Levy Change Would Add 25% Cost for Training Workers Over 25

The United Kingdom government plans to raise the cost of training workers over the age of 25 by 25 percent, a move that business leaders say could complicate efforts to reduce youth unemployment. The proposal, which was drafted before the upcoming budget, intends to alter the apprenticeship funding scheme in England to steer employers toward training younger staff.

Under the current system, employers contribute to the growth and skills levy, a tax that generates approximately four billion pounds annually to fund the national apprenticeship system. Businesses have historically had the freedom to spend these funds on training for workers of any age. The new plan would change this dynamic for older employees. For apprentices under 25, the levy would continue to cover the full cost of training. For workers over 25, a new co-investment rule would apply, meaning the levy would only cover 75 percent of the expense, with the remaining 25 percent to be funded separately by the employer.

Robert Halfon, the executive director of policy at the manufacturing lobby group Make UK, argued that the shift would not create new opportunities but would merely relocate them. He stated that making it more expensive to train older workers is not the solution to getting young people into employment. Halfon urged Chancellor John Healey to use the budget to increase the total number of available apprenticeships rather than restricting training in other age groups.

The government is pushing these changes to address a decline in youth apprenticeships. Over the past decade, starts for young people have dropped by 40 percent. Currently, approximately one million people aged 16 to 24 are not in education, employment, or training. Ministers aim to reverse this trend, with Prime Minister Andy Burnham having made youth jobs a central part of his agenda. The proposal is expected to be linked to the findings of Alan Milburn’s review on youth unemployment.

Andy Burnham’s government has set a target for 30,000 new foundation apprenticeship starts during the current parliamentary term. However, only 160 young people enrolled in the scheme during the first eight months of its operation. The new funding rules are designed to ensure that more of the public money is directed toward this younger demographic, as workers over 25 currently account for more than half of all new apprenticeship enrolments.

John Foster, the chief policy and campaigns officer at the CBI, warned against treating skills development as a zero-sum game. He noted that training adults remains vital for helping workers adapt to changes in the workplace, particularly as artificial intelligence reshapes job roles. Foster emphasized that while supporting young people is necessary, it should not come at the expense of adult learning opportunities.

Ben Rowland, the chief executive of the Association of Employment and Learning Providers, advised the government to proceed with caution. He said that any further changes to the apprenticeship system must involve employers in the process. Rowland warned that changes that are too abrupt or implemented too quickly could endanger the relationship between the state and the private sector.

Kate Shoesmith, the director of policy and insights at the British Chambers of Commerce, suggested that the government should focus on reducing the wider costs of doing business to encourage youth hiring. She argued that creating new barriers to training for older workers does not address the core productivity and growth challenges facing businesses.

A government spokesperson defended the focus on young people, citing a reform package backed by 3.3 billion pounds. This package aims to deliver 50,000 additional apprenticeships for young people. It includes a new hiring payment of 2,000 pounds for small and medium-sized enterprises that take on an apprentice aged 16 to 24. The spokesperson noted that the Milburn Review is due in the autumn and that the government would not pre-empt its final findings.