Employers Warn Proposed Apprenticeship Funding Overhaul Could Undermine Youth Employment Goals

Proposed Funding Shifts

Major UK employers have expressed significant concerns regarding a potential government move to increase the cost of training workers over the age of 25. Reports indicate that ministers are considering an overhaul of the apprenticeship funding scheme, which would effectively increase the cost for firms to train older staff by 25%. This policy, discussed ahead of the recent budget, is intended to prioritize apprenticeship opportunities for the approximately 1 million young people aged 16 to 24 currently classified as NEET (Not in Education, Employment, or Training).

Under the proposed system, while employers could use their contributions to the growth and skills levy to fully fund apprenticeships for those under 25, training for older workers would move to a 'co-investment' model. In this scenario, levy funds would cover only 75% of costs, leaving businesses to fund the remaining 25% through other means.

Industry Response and Economic Concerns

Business leaders have argued that this approach creates a 'zero-sum game' rather than expanding the total number of available roles. Robert Halfon, executive director of policy at Make UK, stated that shifting opportunities around is not a substitute for genuine job creation. Industry representatives from the CBI and the British Chambers of Commerce have echoed these concerns, emphasizing that mid-career training is vital for workforce productivity, particularly as artificial intelligence and automation transform job requirements.

Furthermore, employers have pointed out that adding new barriers to training comes at a difficult time for businesses already managing rising costs and the impact of recent adjustments to national insurance contributions. There is a broad industry consensus that the government should focus on reducing the overall cost of doing business to encourage youth hiring, rather than restricting investment in existing staff.

Government Objectives and the Milburn Review

The proposal is expected to align with the government's response to the forthcoming review led by Alan Milburn, which examines the root causes of youth unemployment. Addressing the 40% decline in youth apprenticeship starts over the past decade is a central pillar of the administration's current skills agenda. A government spokesperson maintained that the administration remains committed to reversing this decline and has already introduced a £3.3bn investment package, including a £2,000 hiring incentive for small and medium-sized enterprises that employ young apprentices.

Supporters of the reform, including the Fabian Society, argue that while the decisions are difficult, the current system has become too heavily skewed toward funding training for older, often already qualified workers, necessitating a shift in where public funds are directed.

Verifying the Facts

Readers can monitor further developments regarding the apprenticeship levy and the formal response to the Milburn Review through the Department for Education and official government policy announcements. For additional details on the current funding structure and industry perspectives, refer to the official reporting at https://www.theguardian.com/education/2026/oct/26/training-costs-apprenticeships-older-workers-youth-jobs-crisis-neet.