Ministers are drawing up plans to force employers to contribute 25 per cent towards the training costs of older apprentices, it is understood. The proposed change would mean businesses could use growth and skills levy funds to cover only 75 per cent of eligible training and assessment for apprentices aged 25 and over, with the remaining quarter paid by the employer. Training for apprentices aged 16 to 24 would continue to receive full funding from the government’s growth and skills levy budget. Multiple sources told FE Week the plan is in the works as part of the government’s response to Alan Milburn’s full report following his review of young people not in education, employment or training, which has been delayed until after the budget. The Guardian also today reported that the policy change is on the cards and set to be introduced on a phased basis from September 2027. Ministers hope higher employer contributions for older apprentices will encourage businesses to take on more young people, following a 40 per cent decline in apprenticeship starts among younger learners. But an FE Week source close to government described the rationale as “nonsensical”, arguing that employers recruit according to their workforce needs rather than the age of candidates. The Department for Work and Pensions said it would not comment on speculation but did confirm that “further reforms” are being made to the growth and skills levy to “prioritise young apprentices, secure value for money and give school and college leavers more opportunities than ever to build careers in cutting edge industries”. A DWP spokesperson said: “We remain determined to increase apprenticeship starts among young people and give them the skills they need to succeed. “We are already pivoting the system towards the next generation, including by creating 50,000 additional apprenticeships for young people, and introducing a new hiring payment of £2,000 for SMEs who take on a 16–24-year-old apprentice. “The Milburn review is due in the Autumn. We will not pre-empt its findings.” Pivoting to the youth Since 2017, employers with an annual pay bill of more than £3 million have paid 0.5 per cent of their total payroll into digital accounts to fund apprenticeship training and assessment. Unspent levy funds are used to subsidise training for small and medium-sized employers. Levy contributions are forecast to generate £4.5 billion in 2026-27, but the money is not ring-fenced for apprenticeship spending. The government sets a separate annual apprenticeship budget, which currently stands at £3.3 billion in England. Under the current rules, employers that do not pay the apprenticeship levy receive full government funding for eligible apprentices aged 16 to 24, up to the relevant funding band maximum. For apprentices aged 25 and over, they receive 95 per cent government funding and contribute the remaining 5 per cent. From August 1, the government had planned to increase the employer contribution towards training and assessment from 5 per cent to 25 per cent for levy-paying employers that exhaust their growth and skills levy funds. The government’s contribution would fall from 95 per cent to 75 per cent. Following a last-minute rethink, however, the higher co-funding requirement was introduced only for levy-paying employers training apprentices aged 25 and over. The reported proposal would extend this 75 per cent government funding and 25 per cent employer contribution arrangement to all employers training older apprentices, including those that do not pay the levy, it is understood. While ministers are trying to create more youth apprenticeships, they are also under pressure to rein in costs as the Department for Work and Pensions’ annual apprenticeship budget has been fully spent in recent years. This has been mainly caused by soaring spend on higher-level apprenticeships, mostly taken by older learners, which are more expensive to deliver. The government has already defunded level 7 apprenticeships for people aged 22 and older, and this year defunded 16 other apprenticeships, including popular management standards, that are mostly taken by existing and older workers. FE Week understands the government is continuing to explore other standards to defund, namely those that are perceived as generic training that resemble continuing professional development instead of discrete occupations. DWP accounts this year revealed forecasts that show apprenticeship spending is expected to reduce from 2027-28.