Households will be able to claim a new bursary worth up to £4,500 a year to help offset the benefits they lose when a young person takes up an apprenticeship. The Department for Work and Pensions today announced the new bursary will close a loophole that penalises potentially thousands of low-income households when a young person starts an apprenticeship and is reclassified as an independent worker. The payment will be funded through the £1 billion of additional investment in the reformed growth and skills levy. Families will be eligible for up to £4,500 per year per household. A report in April by the Social Security Advisory Committee (SSAC) found disadvantaged families can lose between £17 and £339 a week in child benefit, the universal credit child element and work allowance if a 16-year-old household member becomes an apprentice instead of remaining in full-time education. The report also revealed that the financial impact discouraged some parents from supporting their children to take up apprenticeships. The findings triggered work and pensions secretary Pat McFadden to ask his department to scope out a targeted bursary for the universal credit-claiming households who can end up worse off under the current benefits rules. McFadden previously described the issue to be affecting a “small number” of universal credit households, but the SSAC found the “policy contradiction” could be potentially affecting thousands of families. The DWP did not give an estimate as to how many households the bursary could help and how it will define the bursary eligibility. Officials will coordinate with the Scottish and Welsh governments on the detail of the bursary as universal credit policy applies across Great Britain. Simon Ashworth, deputy chief executive and director of policy at the Association of Education and Learning Providers, said the new bursary was a welcome step. “By tackling the household benefit trap, more young people will be able to choose an apprenticeship based on their ambitions rather than their family’s finances,” he said. “If we are serious about reducing the number of young people who are not in education, employment or training, we have to make it easier for employers to recruit them. Fully funding apprenticeship training for eligible under-25s is a major step towards that goal and should encourage many more businesses to invest in the next generation of young talent.” ‘A springboard to opportunity’ The bursary sits alongside a raft of reforms aimed at boosting under 25s apprenticeships take-up to meet the government target of 50,000 by the end of Parliament in 2028. Employers can benefit from up to £8,000 in support for hiring young apprentices including a £2,000 hiring bonus for SMEs, a £2,000 incentive for foundation apprenticeship starts and £3,000 youth jobs grants. McFadden said the welfare system should be a “springboard to opportunity, not a barrier to it”. “By providing bursaries to those who need them most and fully funding apprenticeship training, we are making sure cost is not the reason someone misses out,” he said. Education secretary Lucy Powell added the government was “determined to help thousands more young people gain the skills, experience and confidence they need to build successful careers”. “Too many young people face unnecessary barriers to apprenticeships, college places and training. We’re investing to change that,” she said. Today’s package also revealed £285 million of cash for college capital projects to create an estimated 22,000 learner places in post-16 institutions.