The crisis in youth apprenticeships

Youth apprenticeship starts in England have fallen by 40% over the past decade. More than half of new apprentices are now over 25, while under-19 enrolments have almost halved.

The government's proposed solution

Ministers plan to overhaul the apprenticeship funding scheme by increasing training costs by 25% for workers over 25, to encourage businesses to hire younger apprentices instead.

How the levy system works now

Large employers with yearly wage costs over £3m pay 0.5% of their annual pay bill into a digital pot they can draw from to fund apprenticeship training and assessment costs.

The proposed change to the levy

Under the new co-investment rule, funds would cover eligible training costs for apprentices aged 16 to 24. For older apprentices, funds would cover only 75% of costs, with employers paying the remainder.

Why employers will resist

Employers have been told by successive governments they could spend levy funds as they chose.One senior policy expert said: "Employers are not going to like it.They were told 'it's your money, you get to decide'."

“Employers are not going to like it. They were told 'it's your money, you get to decide'. But the system is not working at the moment.”

Why the government won't raise the levy

Ministers are wary of adding costs to businesses after backlash over employer national insurance contributions. They are restricting levy funds instead to support young people without further public spending.

When the changes could start

The measure is believed to be under consideration for a phased launch from the start of the next academic year in September 2027, pending the Milburn review findings.

The broader context

Chancellor John Healey is preparing to include youth unemployment measures in his tax and spending statement to Parliament within a fortnight. The government aims to create 50,000 additional apprenticeships for young people.