Employers Warn Cost Hike for Older Workers Could Undermine Youth Jobs Plan

British employers have warned that a plan to increase the cost of training older workers may weaken the government's effort to reduce youth unemployment. The proposal, expected to be announced in the budget on Wednesday, October 29, would require businesses to pay a 25% higher share of the cost for apprentices over the age of 25 in England.

The scheme aims to redirect apprenticeship funding toward younger people. Currently, workers over 25 account for more than half of new apprenticeship enrolments. Under the new rules, employers would use their contribution to the growth and skills levy, a tax of 4 billion pounds per year, to cover the full cost of training an apprentice under 25. For older workers, the levy would cover only 75% of the cost, leaving the remaining 25% to be funded separately by the employer.

Robert Halfon, executive director of policy at the manufacturing lobby group Make UK, argued that the move would shift opportunities rather than create new ones. He stated that making it more expensive to train older workers is not the answer to getting young people back into employment. Halfon urged Chancellor John Healey to grow the number of available apprenticeships instead of restricting training for other age groups.

Critics note that adult training plays a vital role in helping workers adapt to changes in the workplace, particularly as artificial intelligence reshapes industries. Andy Burnham has placed youth jobs at the center of his agenda, with a goal to reverse a 40% drop in youth apprenticeship starts over the past decade. However, business leaders say the current system is already strained and needs employers brought into the process to avoid abrupt changes.

John Foster, chief policy and campaigns officer at the CBI, described skills as not being a zero-sum game. He emphasized that while supporting young people who are not in education, employment, or training is a priority, adult training also opens entry-level opportunities and helps people update their skills mid-career.

The government aims to enroll 30,000 young people into its foundation apprenticeship scheme during the current parliament. So far, only 160 young people have been enrolled in the first eight months. A government spokesperson said the reforms are backed by 3.3 billion pounds to deliver 50,000 additional apprenticeships for young people and include a 2,000-pound hiring payment for small and medium-sized enterprises.

The Milburn Review, which examines why so many young people are unemployed, is due in the autumn. Ministers have said they will not pre-empt its findings but plan to use the budget to announce measures to bolster opportunities for the 1 million 16- to 24-year-olds currently not in education, employment, or training.