Ministers have set out a £725 million package to expand apprenticeships in England, with a stated aim of creating 50,000 additional opportunities for young people over the next three years. The Department for Work and Pensions confirmed on 7 December 2025 that the reforms prioritise under‑25s and align training with local labour market needs, supporting the government’s ambition for two‑thirds of young people to achieve higher‑level skills.
As part of the package, the government will meet the full training cost of apprenticeships for eligible under‑25s at small and medium‑sized employers, removing the 5% co‑investment normally paid by non‑levy payers. HM Treasury’s Budget 2025 attributes this to £725 million allocated through the Growth and Skills Levy, with operational details to follow in guidance. Under current rules, non‑levy employers contribute 5%, and since 1 April 2024 that contribution has been waived for 16–21‑year‑olds and for 22–24‑year‑olds who are care leavers or have an Education, Health and Care Plan; the new measure broadens full funding to all under‑25s in SMEs.
A £140 million pilot will be delivered through mayoral combined authorities to connect young people-particularly those not in education, employment or training-with apprenticeship places at local employers. The DWP says the pilot will be run with regional leaders to commission and coordinate provision in line with local demand.
The apprenticeship offer for school‑leavers is shifting toward foundation routes. Department for Education accounts confirm that foundation apprenticeships launched in August 2025, alongside a reduction in the minimum programme length from twelve to eight months, with further waves planned in sectors including hospitality and retail.
From April 2026, short courses in areas such as digital, artificial intelligence and engineering will start to roll out, accompanied by a new Level 4 apprenticeship in AI. Government also plans to work with defence employers on flexible, work‑based training to help firms upskill existing staff.
Budget papers trail administrative adjustments to the levy system: removing the additional uplift to levy accounts; shortening the expiry window for levy funds to twelve months; introducing a 75% government co‑funding rate for levy‑paying employers once their levy balance is exhausted; and streamlining the suite of apprenticeship standards. Departments intend to confirm the timetable as the April 2026 short‑course model is finalised.
Officials frame the measures as a response to the decline in younger starters. The DWP cites almost a 40% fall in apprenticeship starts among young people since 2015/16, arguing that lowering costs for SMEs and focusing on entry‑level routes should raise participation.
The announcement follows the £820 million Youth Guarantee confirmed on 6 December 2025, expected to produce about 350,000 training or workplace opportunities and nearly 55,000 paid jobs from spring 2026 for young people who need additional support. The apprenticeships package and the Youth Guarantee are presented as complementary.
For employers, the near‑term tasks are practical. Age eligibility needs confirming at the apprenticeship start date, and the Apprenticeship Service should continue to be used to reserve funds and convert reservations to commitments. Until new rules take effect, the standard 5% co‑investment for non‑levy payers remains, with the April 2024 waiver applying to the existing age and care‑experienced groups. Providers may wish to plan delivery in hospitality, retail, digital and engineering ahead of the 2026 short‑course roll‑out.
Two further points matter for workforce planning in England. The Growth and Skills Levy is intended to replace the apprenticeship levy, with full operational guidance from the Department for Education and Skills England still to come; Skills England, with the Office for Investment, will also support major investors to access the skills system and funding routes. Public funding is being refocused toward younger and entry‑level training, including the removal of most funding for Level 7 apprenticeships for learners aged 22 and over from January 2026, with exceptions for specified groups. Organisations should monitor DfE updates through early 2026.