Employers push back on apprenticeship fee hike

Major British business groups have urged the government to reconsider a proposal to raise the cost of training apprentices over the age of 25. The coalition of employers argues that shifting the financial burden to businesses for older workers may reduce overall training capacity rather than expanding opportunities for young people.

The proposed policy would increase the cost of training a worker over 25 in England by 25 percent. Under the current system, employers pay into a growth and skills levy, a tax of 4 billion pounds per year, which funds the national apprenticeship scheme. The new plan would allow employers to use the full amount of their levy contribution to train an apprentice under 25. For workers over 25, the levy would cover only 75 percent of the cost, requiring employers to pay the remaining 25 percent from separate funds.

The proposal was developed before Wednesday's budget and is expected to form part of the government's response to the Milburn Review on youth unemployment. Chancellor John Healey is expected to announce measures to support the 1 million people aged 16 to 24 who are not in education, employment, or training. The plan aims to rebalance the system, as workers over 25 currently account for more than half of new apprenticeship enrollments.

Robert Halfon, executive director of policy at the manufacturing group Make UK, said the change would shift opportunities rather than create new ones. He stated that making it more expensive to train older workers is not the solution to the youth jobs crisis. Halfon suggested that the government should use the opportunity to grow the number of apprenticeships available rather than restrict training elsewhere.

Andy Burnham has made youth jobs a central part of his agenda, including plans to reverse a 40 percent drop in youth apprenticeship starts over the past decade. However, John Foster, chief policy officer at the CBI, warned against treating skills as a zero-sum game. He noted that adult training plays a vital role in helping people adapt their skills as the workplace changes, particularly with the rise of artificial intelligence.

Ben Rowland, chief executive of the Association of Employment and Learning Providers, said that bringing employers on board is essential for any system changes. He cautioned that abrupt or quick changes could endanger the process. Business leaders have also pressed Healey to consider soaring costs from the war in the Middle East and the recent increase in employer national insurance contributions.

Kate Shoesmith, director of policy at the British Chambers of Commerce, argued that employers need flexibility to invest in skills at every career stage. She said the best way to encourage youth apprenticeships is to reduce the wider costs of doing business rather than creating new barriers to training.

The current youth skills strategy faces criticism after only 160 young people were enrolled in the foundation apprenticeship scheme in the first eight months. Ministers aim for 30,000 starts over the current parliament. Joe Dromey, general secretary of the Fabian Society, said the current system is skewed toward funding older, highly qualified workers. He argued that tackling youth unemployment requires difficult choices about where public funding is spent.

A government spokesperson said it is right to focus on reversing the 40 percent decline in young people starting apprenticeships. The government has reformed the system with 3.3 billion pounds in funding to deliver 50,000 additional apprenticeships for young people. This includes a new hiring payment of 2,000 pounds for small and medium enterprises that take on a 16 to 24 year old apprentice. The Milburn Review is due in the autumn, and the government said it would not pre-empt its findings.