Healey Plan to Hike Over-25 Training Costs Faces Employer Criticism

Ministers in England are considering a 25% price increase on apprenticeship training for workers over the age of 25.

The proposal, which is part of a wider rework of the apprenticeship funding system, aims to nudge companies toward hiring younger employees. The idea was drafted before the budget was announced on Wednesday and has been reported on since last week. It is expected to appear in the government's response to the Milburn Review, which examines youth unemployment.

Chancellor John Healey is expected to introduce measures to expand opportunities for young people. Currently, approximately one million individuals aged 16 to 24 are not in education, employment, or training, a status known as Neet. Under the current rules, employers can use funds from the growth and skills levy, a tax worth £4 billion annually, to cover the full cost of an apprentice under 25.

For workers over 25, the new plan would introduce a co-investment rule. Levy funds would cover 75% of the training cost, leaving employers to pay the remaining 25% from other sources. This changes the previous guidance, which allowed employers to spend levy money on training as they saw fit. Ministers argue that the system needs rebalancing because individuals over 25 currently account for more than half of new apprenticeship enrollments.

Andy Burnham has placed youth employment at the center of his political agenda. He has cited plans to reverse a 40% decline in youth apprenticeship starts over the past decade. However, business groups have reacted negatively to the proposed cost increase. Robert Halfon, executive director of policy at Make UK and a former Conservative skills minister, stated that the change would likely shift opportunities around rather than create new ones. He urged the chancellor to increase the total number of places instead of reallocating the existing budget.

John Foster of the CBI warned against treating skills development as a zero-sum game. He argued that adult training is necessary for entry-level routes and mid-career skill updates, especially as artificial intelligence reshapes the workplace. Ben Rowland of the Association of Employment and Learning Providers cautioned that abrupt changes could undermine employer support for the apprenticeship system.

Kate Shoesmith of the British Chambers of Commerce suggested that reducing the wider costs of doing business would be a more effective way to promote youth apprenticeships. Firms have been asking Healey for relief from soaring costs linked to the Middle East war and the recent increase in employer national insurance contributions. The debate highlights tensions within Labour's youth skills strategy, which has faced criticism for its current performance.

Only 160 young people enrolled in the foundation apprenticeship scheme in the first eight months, well short of the goal of 30,000 starts during the current parliament. Joe Dromey of the Fabian Society noted that the system currently funds older, highly qualified workers disproportionately. He stated that addressing youth unemployment requires difficult choices about public funding allocation.

A government spokesperson defended the focus on reversing the decline in young apprenticeship starts. The spokesperson pointed to £3.3 billion allocated to deliver 50,000 additional apprenticeships and a £2,000 hiring payment for small and medium-sized firms that employ 16- to 24-year-olds. The spokesperson added that the Milburn Review is due in the autumn and that the government will not pre-empt its findings.