The new Government apprenticeship incentives: do they go far enough to support young people?

Last week, Secretary of State for Work and Pensions, Pat McFadden, announced a major youth employment drive, alongside the biggest transformation of apprenticeships in a decade. At Coach Core Foundation, we welcome these announcements, as they signal real momentum behind the changes we have been calling for, particularly through our recently published policy proposals. However, further detail and consideration is required, to ensure these initiatives successfully widen opportunity for the most disadvantaged young people, rather than unintentionally narrow it.

Backed by £1 billion and designed to unlock 200,000 new jobs and apprenticeships, the new package introduces the Youth Jobs Grant, a £2,000 SME apprenticeship incentive, an expansion to the Jobs Guarantee programme, the introduction of Foundation apprenticeships in retail and hospitality and reforms to the Growth and Skills Levy. These measures are intended to tackle a decade-long 40% decline in apprenticeship starts among young people and reverse the rising number of those not in employment or training. For the young people and SMEs we support, these announcements could be crucial in enabling employers to invest in young people and tackle the NEET crisis. In this piece, we will unpick each of the key announcements, our response and what else Government needs to consider in order for these measures to be successful.

Summary

These announcements represent considerable investment into young people at a time when urgent intervention is needed. Coach Core welcomes the Government’s ambition and commitment to address the youth unemployment issue and to tackle the existing flaws within the apprenticeship system. We also welcome the alignment of some of these announcements to our existing policy proposals and we will continue to share insight and expertise from our work to help shape these (and further proposals).

However, to ensure lasting impact, we continue to call on Government to:

• Publish clear data on levy underspends and reallocation of funding to ensure money is being invested in the areas that need it most
• Protect the quality and availability of full apprenticeships, particularly as Foundation Apprenticeships expand
• Address the financial challenges young people face, including transport barriers and restrictive welfare rules, that make apprenticeships financially unviable for many young people, particularly those who require additional support
• Ensure defunded standards are replaced with clear, high-quality progression routes that allow young people to continue building skills and accessing higher-paid opportunities

£3,000 Youth Jobs Grant

A new Youth Jobs Grant will give employers £3,000 for every young person aged 18–24 they hire who has been on Universal Credit and looking for work for at least six months. It is expected to support 60,000 young people over three years. [gov.uk]

At Coach Core, we see this as a largely positive step, as it reduces the perceived risk for employers taking on young people with limited prior work experience. In theory, it will expand access for those facing the most significant barriers and aligns directly with Coach Core’s commitment to supporting disadvantaged young people. However, because eligibility is tied to Universal Credit, it does not currently account for the large number of ‘hidden NEETs’ – young people who are out of work but not claiming benefits. With the number of NEET young people moving ever closer to 1 million, this initiative will provide only a small solution to the challenge.

In addition, if the Government is committed to supporting the long term employment outcomes of young people, employers must be supported, where appropriate, to consider how they can utilise this funding as a springboard into longer term apprenticeship opportunities. Otherwise, this grant could unintentionally channel young people into short-term, low-progression roles- with limited impact on their longer term employment prospects. To combat this, Government should allow the grant to be accessible alongside apprenticeships, so that it supports – not competes with – long-term training. They should also consider the introduction of minimum standards or quality requirements for employers, to prevent misuse or short-term interventions.

Government should also consider how Jobcentre Plus outreach, Youth Hubs and local employability partners can ensure the grant reaches young people who are disengaged from services entirely, so the funding supports those who are furthest from the labour market – not only those already in contact with the benefits system.

We look forward to hearing further detail on this initiative shortly.

£2,000 Apprenticeship Incentive for SMEs

Government has announced that SMEs will receive a £2,000 incentive for each new apprentice aged 16–24 they hire. This is intended to help create 50,000 more apprenticeships. [gov.uk]

As we argued in our recent policy proposals, financial pressure is a significant barrier for SMEs and micro employers. Whilst the recent removal of the SME co-investment for under‑25 apprentices was welcomed, the wider financial challenges linked to wages and other development costs remained the biggest barrier. The introduction of this incentive goes some way to recognising- and responding- to these financial concerns. However, the same financial incentive applies to both Foundation Apprenticeships (entry level apprenticeships) and full apprenticeship standards. As an unintended consequence, this may inadvertently push SMEs toward the cheaper, short-duration options, reducing the availability of full apprenticeships where young people can access longer term, stable employment and progression.

As we argued in our response to the Post 16 Skills White Paper, Foundation Apprenticeships should be a route into apprenticeships, rather than a replacement for them. Ultimately, it should be down to employers to determine which training option is appropriate for their needs of their organisation, and the young people they are supporting, but without further investment into full apprenticeships, we risk creating a system where the most disadvantaged young people are funnelled into short term roles with limited progression opportunities.

As we called for in our recent policy proposals, Government should go further and offer grants of £3,000 for SMEs, particularly for Level 2 or 3 apprentices, where mentoring and broader holistic needs are often greater. Doing so will further support small and medium sized employers and give them greater scope to offer a fairer, more sustainable wage for young people, given the growing cost of living. In addition, Government should also consider how young people themselves can be supported to access apprenticeship opportunities, for example, by providing free or subsidised travel (particularly at Level 2 and 3), as we called for in our policy proposals.

New Apprenticeship Units

Seven new short apprenticeship units will be introduced in priority growth areas such as AI leadership, EV charging installation, solar PV installation, modular construction, welding and engineering-related assembly. While these will provide flexible, modular training for specific, niche sectors, there is opportunity for these to go further.

Extending the scope of Apprenticeship Units to fund and recognise mentor training for SMEs, who often operate with minimal budgets would further reduce perceived risks for SMEs and increase not only apprenticeship starts, but retention too, particularly for learners who require more specialised support. This was one of the policy proposals we put forward to Government and we will await further expansion of this programme with interest.

Defunding / Streamlining Apprenticeship Standards

Alongside the wider reforms, the Government has also announced the defunding of 16 apprenticeship standards, with the aim of diverting more investment towards young people. While the intention to prioritise accessible, entry level pathways is understandable, this decision carries important long term implications that must be considered carefully.

For many young people, especially those from disadvantaged backgrounds, apprenticeships offer not only a first job, but a pathway into sustainable employment, increased responsibility, and higher earning potential over time. Findings from our recent Impact Report show that 94% of respondents felt their Apprenticeship was important in achieving their career goals and 74% progressed into confirmed employment, further education, or additional training upon completion. Removal of certain standards, particularly those that traditionally provide long term progression routes for young people, could limit long term social mobility and prevent young people from moving into higher skilled, better paid roles. This impact is likely to be even more closely felt by young people facing broader disadvantage. Government must ensure that, by pivoting the system towards young people, they don’t inadvertently impact longer term progression opportunities. As streamlining continues, careful consideration should be given, to ensure that courses with clear, high-quality progression routes remain accessible to young people.

Coach Core remains committed to supporting young people and SMEs and we await further detail on all of these announcements with great interest.