Employers push back on plan to raise training costs for workers over 25

Major UK employers have warned the government that increasing the cost of training workers over the age of 25 could undermine efforts to solve the youth unemployment crisis. The proposal, which is expected to be part of the response to a review by Alan Milburn, aims to shift funding toward younger apprentices.

Under the current apprenticeship system, employers contribute to a growth and skills levy that raises approximately £4bn per year. The plan would allow firms to use these levy funds to cover the full cost of training an apprentice under 25. For workers over 25, the levy would cover only 75% of the training costs, requiring employers to pay the remaining 25% out of pocket.

Robert Halfon, executive director of policy at Make UK, argued that the change would merely shift opportunities rather than create new ones. "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," Halfon said. He urged Chancellor John Healey to grow the number of available apprenticeships instead of restricting training for older workers.

The push for reform comes as over-25s account for more than half of new apprenticeship enrolments. Minister Andy Burnham has targeted the sector to reverse a 40% drop in youth apprenticeship starts over the past decade. Currently, 1 million people aged 16 to 24 are not in education, employment, or training, a group known as Neet.

John Foster, chief policy officer at the CBI, warned against treating skills as a zero-sum game. He noted that adult training helps people adapt to workplace changes, particularly from artificial intelligence. "We can't make skills a zero-sum game," Foster said. "While it is right to focus on supporting young people who are Neet into work, adult training also has a vital role to play."

Kate Shoesmith, director of policy at the British Chambers of Commerce, suggested that reducing wider business costs would be a better way to encourage youth hiring. "The best way to encourage more youth apprenticeships is to make it easier and more affordable for firms to take on young people," Shoesmith said. She cautioned against adding new barriers to training while businesses face pressure to improve productivity.

A government spokesperson stated that the reforms are backed by £3.3bn to deliver 50,000 additional apprenticeships for young people. The government also plans to offer a £2,000 hiring payment to 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.