In May last year, the UK government announced significant reforms to the existing apprenticeship framework, with the hopes of helping young people enter the workforce. The reform included the introduction of new foundation apprenticeship options along with new employer incentives for hiring young people. The aim was to achieve 30,000 “foundation apprenticeship” starts by the end of this current parliament, however, just over a year on and the numbers are falling behind with only 160 starts registered from August 2025 to April 2026.
Apprenticeship reform
The UK apprenticeship reforms redesign assessment methods, funding structures, and program availability to focus heavily on younger workers and priority skills. The key aim of the reform was to help reduce the number of young people who are not in education, employment or training (NEET).
The government aimed to do so by the introduction of foundation apprenticeships and apprenticeship units, reducing the levy expiry times to encourage employers to use their funds sooner, reducing the number of high level and management apprenticeships, and introducing a number of employer, SME and youth incentives.
Employer Hiring Incentives
To encourage employers to take on a young person, the UK government has introduced several incentives. These include:
- £1,000 additional payment for hiring apprentices: available for hiding 16 to 18 (and under 25 with an EHC plan or care leavers). This is paid in two equal instalments, after day 90 and one year after apprenticeship started (or day 242 if apprenticeship under 12 months).
- £2,000 foundation apprenticeship incentive: available for 16 to 21 (and under 25 with an EHC plan, care leavers, or prisoners and prison leavers). Incentive is paid in three equal instalments, after day 90, day 242 (8 months) and the final payment when an apprentice progresses onto their next apprenticeship.
- £2,000 apprenticeship hiring payment for non-levy employers: available for hiding new employees who are 16 to 24. This is paid in two equal instalments after day 90 and day 365 (or day 242 if apprenticeship is under 12 months).
- £3,000 Youth Jobs Grant: available for hiring apprentices that are 18 to 24, if apprentice has been unemployed and on universal credit for 6 months or more. Incentive is paid in two instalments of £1,800 after 6 weeks and £1,200 after 18 weeks.
Additional benefits for taking on a young person
Once available, employers will be able to receive the new hiring payment in addition to existing payments. These include:
- No employer National Insurance contributions for apprentices under 25
- 100% training costs covered for eligible under-25s (non-levy)
- £3,000 care leavers bursary available to care leavers under 25 starting an apprenticeship
- We will be launching a bursary to ensure benefit-related income changes do not prevent young people from starting an apprenticeship
In addition, training providers will get an extra £1,000 payment for supporting apprentices aged 16 to 18 (and under 25 with an EHC plan or care leavers). We pay this over two equal instalments, with more details in the funding rules.
Who is doing apprenticeships?
Despite the changes and incentives, more than half of the 308,000 people have enrolled into an apprenticeship of any kind in England in the academic year so far have been over-25s, while under-19s accounted for a fifth of all starts.
According to recent reports, overall apprenticeship starts among under-25s remain about 40% below their level of a decade ago, the largest decline among advanced economies.
Experts have warned Britain risks a “lost generation” as young people bear the brunt of rising unemployment. About one in eight young people in the UK are now Neet, and the rate is growing faster than in other countries amid rising levels of mental ill health and the slowing jobs market.
How to resolve the NEET crisis
Calling on ministers to take action, the Fabian Society said an overhaul of apprenticeships, technical education and jobs support was vital for tackling the rise in the number of young people out of work.
The Labour-affiliated thinktank said the academic route from GCSEs through to A-levels and university was clear and widely understood by individuals and employers, but young people hoping to pursue apprenticeships faced a far more complicated system to navigate.
The report recommended the government launch a £311m-a-year regional apprenticeship fund by the end of the decade, created by devolving 5% of revenue from an expanded growth and skills levy.
It also urged a redesign of foundation apprenticeships, including allowing employers to use growth and skills levy funds to cover half the wage cost – saving £4,700 for every young person they took on. The report estimates this could support 26,000 new apprenticeship starts a year.
Rail and engineering apprenticeships as an answer to the growing crisis
The rail and engineering sectors have been facing their own recruitment challenges for the last few years, driven by the reduction of staff turnover and a growing level of skills shortage amid a rapidly changing profession.
Apprenticeships have been a long running solution for businesses within the sectors as a means to recruit and develop new talent within the workplace. Technical apprenticeships within the sector have been developing throughout the years and now offer a range of course units that focus on in demand skills such as computing skills and renewable energy.
By investing more in rail and engineering apprenticeships the government can develop a clear path for young people who are NEET to join the workforce and step out of unemployment.
If you are a rail or engineering employer and are interested in learning how Train’d Up can support your business through apprenticeships, book a discovery call with our team today!