£140 Million Apprenticeship Pilot for Local Mayors to Match Young People and NEETs Into Local Jobs

DWP Announces that 50,000 more young people will benefit from Apprenticeships to match skills to local jobs.

• Major £725 million investment to deliver more apprenticeships for young people and help match skills training with local job opportunities
• Young people to benefit from increased access to training with full cost of apprenticeships at SME’s covered by Government 
• New wave of foundation apprenticeships in sectors such as retail and hospitality sectors to get young people into work 
• Backing thousands more apprenticeship starts for young people through a £140 million partnership with local leaders

50,000 young people across the country will be better equipped for jobs of the future through a major investment to create more apprenticeships and training courses.  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.

£140 million Apprenticeship pilot for Mayors

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

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. 

April 2026, Short Flexible Courses and Level 4 Apprenticeship in AI

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 down payment 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.” 

Apprenticeship Starts among young people fallen by 40% since 2015/16

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.  

Sector Reaction

David Hughes, Chief Executive, Association of Colleges, said:

“The Prime Minister’s announcement this morning is an important step in the right direction when it comes to apprenticeships and supporting young people into good careers. Our research published in 2024 found that since the implementation of the apprenticeship levy, apprenticeships among young people had fallen significantly and starts in small and medium-sized enterprises (SMEs) had halved.
 
“Colleges already work with thousands of employers who offer young people a start in work, but we know more is needed to address the stubborn and very high number of young people who are not in education, employment or training (NEET). This announcement recognises that pressing need and that supporting SMEs to take on more apprenticeships is a vital part of the solution. For many NEET young people, training and gaining new skills in a college is also a vital part of the journey into a good job, and colleges are ready to step in to scale up that offer.”

Alison Morris, Director of Policy at Skills Federation said:

“With nearly a million young people currently out of education or employment, urgent action is essential. The government’s announcement of £725 million investment is a vital step toward tackling this challenge – but its impact will depend on how effectively employers are engaged in shaping and delivering high-quality apprenticeships that provide real jobs with training.

“Employers need to feel confident that an individual completing their programme is competent and work-ready. That is why foundation apprenticeships have been met with a mixed reaction from some employers. Offering foundation apprenticeships in different sectors including retail and hospitality could ensure a better fit. Sector skills bodies understand their sectors and should be consulted about what will work.

“Mayoral strategic authorities are uniquely positioned to connect young people with apprenticeship opportunities that reflect local economic needs. The new regional pilots are an opportunity to strengthen partnerships between employers, training providers, and local leaders. A maturing system of devolution must also allow for genuine ‘test and learn’ approaches so that successful models can be scaled and duplication minimised.

“But developing new skills does not end at the start of a career. Skills England analysis shows that over 70% of jobs in 2035 will be filled by people already in the labour market. As the nature of work evolves at pace, upskilling and reskilling will be critical, and it is vital that the renewed focus on young people doesn’t come at the expense of the rest of the wider workforce.”

 Anton Roe, CEO, MHR said:

“The government’s plans to expand apprenticeships and create new placements across AI, hospitality, engineering, and other sectors are a positive step, especially as the numbers of young people not in education, employment or training are on the rise. But while funding and policy set the stage, employers are then responsible for bringing these opportunities to life by designing high-quality, hands-on roles that harness the curiosity, digital-native skills, and adaptability of young people. 

“As AI reshapes the workplace, organisations that act now can turn this into a real competitive advantage, shaping entry-level roles that prepare the next generation. By providing meaningful apprenticeships and structured learning on the job, young people will be empowered to thrive in the workplace and build the skills that will benefit both them and the wider economy.” 

Commenting on the Government’s announcement of 50,000 new youth apprenticeships, Jude Hillary, NFER’s Co-Head of Policy and Practice, said:

“This announcement comes at a critical time, with nearly one million young people currently not in employment, education, or training (NEET).

“We know that sustained periods of being NEET have long-term consequences for individuals, society, and the wider economy, making timely action essential.  

“Reforms to the apprenticeship system over the past decade have contributed to a more than 40 per cent decline in starts. Our research shows this decline has fallen disproportionately on young people and those from disadvantaged backgrounds. Given the strong economic case for apprenticeships – consistently associated with positive labour-market outcomes for young people – investment in this area is both necessary and welcome.   

“The Government’s focus on supporting more young people back into work and into apprenticeships represents a step in the right direction, but the devil is in the detail. More clarity is needed on how these reforms will be implemented and how the Government’s ambitions will be realised in practice.

“As new initiatives such as Foundation Apprenticeships are developed, it is essential they are designed within the wider apprenticeship system and offer clear, coherent, progression routes. Sector concerns about the blurring of lines between Foundation and Intermediate apprenticeships underline the need for clarity and alignment.

“More broadly, policy must focus not just on boosting apprenticeships starts, but also on ensuring quality and improving completion rates. It also remains to be seen how far the new measures will encourage employers to take on young people facing multiple barriers. Young people – particularly those from disadvantaged backgrounds- continue to face significant challenges in accessing apprenticeships, including transport costs and the impact on household income, such as the loss of child benefit.”

Commenting on the government’s new package of reforms to the apprenticeship system, the Recruitment and Employment Confederation (REC) Director of Campaigns Shazia Ejaz said:

“Employers have been waiting for real movement on getting more skilled people into work. Action on apprenticeships reform is welcome because the current system frustrates and fails many employers. The direction of travel is right on helping young people not in education, employment or training and a local focus based on understanding regional needs in partnership with employers and recruiters is important.

“However, to create many more ladders of opportunity, it needs to accelerate its promised support of short courses across multiple sectors. As the labour market is on the cusp of huge change, we cannot afford to exclude temporary workers from accessing training to help fill vacancies quickly and to keep them in the labour market.”