Higher training costs for older workers could undermine the government’s efforts to tackle Britain’s growing youth unemployment crisis, leading business organisations have warned.
The UK government is considering changes to England’s apprenticeship funding system that would require employers to contribute more to training workers aged 25 and over.
Under the proposals, companies would be able to use their growth and skills levy funds to cover the full cost of training apprentices aged 16 to 24.
However, businesses training older apprentices would be required to pay 25% of the cost separately, with levy funds covering the remaining 75%.
Ministers believe the changes could encourage employers to recruit more young people, particularly those struggling to enter the workforce.
But business leaders warn that making adult training more expensive could discourage companies from offering apprenticeships altogether.
The proposals come as the government prepares to introduce measures to address the growing number of young people who are not in education, employment or training.
Employers Warn Against Higher Apprenticeship Costs
Major business organisations, including Make UK, the Confederation of British Industry (CBI) and the British Chambers of Commerce, have raised concerns about the proposed changes.
They argue that businesses are already facing significant financial pressures, including higher employment expenses, energy bills and economic uncertainty.
Robert Halfon, a former Conservative skills minister and executive director of policy at Make UK, warned that increasing training costs for older workers could simply shift opportunities between age groups rather than create additional apprenticeships.
Make the case that the government should focus on expanding the overall number of apprenticeship places in the UK.
The organisation argues that young people need more opportunities to enter skilled employment, but such opportunities should not come at the expense of adults seeking new qualifications.
Employers also say that training experienced workers remains essential for productivity and economic growth.
What Is the Government Planning to Change?
The proposed reforms would change how employers use the growth and skills levy.
Large companies currently contribute to the apprenticeship funding system through a levy linked to their payroll.
The money can then be used to support eligible apprenticeship training.
Under the new proposal, the funding arrangements would depend on the apprentice’s age.
For workers aged 16 to 24, employers could continue using levy funds to cover 100% of eligible training costs.
For apprentices aged 25 and over, levy funds would cover only 75%.
Employers would need to pay the remaining quarter from their other business funds.
For example, if an eligible apprenticeship programme costs £12,000, an employer training someone aged 25 or over could face a separate £3,000 contribution.
The change would not mean every adult apprenticeship automatically becomes 25% more expensive overall. Instead, it would change how much of the training bill employers can pay using levy funds.
The policy remains under consideration and has not yet been finalised.
Reports suggest a phased introduction could begin in September 2027.
Why Is the UK Facing a Youth Jobs Crisis?
The government is under pressure to address the large number of young people struggling to find employment or training opportunities.
Almost one million people aged 16 to 24 across the UK are currently classified as not in education, employment or training, commonly known as NEET.
This group includes young people who are unemployed and actively seeking work, as well as those who are economically inactive.
There are several reasons why young people may struggle to enter the labour market.
Some lack relevant qualifications or practical experience.
Others face health difficulties, transport barriers or limited access to local employment opportunities.
Employers may also prefer experienced candidates because they require less initial training.
These challenges can create long-term consequences for young people, including reduced earnings, financial insecurity and difficulty progressing into stable careers.
Youth Apprenticeship Starts to Have Fallen Sharply
Government figures show that apprenticeship starts among young people have declined by approximately 40% over the past decade.
The fall has raised concerns about the availability of practical routes into employment.
Apprenticeships combine paid work with structured training, allowing participants to develop qualifications while gaining workplace experience.
They can be particularly valuable for people who do not want to follow a traditional university route.
However, more than half of new apprenticeship starts now involve people aged 25 and over.
Ministers want to rebalance the system so that younger people receive a larger share of training opportunities.
The challenge is ensuring that this shift results in genuinely additional places rather than simply replacing older apprentices with younger ones.
CBI Warns Adult Training Must Not Be Overlooked
The Confederation of British Industry has also expressed concerns about the proposals.
John Foster, the CBI’s chief policy and campaigns officer, argued that supporting young people should not mean restricting opportunities for older workers.
Adult apprenticeships can help employees develop new skills, move into different occupations and adapt to technological change.
This is becoming increasingly important as artificial intelligence and automation reshape the workplace.
Employees who entered the labour market years ago may need additional qualifications to stay competitive.
Businesses also depend on experienced workers who understand their industries and can support younger colleagues.
Reducing access to adult training could therefore create challenges for workforce development.
Small Businesses Could Face Additional Pressure
Small and medium-sized enterprises are especially sensitive to changes in employment and training costs.
Unlike large corporations, smaller companies may have limited budgets for staff development.
Even a relatively modest increase in training expenses can influence recruitment decisions.
Kate Shoesmith, director of policy and insights at the British Chambers of Commerce, has argued that employers need greater flexibility to invest in skills throughout people’s careers.
The organisation believes the government should make it easier and more affordable for businesses to hire young people.
Possible measures include reducing recruitment costs, simplifying apprenticeship administration and offering stronger financial incentives.
These approaches could encourage companies to create additional positions rather than limiting existing training opportunities.
Government Defends Focus on Younger Apprentices
The government says tackling youth unemployment is a priority.
Ministers have announced reforms backed by £3.3 billion intended to support 50,000 additional apprenticeships for young people.
The government has also introduced a £2,000 hiring payment for eligible small and medium-sized businesses taking on apprentices aged 16 to 24.
Officials argue that the apprenticeship system needs to provide better opportunities for the next generation.
The proposed funding changes are part of a wider review of youth employment that Alan Milburn, a former Labour cabinet minister, is leading.
The review is examining why so many young people are outside work, education and training.
Its recommendations are expected to inform future government policy.
However, ministers have not yet confirmed the final details of the proposed adult apprenticeship funding changes.
Businesses Say Hiring Costs Are Already Too High
Recent research suggests employers are becoming increasingly cautious about recruitment.
A CBI and Pertemps survey published in October 2026 found that only 15% of participating businesses felt confident about hiring.
That compared with 24% in 2025.
The survey also found that 53% of businesses were offering fewer apprenticeships than they wanted because of wider cost pressures.
Meanwhile, 44% said rising recruitment and onboarding costs were encouraging them to hire experienced workers rather than entry-level candidates.
These findings suggest that apprenticeship funding is only one part of the youth employment challenge.
Even where training support is available, businesses must still have enough demand and financial capacity to employ additional staff.
Why Training Older Workers Still Matters
Adult apprenticeships serve several important purposes.
They allow people to change careers, improve qualifications and respond to developments in their industries.
For example, an experienced manufacturing employee may need additional training to work with new digital systems.
A healthcare worker may pursue an apprenticeship to move into a more specialised role.
Similarly, someone who has lost their job may use an apprenticeship to enter an entirely different profession.
Restricting funding for these opportunities could make career transitions more difficult.
Employers argue that the apprenticeship system should support people at different stages of their working lives.
Could the Changes Actually Reduce Apprenticeships?
The main concern raised by business groups is that higher training costs could discourage investment.
If companies must pay more to train older workers, some may reduce the number of adult apprenticeships they offer.
Others may decide not to replace those places with younger apprentices because of additional supervision, recruitment or wage costs.
This could result in fewer overall training opportunities.
However, supporters of the proposed changes argue that the existing system directs too much funding towards older workers who may already hold substantial qualifications.
Joe Dromey, general secretary of the Fabian Society, has argued that public resources should be targeted more effectively towards people who face the greatest barriers to employment.
The disagreement centres on whether reallocating existing funding will produce better results or whether additional investment is needed.
What Happens Next?
The government is expected to outline further measures addressing youth unemployment around the autumn budget.
The proposals may include apprenticeship reforms, employment support and new opportunities for young people to gain workplace experience.
Business groups are urging ministers to consult employers before making significant changes.
They want reforms that encourage additional hiring without making it harder to train existing staff.
The final recommendations of the Milburn review will also be important.
Until the government confirms its policy, employers should treat the proposed 25% contribution for older apprentices as a potential future change rather than an established requirement.
Conclusion
Higher training costs for older workers have become a major concern for UK employers as the government seeks solutions to the youth jobs crisis.
Ministers want to increase apprenticeship opportunities for younger people after a decade of declining participation.
However, business organisations warn that making adult training more expensive could reduce investment in skills without creating additional jobs.
The debate highlights the challenge of supporting young people while maintaining opportunities for workers of all ages.
The success of any reforms will depend on whether businesses are encouraged to create more apprenticeships, invest in staff development and offer sustainable employment.
With almost one million young people outside education, employment or training, the pressure to find an effective solution is growing.
Frequently Asked Questions
What are the proposed apprenticeship changes in England?
The government is considering requiring employers to pay 25% of eligible training costs for apprentices aged 25 and over, rather than covering the full cost through levy funds.
Will apprentices under 25 still receive full training funding?
Under the proposal, employers could continue using levy funds to cover 100% of eligible training costs for apprentices aged 16 to 24.
Why are employers concerned?
Businesses fear that higher costs for older apprentices could reduce overall training investment and discourage recruitment.
How many young people are not in education, employment or training?
Approximately one million people aged 16 to 24 across the UK are currently classified as NEET.
How much have youth apprenticeship starts fallen?
Government figures indicate a decline of around 40% over the past decade.
What support is available for employers hiring young apprentices?
The government has announced a £2,000 hiring payment for eligible small and medium-sized businesses recruiting apprentices aged 16 to 24.
When could the proposed changes begin?
Reports suggest a possible phased introduction from September 2027, but the government has not confirmed the final policy.
Will the changes apply across the entire UK?
The proposed apprenticeship funding changes concern England. Skills and apprenticeship policies are devolved to Scotland, Wales and Northern Ireland.
