Listen to this story Members can listen to an AI-generated audio version of this article. 1.0x Audio narration uses an AI-generated voice. 0:00 0:00 Become a member to listen to this article Subscribe Ministers plan to force employers to contribute 25 per cent towards the training costs of older apprentices, it is understood. The 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 was being drawn up as part of the government’s response to Alan Milburn’s full reportfollowing 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 was 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 the 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” were 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 to 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 payroll figure 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 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. But following a last-minute rethink, the higher co-funding requirement was introduced only for levy-paying employers when 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 largely been 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 were mostly taken by existing and older workers. FE Week understands the government is continuing to explore the defunding of other standards, namely those that are perceived as generic training that resemble continuing professional development instead of discrete occupations. DWP accounts this year revealed apprenticeship spending is forecast to fall from 2027-28.
David Hilton 18 October 2026 Am I missing something here? Haven’t employers always had to pay for taking on apprentices over the age of 24?
Peter Marples 18 October 2026 If the government are determined to increase the number of 16-24 year old apprenticeships, this will do absolutely nothing and shows how completely out of touch they are with the way in which employers behave and make decisions. Mark my words, the government will reintroduce pla to address the issue and claim they have had an icrease of 200% but will result in no jobs at all
anon 19 October 2026 “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.” Anyone remember a few years ago when a Skills Minister said ‘I don’t understand why completions aren’t 99%’…. Guess what – when completion rates goes up, it means more are retained. More retained means more ‘on programme’ payments and more 20% completion payments, hence more pressure on budget. If you get yourself an envelope, turn it over and do some rudimentary maths, you might find that the Treasury surplus isn’t that far removed from the unrealised income of training providers if completion was 100%. Coincidence? And no – I’m not saying it has nothing to do with the drift towards older learners & higher levels. Spending the money is one thing. Spending the money in the right area is another…
anon 21 October 2026 This would be incredibly counterproductive to achieving a number of national skills and recruitment challenges in the education sector, such as initial teacher training and teaching assistance, where staff are typically older and schools do not have the budgets to fund 25% of the training costs.
Laney 23 October 2026 This proposal risks overlooking the reality facing many employers. With operating and employment costs continuing to rise, businesses may respond to an additional 25% training contribution not by recruiting younger apprentices, but by reducing apprenticeship opportunities altogether. It also raises a wider question: does the DWP believe that employees aged 25 and over no longer need to develop their skills? In a rapidly changing digital landscape, continuous learning is essential for productivity, innovation and workforce resilience at every age. Levy-paying employers already make a significant financial contribution, yet many struggle to use their funds. Asking them to pay more, while existing contributions remain difficult to access or use effectively, seems counterproductive. Reform should focus on making the system more flexible and accessible—not creating further barriers to recruitment and development.
Samantha Johnson 23 October 2026 It’s disgusting,, no thought to this process only how to save money, it’s been a turbulent time for so long in apprenticeships and providers. I’m exhausted with it all
Paul 1 November 2026 Forcing schools and MATs to fund 25% of apprenticeship training costs poses an existential threat to sector recruitment and skills development. It will dismantle critical entry routes for support staff like teaching assistants and also impact trainee teachers—and leave training providers unable to sustain delivery. The ultimate result will be a collapse of school-based apprenticeships, directly harming pupil support. This raises fundamental questions about government rationale: Why do policymakers believe this mechanism will succeed, and have they genuinely consulted employers across the sector who are expected to absorb these costs?
Amy 2 November 2026 As a large employer, we are always underspent as are many others, but we contribute significantly to the national budget. The apprenticeship model since 2017 has been vital to increasing the skills of our workforce across a range of professions at all levels, from entry to senior roles. The support from the levy should not just be about entry level roles and getting young people off benefits but continuously upskilling people at all levels to keep up with rapid changes employers are faced with in order to improve their business and remain competitive and positively contribute to the national economy and improved public services. If the proposed changes come into effect it is highly likely that organisations may just decide to write off apprenticeships due to the additional costs towards training, the likely reduction in personnel to manage the process internally and the loss of tried and trusted education providers. I am aware some smaller education providers may not survive these changes, so where is the incentive for smaller businesses to take a risk and grow their business. This incessant assumption that adding more barriers to using the levy will make employers increase job offers to NEETS in particular is INCORRECT. In fact, our business has increased the number of junior entry roles simply because we have been able to upskill existing team members who have progressed upwards, making way for others to join the business. Also, for those in entry roles, they currently have the assurance that investment in their development does not stop once they have completed their initial apprenticeship. So if the predicted changes are implemented, what do we say to young people? – come and work for us, we will support your initial training but after that its unlikely. Its not a good way to retain a skilled workforce in the longer term. There is lots of evidence available which states that investment in the workforce is key to recruiting and retaining employees. Asking businesses to pay hundreds of thousands to millions of pounds into the levy and then asking them to find an additional 25% of the costs along with other ineligible costs(which can be significant in some cases) may lead to them considering whether to continue to offer apprenticeships or not. I know we are waiting for the report in order to do a impact and cost analysis to help guide future decisions on apprenticeships and I’m sure we are not the only employer who will be doing this.
anon 5 November 2026 Could there be an issue around age discriminiation if this is introduced? Good to hear opinions. Employers like mine would not be willing and able to fund 25% of many apprenticeships. If we only shortlisted those who meet full funding criteria (under 25’s) could that be challenged as age discriminiation? It’s one thing having an apprenticeship that is only funded for a particular age like foundation apprenticeships, but I would imagine a different proposition to defend if there was no age restriction to complete an apprenticeship, just on how much an employer receives via the levy pot.