Benefit losses force teens to ditch apprenticeships

Disadvantaged young people are quitting apprenticeships due to welfare rules that cost poorer families hundreds of pounds in benefits, experts have warned.

The “apprenticeships penalty” has caused low-income families to lose as much as £339 per week due to 16-year-old apprentices being classed as “independent workers” within a household.

As a result, young people have turned down apprenticeships and parents are discouraging their children from taking one up.

Researchers heard of one parent who kicked their child out of the family home for not abandoning their apprenticeship.

A report by the Social Security Advisory Committee found the losses leave disabled young people, young adult carers and care leavers “much worse off”, with some choosing courses that allow them to keep benefit income.

The advisory committee urged ministers to conduct a comprehensive review of the financial “cliff edge”, particularly for families with disabled children, those with caring responsibilities and single-parent households.

They also recommended improving access to information about how household and individual benefits change when a young person pursues an apprenticeship or remains in education.

Wages cannot offset benefit cuts

The report explained that young people no longer meet the criteria for “qualifying young person” status once they leave full-time education to begin an apprenticeship, even if they still live in the family home.

However, young people in full-time education are classed as dependents, so families don’t lose out on payments.

Apprentices sign an apprenticeship agreement, a form of contract, meaning they are automatically excluded regardless of their financial circumstances.

Most families with 16 to 18-year-olds in full-time education receive child benefit of £26.05 per week for the first child and £17.25 for the second and subsequent children.

For those on universal credit, families get £78.23 per week for the child element and £52.17 per week for a work allowance before their universal credit is tapered.

In total, the government spent £2.4 billion on child benefit payments to households for 16 to 19-year-old children last year.

The report found families with young apprentices lose all three elements of benefits simultaneously, meaning they lose between £17 to £339 per week, with families with disabled members hardest hit.

Meanwhile, income for young people with part-time jobs is disregarded if they remain in full-time education.

The committee recommended ministers address the timing gap between benefit cessation, currently the August 31 after the young person’s 16th birthday, and participation commencement. Advisors said the government should extend support from the current cut-off date until young people begin their apprenticeship and have received their first wage.

Social Security Advisory Committee chair Stephen Brien said no realistic apprenticeship wage could offset the “substantial losses”.

“For too many households, choosing a vocational pathway – one that the government promotes as an equally valid route into adulthood – can trigger substantial losses in financial support,” he added.

The committee suggested a review of all benefits rules, a “joined-up approach” between the Department for Work and Pensions and HMRC, and transferring responsibility for child benefit to the DWP, from HMRC.

Adults influence decisions

The report discovered that parents, social workers and teachers were influencing young people’s choices based on their potential household income losses.

Researchers heard multiple cases of single-parent households where a child was discouraged from taking up an apprenticeship amid concerns about losing child maintenance payments.

Another family reportedly told the committee they would be £700 per month worse off if their child, who has a disability, left full-time education for an apprenticeship.

“While direct testimony from young people is limited, available evidence suggests obligation dynamics influence decisions,” the report said.

One young person agreed not to pursue an apprenticeship after learning her parents would lose income, despite feeling it was “deeply unfair”.

Another parent asked their child to quit their apprenticeship or leave the family home once they realised some of their benefits had stopped.

After being kicked out, the teenager sought a youth hub to claim universal credit to support themselves on their apprentice wage.

“Ultimately, the young person moved back into the family home, but they left their apprenticeship as a result and went back to college,” the report concluded.

Heavy burden for young carers

Young carers are ineligible for the carer’s allowance if they are in full-time education at age 16-18 or are apprentices who earn over the earnings threshold or care for fewer than 35 hours a week.

Government advisors said even with part-time courses or work, young people with caring responsibilities were becoming overwhelmed.

They also heard some young adult carers felt pushed to choose courses that were part-time, despite being unsuitable for their interests or long-term prospects.

“In these situations, we heard, young adult carers can often fail to achieve qualifications on a par with their peers,” the report found.

The committee recommended ministers remove the ineligibilities for young carers and introduce a young carer grant.

Disabled apprentices ‘much worse off’

Government advisors also warned about the impact of a 16-year-old leaving full-time education to begin an apprenticeship.

When this happens, the parents’ entitlement to child benefit and the child and disabled child elements of universal credit is stripped.

The report also found the extra time taken for a young disabled apprentice to be independently considered for disabled work benefits could leave families in “financial limbo”.

“We heard that this process could cause stress and potentially lead to dropout,” the committee warned.

It urged the Department for Work and Pensions to have “greater flexibility” on when young apprentices should claim adult benefits.

A DWP spokesperson said: “We are determined to reverse the 40% drop in young people starting apprenticeships over the last decade, and are carefully considering the report’s recommendations.

“With the apprentice minimum wage now at £8 per hour, a young person working 35 hours a week will earn around £270 a week and, as the report acknowledges, in most scenarios this offsets any reduction in household benefits.

“We’re determined to give every young person the best possible start in their career. That’s why we are investing £2.5 billion to tackle youth unemployment, creating 50,000 additional apprenticeships for young people, and introducing a new incentive of up to £2,000 for SMEs which take on a 16–24-year-old apprentice.”