Employers warn higher training costs for over-25s could hurt youth jobs plan

Britain's largest employers have warned that raising the cost of training older workers threatens the government's strategy to reduce youth unemployment.

The proposal, which precedes the budget announcement scheduled for Wednesday, seeks to adjust funding rules for the apprenticeship system in England. Under the current plan, the cost of training a worker over the age of 25 would rise by 25%. The objective is to incentivize firms to prioritize younger trainees.

This policy shift follows a review led by Alan Milburn into the causes of high youth unemployment. Chancellor John Healey is expected to announce measures addressing the 1 million people aged 16 to 24 who are not in education, employment, or training. Andy Burnham has made youth jobs a central part of his agenda, aiming to reverse a 40% drop in youth apprenticeship starts over the last decade.

Currently, workers over 25 account for more than half of new apprenticeship enrollments. The government aims to rebalance this ratio. Under the proposed rules, employers could use their full levy contribution to fund an apprentice under 25. For older workers, a co-investment rule would apply, with levy funds covering only 75% of the costs. The remaining 25% would need to be funded separately by the employer.

Robert Halfon, executive director of policy at Make UK, described the plan as a shift in opportunities rather than the creation of new ones. He stated that making training for older workers more expensive is not the solution to the youth employment crisis. Halfon urged the government to increase the total number of apprenticeships available rather than restricting training in other age groups.

John Foster, chief policy and campaigns officer at the CBI, argued against treating skills as a zero-sum game. He noted that adult training remains vital for opening entry-level opportunities and helping workers adapt to changes driven by artificial intelligence. He warned that focusing exclusively on the 16 to 24 demographic overlooks the needs of those updating their skills mid-career.

Ben Rowland, chief executive of the Association of Employment and Learning Providers, emphasized the need to involve employers in the transition. He cautioned that changes that are too abrupt or too quick endanger the relationship between the government and the training sector. Rowland stated that bringing employers on the journey is the key to any further changes to the apprenticeship system.

Business leaders are also pressing the chancellor for support amid rising costs linked to the war in the Middle East. They urge Healey to avoid adding pressure on firms following recent increases in employer national insurance contributions. Kate Shoesmith, director of policy and insights at the British Chambers of Commerce, said employers need flexibility to invest in skills at every stage of a career. She argued that reducing the wider costs of doing business is a better way to encourage youth apprenticeships than creating new barriers.

The government has acknowledged challenges in its current youth skills strategy. Only 160 young people were enrolled in the foundation apprenticeship scheme in the first eight months, falling short of the ambition for 30,000 starts during the current parliament. Joe Dromey, general secretary of the Fabian Society, noted that the system is skewed toward funding older, highly qualified workers. He said tackling youth unemployment requires difficult choices about where public funding is spent.

A government spokesperson said it is right to focus on reversing the 40% decline in young people starting apprenticeships. The ministry pointed to reforms backed by £3.3bn, which aim to deliver 50,000 additional apprenticeships for young people. It also cited a new hiring payment of £2,000 for small and medium enterprises that take on a 16 to 24-year-old apprentice. The spokesperson added that the Milburn Review is due in the autumn and the government will not pre-empt its findings.