25% Training Surcharge for Over-25s Could Squeeze Youth Apprenticeship Slots

25%. That is the additional cost employers in England would face for every pound spent training an apprentice older than 25 under a new government funding proposal. The plan aims to redirect apprenticeship spots toward younger workers, but business groups argue the measure will shrink the total number of training places available to all age groups.

The proposal, drawn up before this week's budget, would alter how the growth and skills levy is applied. Currently, employers can use their levy contributions to cover the full cost of any apprentice, regardless of age. Under the new rules, levy funds would only cover 75% of the training cost for workers over 25. Employers would have to find the remaining 25% from their own accounts. For apprentices under 25, the levy would still cover 100% of the cost.

Ministers argue the change is necessary to rebalance the system, which they say has tilted too heavily toward older workers. Over-25s currently account for more than half of all new apprenticeship enrolments in England. The government wants to reverse a 40% drop in youth apprenticeship starts seen over the past decade.

Chancellor John Healey is expected to announce measures to widen opportunities for young people in the upcoming budget. Approximately 1 million people aged 16 to 24 in the UK are currently not in education, employment, or training, a status known as Neet. The funding change is expected to feature in the government's response to the Milburn Review, which examines the causes of youth unemployment.

Business groups have raised immediate objections to the plan. Robert Halfon, a former Conservative skills minister and now executive director of policy at Make UK, said the change "will just mean opportunities are shifted around instead of creating new ones." He urged the chancellor to grow the number of places rather than cutting and reallocating the existing budget.

John Foster of the CBI argued that adult training opens entry-level routes and allows workers to update their skills mid-career, a necessity as artificial intelligence reshapes the workplace. "We can't make skills a zero-sum game," Foster said. Ben Rowland of the Association of Employment and Learning Providers added that changes implemented too abruptly could endanger employer support for the scheme.

Kate Shoesmith of the British Chambers of Commerce suggested that the best way to promote youth apprenticeships is to cut the wider costs of doing business. Firms have been pressing the government for help with soaring costs linked to the war in the Middle East and have asked for relief from the recent rise in employer national insurance contributions.

The debate arrives as Labour's own youth skills strategy faces scrutiny. Only 160 young people enrolled on the government's foundation apprenticeship scheme in the first eight months of the year, against an ambition of 30,000 starts over the current parliament. Joe Dromey of the Fabian Society noted that the present system leans heavily toward funding older, often highly qualified workers, and that tackling youth unemployment requires difficult choices about where public money is spent.

A government spokesperson said ministers were right to focus on reversing the 40% decline in young apprenticeship starts. The spokesperson pointed to £3.3bn allocated to deliver 50,000 additional apprenticeships and a £2,000 hiring payment for small and medium-sized firms that take on a 16- to 24-year-old. The Milburn Review is due in the autumn, and the government said it will not pre-empt its findings.