THE £725 million package of reforms to the apprenticeship system will help to tackle youth unemployment and drive economic growth, with thousands more young people expected to benefit over the next three years claims the government.

The latest funding includes a £140 million for a pilot where Mayors will be able to connect young people – especially those not in education, employment or training (NEET) with thousands of apprenticeship opportunities at local employers.

By partnering with regional leaders who best understand their local economies, these pilots will ensure young people can access training that meets the needs of employers in their area.

As part of the package, the government will also cover the full cost of apprenticeships for eligible young people under 25 at small and medium-sized businesses.

Removing the 5% co-investment rate for SME’s means that the training costs for all eligible under 25 apprentices are fully funded opening up thousands of opportunities for young people. This will make it easier for young people to find opportunities and remove the burden from businesses, making it easier for them to take on young talent.

Businesses will also benefit from a major boost in flexibility as new short courses in cutting-edge areas including AI, engineering and digital skills will begin rolling out from April 2026.

This includes working closely with the defence sector to develop a new suite of flexible, work-based training options to help employers upskill their existing workforce in the critical skills needed for future success.

Today’s announcement comes alongside plans to open up new waves of foundation apprenticeships in sectors such as hospitality and retail.

The reforms will simplify and modernise the apprenticeship system, making it more efficient and responsive to the needs of employers and learners. From April 2026, short courses will be introduced to provide more flexible training options and a new Level 4 apprenticeship in AI will also be introduced, supporting employers to develop the skills of their workforce.

The reforms to the Growth and Skills Levy build on the Prime Minister’s ambition for two-thirds of young people to participate in higher level learners – academic, technical or apprenticeships – helping more young people gain the skills they need to start their careers.

Prime Minister Keir Starmer said:

For too long, success has been measured by how many young people go to university. That narrow view has held back opportunity and created barriers we need to break.

If you choose an apprenticeship, you should have the same respect and opportunity as everyone else. That’s why the Government is investing £1.5 billion through the Youth Guarantee and the Growth and Skills Levy – creating 50,000 more apprenticeships and foundation apprenticeships for young people over the next three years.

It’s time to change the way apprenticeships are viewed and to put them on an equal footing with university. This is a defining cause for this government and a key step towards our ambition to get two-thirds of young people in higher-level learning or apprenticeships.

Work and Pensions Secretary Pat McFadden said:

Every young person deserves a fair chance to succeed. When given the right support and opportunities, they will grasp them.

That’s why we are introducing a range of reforms to help young people take that vital step into the workplace or training and to go on and make something of their lives.

This funding is a downpayment on young people’s futures and the future of the country, creating real pathways into good jobs and providing work experience, skills training and guaranteed employment.

The reforms are designed to tackle the sharp decline in apprenticeship starts among young people over the last decade – which have fallen by almost 40% since 2015/16 and shift the focus towards supporting young people into high-quality training and employment.

This latest intervention follows an £820 million investment guaranteeing every young person the chance to gain the skills they need for success and support to find a job. This package will create 300,000 more opportunities to earn and learn and provide guaranteed jobs to almost 55,000 young people.

Over the coming months, DWP and Skills England will work intensively with business on the right balance to further boost apprenticeship starts for young people while delivering the right flexibilities for business.

Skills England will also drive forward a renewed Skills Inward Investment and Infrastructure offer for business, co-created with the Office for Investment. This will involve meeting investors to guide them through the UK skills system and potential funding streams to get training for jobs off the ground as quickly as possible and support young people in their careers.