UK Employers Oppose 25% Surcharge for Training Workers Over 25

Ministers in the UK government are preparing to make the training of workers over the age of 25 cost 25% more for employers, a move that could reduce the total number of apprenticeship places available. The proposal, which is expected to be detailed in the government's response to the Milburn Review on youth unemployment, alters how the national growth and skills levy is applied. By increasing the financial burden on firms that train older staff, the policy aims to steer hiring toward younger candidates. However, major business organizations argue the change will shrink the overall pipeline of skilled workers rather than simply redirecting existing spots.

The current system allows employers to use their full levy contribution to fund any apprenticeship, regardless of the trainee's age. The new plan would introduce a co-investment rule for workers over 25. Under this rule, the government levy would cover only 75% of the training cost, forcing companies to find the remaining 25% from their own budgets. For apprentices under 25, the levy would continue to cover the entire cost. This shift targets a specific demographic, as individuals over 25 currently account for more than half of all new apprenticeship enrollments in England.

The proposal was drafted prior to the budget announcement and is linked to Chancellor John Healey's expected measures to address youth unemployment. Approximately one million people aged 16 to 24 in the UK are currently not in education, employment, or training. Labour leader Andy Burnham has prioritized reversing a 40% decline in youth apprenticeship starts over the past decade. The government argues that rebalancing funding is necessary to correct a system that has favored older, often highly qualified workers.

Business leaders have voiced strong objections to the financial implications of the new co-investment rule. Robert Halfon, a former Conservative skills minister and current executive director of policy at Make UK, stated that the change will shift opportunities around instead of creating new ones. He urged the chancellor to break the cycle of cutting and reallocating the apprenticeship budget. John Foster of the CBI warned that skills cannot be a zero-sum game, noting that adult training opens entry-level routes and helps workers update their skills as artificial intelligence reshapes the workplace.

Ben Rowland of the Association of Employment and Learning Providers cautioned that abrupt changes could endanger employer support for the system. Kate Shoesmith of the British Chambers of Commerce suggested that the most effective way to promote youth apprenticeships is to cut the wider costs of doing business. Firms are currently pressing the government for relief from soaring costs linked to the Middle East conflict and the recent rise in employer national insurance contributions.

The debate arises as Labour's youth skills strategy faces scrutiny over its performance. Only 160 young people enrolled in the foundation apprenticeship scheme in the first eight months, far short of the target of 30,000 starts over the current parliament. Joe Dromey of the Fabian Society argued that the present system leans too heavily toward funding older workers, asserting that tackling youth unemployment requires difficult choices about public spending. A government spokesperson said ministers are focused on reversing the 40% decline in young apprenticeship starts.

The government pointed to its existing commitments to support youth employment, including £3.3 billion allocated to deliver 50,000 additional apprenticeships. It also cited a £2,000 hiring payment available to small and medium-sized firms that take on a worker between 16 and 24 years old. The spokesperson noted that the Milburn Review is due in the autumn and that the government will not pre-empt its findings. The final details of the apprenticeship funding changes have not yet been finalized.