Employers warn 25% fee hike for older workers could stall youth job targets

Employers in England face a potential 25% cost increase for training workers over the age of 25 under a draft plan by the government. The proposal aims to make training for older workers more expensive to encourage firms to hire younger apprentices. This move is expected to form part of the response to the Milburn Review on youth unemployment.

Ministers intend to overhaul the apprenticeship funding scheme. Under the new rules, levy funds would cover only 75% of the costs for an apprentice over 25. Employers would need to cover the remaining 25% separately. For workers under 25, levy funds would continue to cover the full cost of training. Over-25s currently account for more than half of new apprenticeship enrolments.

Robert Halfon, executive director of policy at Make UK, said the change would shift opportunities rather than create new ones. He noted that making it more expensive to train older workers is not the solution to getting young people back into employment. Halfon urged Chancellor John Healey to grow the number of available apprenticeships instead of restricting training elsewhere.

John Foster, chief policy and campaigns officer at the CBI, described the proposal as a zero-sum game. He stated that adult training plays a vital role in opening entry-level opportunities and helping people update skills as AI reshapes the workplace. Ben Rowland of the Association of Employment and Learning Providers warned that abrupt changes could endanger the system if employers are not brought along on the journey.

The government seeks to reverse a 40% drop in youth apprenticeship starts over the past decade. Currently, 1 million people aged 16 to 24 are not in education, employment, or training. Andy Burnham has placed youth jobs at the center of his agenda, including plans to retool technical education. The foundation apprenticeship scheme has enrolled just 160 young people in the first eight months, far below the target of 30,000 starts over the current parliament.

Kate Shoesmith of the British Chambers of Commerce said employers need flexibility to invest in skills at every career stage. She argued that reducing the wider costs of doing business is a better way to encourage youth apprenticeships than creating new barriers. Joe Dromey of the Fabian Society said the current system is skewed toward funding older, highly qualified workers, making difficult choices necessary to tackle youth unemployment.

A government spokesperson confirmed the aim to reverse the decline in young apprentices. The government has reformed the system with £3.3bn to deliver 50,000 additional apprenticeships for young people. It also supports small and medium-sized enterprises with a £2,000 payment for taking on a 16 to 24-year-old apprentice. The Milburn Review is due in the autumn, and the government said it would not pre-empt its findings.