Higher Training Costs for Older Workers Risks Plan to Tackle Youth Jobs Crisis, UK Employers Warn

Britain's largest employers have told the government that forcing businesses to pay more to train older workers risks damaging its goal to tackle the youth jobs crisis.

The Guardian understands ministers plan to overhaul Labour's apprenticeship funding scheme to increase the cost of training a worker over the age of 25 in England by 25 percent, to encourage firms to train young people instead. Drawn up before Wednesday's budget, the proposal, first reported last week, is expected to form part of the government response to Alan Milburn's review into why so many young people are unemployed.

The chancellor, John Healey, is widely tipped to announce measures to bolster opportunities for young people to help the 1 million 16- to 24-year-olds not in education, employment or training (Neet) across the country. However, business leaders urged the government to reconsider the plan to make training older workers more expensive.

Robert Halfon, a former Conservative skills minister who is now executive director of policy at the manufacturing lobby group Make UK, said: 'It will just mean opportunities are shifted around instead of creating new ones.' He added: 'We agree that getting young people back into employment and training is a moral and economic imperative. But making it more expensive for employers to train older workers isn't the answer.'

Calling on Healey to 'break the cycle' of cutting and reallocating the apprenticeship budget in England, Halfon said the system was already struggling to deliver what businesses and young people need.

Andy Burnham has placed youth jobs at the heart of his agenda, including sweeping changes to retool technical education and plans to reverse a 40 percent drop in youth apprenticeship starts over the past decade. With over-25s accounting for more than half of new apprenticeship enrolments, ministers have been clear they want to rebalance the system towards supporting more younger people.

Under the latest proposal, which is yet to be finalised, employers would be able to fund the full cost of an apprentice under the age of 25 using the money they contribute to the growth and skills levy — the 4 billion pounds a year tax used to fund the national apprenticeship system. However, for an older worker, they would face a 'co-investment rule' whereby levy funds would cover 75 percent of the costs, with the rest covered separately.

John Foster, the chief policy and campaigns officer at the CBI lobby group, said: 'We can't make skills a zero-sum game. While it is right to focus on supporting young people who are Neet into work, adult training also has a vital role to play in opening up entry-level opportunities and helping people adapt and update their skills mid-career, particularly as AI reshapes the workplace.'

Kate Shoesmith, the director of policy and insights at the British Chambers of Commerce, said that at a time when businesses are under pressure to improve productivity and drive growth, employers need greater flexibility and support to invest in skills at every stage of a person's career. The best way to encourage more youth apprenticeships, she said, is to make it easier and more affordable for firms to take on young people by reducing the wider costs of doing business, rather than creating new barriers to training.

A government spokesperson said: 'It's right that we focus on reversing the 40 percent decline in the number of young people starting an apprenticeship and give them the skills they need to succeed.' That is why the government has reformed the system backed by 3.3 billion pounds to deliver 50,000 additional apprenticeships for young people and support employers with a new hiring payment of 2,000 pounds for SMEs who take on a 16- to 24-year-old apprentice, the spokesperson said, adding that the Milburn Review is due in the autumn and the government will not pre-empt its findings.