for an older worker, they would face a “co-investment rule” whereby levy funds would cover 75% of the costs. The rest would need to be covered separately.”
Not in the sourcesAndy Burnham is the prime minister.Business | The Guardian: “Andy Burnham has placed youth jobs at the heart of his agenda”
Partly supportedChancellor John Healey has measures aimed at supporting 1 million 16- to 24-year-olds who are not in education, employment or training.Business | The Guardian: “The chancellor, John Healey , is widely tipped to announce measures to bolster opportunities for young people to help the 1 million 16- to 24-year-olds not in education, employment or training (Neet) across the country.”
Partly supportedSources have noted that the foundation apprenticeship scheme enrolled 160 young people in its first eight months against an ambition of 30,000 starts over the current parliament.Business | The Guardian: “Labour has been told its youth skills strategy risks failure, after just 160 young people were enrolled into its foundation apprenticeship scheme in the first eight months. Ministers have an ambition for 30,000 starts over the current parliament.”