Treasury plan would make training workers over 25 cost 25% more

The UK apprenticeship system currently allocates more than half of new enrolments to workers aged 25 and older, a demographic shift that has drawn scrutiny from government officials seeking to prioritize younger candidates. A proposal now being finalized would alter the funding structure for these older trainees, requiring employers to cover a larger share of the training costs. The change is expected to be announced in the budget scheduled for Wednesday.

Under the current rules, employers who contribute to the growth and skills levy, a tax of approximately 4 billion pounds per year, can use those funds to pay the full cost of training for any apprentice. The proposed modification would introduce a co-investment requirement for workers over 25. In this new model, levy funds would cover only 75 percent of the training expenses. The remaining 25 percent would need to be funded separately by the employer, effectively raising the total cost of training an older worker by that margin.

The plan is linked to the government's response to a review led by Alan Milburn into youth unemployment. Chancellor John Healey is expected to introduce measures aimed at addressing the status of one million 16 to 24-year-olds who are not in education, employment, or training. Ministers have noted that youth apprenticeship starts have dropped by 40 percent over the past decade. The policy aims to rebalance the system to support more young people entering the workforce.

Business leaders have criticized the approach, arguing that raising costs for older workers may not create new jobs but rather shift opportunities around. Robert Halfon, executive director of policy at Make UK, stated that making it more expensive to train older workers is not the answer. He suggested that the government should use the opportunity to grow the total number of apprenticeships rather than restricting training in other age groups. Halfon called on Healey to break the cycle of cutting and reallocating the apprenticeship budget.

Andy Burnham has placed youth jobs at the center of his agenda, including plans to reverse the decline in youth apprenticeship starts. However, the CBI and other groups warn that the change treats skills as a zero-sum game. John Foster, chief policy and campaigns officer at the CBI, noted that adult training plays a vital role in helping people update their skills mid-career, particularly as artificial intelligence reshapes the workplace. He argued that focusing solely on young people who are not in education, employment, or training ignores the needs of the broader workforce.

Ben Rowland, chief executive of the Association of Employment and Learning Providers, emphasized the need to bring employers into the process of any further changes. He warned that abrupt modifications could endanger the system. Kate Shoesmith of the British Chambers of Commerce added that employers need greater flexibility to invest in skills at every career stage. She suggested that reducing the wider costs of doing business would be a more effective way to encourage youth apprenticeships than creating new barriers to training for older workers.

The government maintains that the reforms are necessary to reverse the decline in young people starting apprenticeships. A spokesperson cited a package backed by 3.3 billion pounds, which includes support for 50,000 additional apprenticeships and a new hiring payment of 2,000 pounds for small and medium-sized enterprises that take on a 16 to 24-year-old. The Milburn Review is due in the autumn, and the government has stated it will not pre-empt the findings of that report. The final details of the co-investment rule are yet to be confirmed.