Employers Oppose 25% Cost Hike for Older Apprentices

The UK government is preparing to change how it funds vocational training for workers over the age of 25.

Ministers plan to increase the effective cost of training older apprentices by 25% in England. The goal is to nudge companies toward hiring younger workers. This move follows a review by Alan Milburn into high youth unemployment rates.

The proposal is expected to be part of Chancellor John Healey's budget announcement on Wednesday. It aims to address the fact that 1 million people aged 16 to 24 are currently not in education, employment, or training.

Business leaders argue the new funding structure creates a zero-sum game. Robert Halfon of Make UK stated the plan shifts opportunities rather than creating new ones.

Halfon noted that while youth employment is an economic imperative, raising costs for older workers is not the solution. He urged the government to grow the number of apprenticeships instead of restricting training elsewhere.

Under the current system, employers can spend their annual levy funds on apprenticeships of any age. The new rule would require co-investment for workers over 25.

Levy funds would cover only 75% of the cost for an older apprentice. Employers would need to cover the remaining 25% separately. This changes the previous freedom to allocate levy funds as companies saw fit.

Over-25s currently make up more than half of new apprenticeship enrolments. Ministers want to rebalance this ratio to support younger candidates.

John Foster of the CBI warned that adult training helps workers adapt to changes like AI. He argued that skills should not be treated as a limited resource.

Kate Shoesmith of the British Chambers of Commerce said businesses need flexibility to invest in skills at all career stages. She suggested reducing wider business costs is a better way to encourage youth hiring.

Andy Burnham has made youth jobs a central part of his agenda. He aims to reverse a 40% drop in youth apprenticeship starts over the last decade.

The government has already allocated £3.3 billion to deliver 50,000 additional apprenticeships for young people. It also introduced a £2,000 hiring payment for SMEs taking on 16 to 24-year-olds.