UK Plans Higher Training Costs for Older Apprentices

Published: 17 October 2026. The English Chronicle Desk. The English Chronicle Online

The UK government is considering a major overhaul of apprenticeship funding in England that would require employers to pay a larger share of training costs for older workers than for younger apprentices. The proposed changes are intended to tackle rising youth unemployment, reverse a prolonged decline in youth apprenticeship enrolment and encourage businesses to invest more heavily in the next generation of workers.

Under the plans being developed by ministers, employers could face a 25 per cent contribution towards the training costs of apprentices aged 25 and above, while government-backed levy funding would continue to cover eligible training costs for apprentices aged between 16 and 24. The proposal would represent a significant shift in how businesses use money collected through the national apprenticeship funding system.

The potential reform comes as policymakers face mounting pressure to improve employment opportunities for young people. The number of young people not in education, employment or training has risen to almost one million, raising concerns about the long-term consequences for individual careers, business productivity and the wider British economy.

Ministers are seeking ways to make vocational training more accessible to young people entering the labour market, particularly those who struggle to secure their first job or obtain the qualifications employers demand. By making younger apprentices relatively less expensive to train, the government hopes to persuade companies to reconsider their recruitment priorities and create more opportunities for school leavers and young adults.

The proposed changes are being developed as part of a broader government response to the youth employment crisis. Former Labour cabinet minister Alan Milburn has been reviewing the reasons behind the growing number of young people who are out of work, with his final report expected after the government’s forthcoming budget statement. Improving access to apprenticeships is expected to be an important part of the discussion.

The government is also preparing to address youth unemployment through its wider tax and spending plans. Chancellor John Healey is expected to set out measures in the House of Commons aimed at responding to the economic pressures facing young people and businesses. The outcome could influence how the government balances support for employment with the need to maintain control over public spending.

Apprenticeships have traditionally provided an important route into skilled employment for people who prefer practical training to a purely academic pathway. They allow participants to earn while learning, develop workplace experience and acquire qualifications that can improve their prospects of securing long-term employment. For employers, apprenticeships can help address skills shortages and create a more reliable pipeline of trained workers.

However, the balance of participation has shifted considerably over the past decade. More than half of new apprenticeship starts are now accounted for by people aged over 25, while the number of apprentices aged under 19 has fallen by almost half. The government is concerned that the system is not directing sufficient resources towards young people at the beginning of their working lives.

Official figures also indicate that the number of youth apprenticeship starts has declined by approximately 40 per cent over the past decade. The trend has raised questions about whether the current funding arrangements provide sufficient incentives for employers to recruit younger candidates, particularly when businesses have competing demands for experienced staff and specialist skills.

The proposed changes would affect the growth and skills levy, a funding mechanism worth approximately £4 billion annually that supports apprenticeship training across England. Large employers with annual wage bills exceeding £3 million are required to contribute 0.5 per cent of their total pay bill to the levy. The money is held in a dedicated digital account that employers can use to cover eligible training and assessment costs.

Under the proposed arrangement, levy funds would remain available to cover the eligible training costs of apprentices aged between 16 and 24. For apprentices aged 25 and above, however, the funding would cover only 75 per cent of the eligible cost, leaving employers responsible for paying the remaining 25 per cent.

For example, if an older apprentice’s eligible training costs amounted to £4,000, the levy would cover £3,000 and the employer would need to contribute the remaining £1,000. Under the proposed rules, the same eligible training costs for a younger apprentice could be covered entirely by the levy, subject to the applicable funding conditions.

The government is understood to be considering a phased introduction from September 2027, at the beginning of the next academic year. The proposal remains under consideration, and the precise details and implementation arrangements have not been finalised.

Although the policy could encourage businesses to recruit more young apprentices, it has also raised concerns about the government’s relationship with employers. Businesses have previously been told by successive administrations that levy contributions could be used to fund training according to their workforce development needs. Restricting the proportion available for older apprentices could therefore be viewed as a significant change to the original funding principle.

A senior policy expert close to the government has acknowledged that employers are unlikely to welcome the proposal. Businesses may argue that they contribute to the levy and should retain sufficient flexibility to decide which employees require additional training. Companies with ageing workforces, specialist skills shortages or substantial retraining requirements could be particularly concerned about the potential impact.

For employers, the issue extends beyond the direct cost of apprenticeship programmes. Training decisions often depend on operational requirements, the availability of suitable candidates and the skills needed to maintain productivity. Some businesses may need to retrain existing employees to adapt to technological change, new regulations or changing customer demands. Increasing the cost of training older workers could make these programmes more expensive and potentially discourage some employers from investing in workforce development.

The proposed reform follows an earlier overhaul of the apprenticeship levy introduced under the Conservative government in 2017. Labour has already changed the system to give employers greater flexibility over the types of training they can fund, including foundation apprenticeships and shorter courses. The intention was to make the system more responsive to business needs and help workers acquire practical skills.

However, the government’s latest thinking suggests that greater flexibility alone may not be enough to address the decline in youth apprenticeship participation. Ministers are increasingly considering whether the distribution of funding needs to change so that employers have a stronger financial incentive to recruit younger workers.

The scale of the challenge has become particularly apparent in the government’s foundation apprenticeship programme. The initiative was designed to create additional routes into employment for young people, but official figures showed that only 160 participants had enrolled during its first eight months. That figure falls significantly short of the government’s ambition to secure 30,000 starts over the course of the parliamentary term.

The low initial participation has intensified questions about whether existing schemes are reaching the young people who need them most. A successful apprenticeship programme requires more than funding alone. Young people must be aware of available opportunities, employers must be willing to provide training, and courses must lead to credible qualifications and realistic employment prospects.

The Fabian Society thinktank has called for a different approach, recommending an increase in the growth and skills levy rate from 0.5 per cent to 0.7 per cent. According to the proposal, the higher rate could raise an additional £2.5 billion, providing more resources that could be directed towards youth apprenticeships and other skills programmes.

Ministers, however, appear reluctant to impose further financial burdens on employers. Businesses have already criticised increases in employer National Insurance contributions, warning that higher employment costs could make recruitment more difficult. Business leaders have also urged the government to provide additional support to companies willing to hire younger workers.

The government therefore faces a difficult policy choice. Increasing the levy rate could generate more money for training but might intensify concerns about the cost of employing people. Restricting access to existing levy funds could redirect support towards younger apprentices without immediately requiring a larger contribution from taxpayers or employers collectively, but it could also reduce businesses’ freedom to determine their training priorities.

The Department for Work and Pensions has said the government remains determined to address the 40 per cent decline in youth apprenticeship starts and provide young people with the skills needed to succeed. The department has highlighted plans to create 50,000 additional apprenticeships for young people and introduce a £2,000 hiring payment for small and medium-sized enterprises that recruit apprentices aged between 16 and 24.

These measures are intended to reduce some of the financial and practical barriers facing smaller businesses, which may have fewer resources to support training than larger companies. A hiring payment could help cover initial recruitment and onboarding expenses, although its overall effectiveness will depend on how many businesses use the incentive and whether the apprenticeships lead to sustained employment.

The department has also stressed that the government will not pre-empt the findings of the Milburn review. This suggests that the final shape of the policy could depend on the review’s recommendations and decisions taken as part of the forthcoming budget.

For young people struggling to enter the labour market, the proposed reforms could create additional opportunities if employers respond by expanding recruitment and investing in training. Greater access to apprenticeships could help participants develop practical experience, earn recognised qualifications and establish careers in sectors where skilled workers are in demand.

Nevertheless, the policy’s success will depend on whether employers create genuinely additional opportunities rather than simply changing the age profile of their recruitment. Businesses will also need access to suitable candidates, effective training providers and qualifications that meet industry requirements. Without these conditions, financial incentives alone may not deliver the scale of change ministers are seeking.

The proposals also raise a broader question about how Britain should balance investment in younger workers with the need to maintain the skills of its existing workforce. Older employees may require training to adapt to changing technologies, move into new occupations or remain economically active for longer. A funding system that favours younger apprentices will therefore need to account for the continuing importance of lifelong learning.

As the government prepares its budget and awaits the findings of the Milburn review, apprenticeship funding is emerging as an important part of its strategy for addressing youth unemployment. The proposed 25 per cent employer contribution for older apprentices could mark a significant change in how training resources are allocated in England.

Whether the reform ultimately improves employment prospects will depend on the final rules, the response from businesses and the quality of the opportunities created. For now, ministers are attempting to redirect the apprenticeship system towards younger people without adding substantially to public spending or placing further pressure on employers. Finding that balance will be central to determining whether the policy can reverse the decline in youth apprenticeships and help more young people secure a meaningful start to their working lives.