£1Bn Youth Employment Drive to Unlock 200,000 Jobs and Apprenticeships

• Major employment drive – backed by large and small businesses and celebrity chef Tom Kerridge – will reverse rising number of young people neither earning nor learning, after a 37 percent increase between 2021 and 2024.
• Additional £1 billion to be invested in grants to help unlock over 200,000 paid jobs for young people, with Jobs Guarantee to be expanded to ages 18-24
• New foundation apprenticeships in hospitality and retail, with up to £2,000 for employers to support 16-21-year-olds into work.

A major youth employment drive backed by £1 billion will help create 200,000 jobs for young people, alongside the biggest transformation of apprenticeships in a decade.

It comes as apprenticeships starts amongst young people are down 40 percent in the last decade and almost one million young people are not earning or learning – a rise of 248,000 between 2021-2024.

To be announced today (Monday) in a speech by Work and Pensions Secretary Pat McFadden at Waltham Forest College today, a “New Deal” for young people includes: A new Youth Jobs Grant, through which businesses will receive £3,000 for every young person they hire aged 18-24 who has been on UC and looking for work for six months. This is expected to support 60,000 young people over three years. Expansion of the Jobs Guarantee to a wider age range, from 18-21 to 18-24, to create more than 35,000 extra subsidised jobs. This brings the total to be supported through the scheme to over 90,000 in the next three years. An Apprenticeship Incentive of £2,000 for each new employee aged 16-24 taken on by an SME. As part of wider reforms, this will drive progress to our target of creating 50,000 more apprenticeships. Further reforms to the Growth and Skills Levy to prioritise young apprentices, secure value for money and give school and college leavers more opportunities than ever to build careers in cutting edge industries.

It is the latest step in the Government’s commitment to ensuring every young person aged 16-24 has the opportunity to earn or learn. These changes are backed by an additional £1bn, taking the total investment into the Youth Guarantee and the additional investment in the Growth and Skills Levy to £2.5 billion over the next three years. This will support almost one million young people and help deliver up to 500,000 opportunities to earn and learn.

Prime Minister Sir Keir Starmer said:

“Backing young people is one of the most important investments we can make in this country’s future.

“We are determined to tackle the rise in youth unemployment by expanding practical routes into work, boosting apprenticeships, and giving employers the clarity they need.

“These reforms underpin our ambition to create an economy that works for everyone, closing the skills gap and supporting more young people into meaningful employment.”

These changes are the biggest reforms to apprenticeships in a decade. For the first time, employers will have more flexibility to upskill their staff through seven new apprenticeship units aligned to Industrial Strategy priorities including artificial intelligence, engineering, clean energy and construction, and we will develop further Units informed by ongoing input from industry. 

Seven new apprenticeship units

The seven new apprenticeship units include AI Leadership, Electric Vehicle Charging Point Installation and Maintenance, Solar PV Installation and Maintenance, Welding, Electrical Fitting and Assembly, Mechanical Fitting and Assembly, and Permanent Modular Building Assembly.

Foundation apprenticeships, supported with an incentive for employers, will also expand into hospitality and retail from April 2026, building on foundation apprenticeships launched in engineering, manufacturing and digital. These entry-level opportunities will support young people aged 16 to 21 as they take the first step on the career ladder and move from education into lasting employment.

The reforms are backed by Michelin Star celebrity chef Tom Kerridge, who has provided dozens of apprenticeships at his pubs.

Alongside this, the Growth and Skills Levy will be changed to reprioritise investment where it is needed most, to ensure that young people can access the jobs essential to our economy’s growth as well as ensure apprenticeships remain fit for purpose and prioritise value for money.

This means apprenticeship standards that do not meet the country’s skills priorities or take resources away from opportunities for young people and could be better delivered through on the job training will be defunded.

The 16 Apprenticeship standards confirmed for defunding include:

Facilities Management Supervisor, Improvement Practitioner, Coaching Professional, Learning and Skills Assessor, Learning and Skills Mentor, Outdoor Learning Specialist, Lead Practitioner in Adult Care, Team Leader, Operations Manager and Chartered Manager, among others.

Work and Pensions Secretary Pat McFadden said:

“These measures will give life-changing opportunities to young people and significantly reverse the increase we inherited in those not in education, employment or training.

“We are focusing funding where it’s needed most and giving employers the flexibility and support they’ve asked for.

“These reforms will give young people a vital first step on the career ladder and help business leaders recruit the talent that will grow their companies.”

Michelin Star chef Tom Kerridge said:

“I welcome this announcement which will provide amazing opportunities to young people looking to get into this industry and others, to learn a trade and earn along the way.

“I’ve trained apprentices in my restaurants, and I know what a great start it gives them in their careers, and these incentives will give our industry a great boost. I’m pleased Pat McFadden has made this a priority.”

With 7.3 million people in the UK currently lacking the essential digital skills needed for work, the Government has launched a new AI and automation practitioner apprenticeship to help workers and businesses harness artificial intelligence. The first cohort will be getting underway this month.

The 18-month Level 4 apprenticeship will train workers to identify where AI can save time, cut costs, integrate digital systems and use AI safely and responsibly.

McFadden is expected to cite the rise of artificial intelligence as a major shift driving the urgency of these reforms as part of his speech on Monday.

From the Autumn 2026, we are expanding the Jobs Guarantee to all eligible 18-24 year olds who are on Universal Credit and have been looking for work for 18 months. They will benefit from 25 hours/week of fully subsidised six-month paid work. Young people on the scheme will be paid at the relevant minimum wage and also receive fully funded wrap around support.

The funding increase builds on a wide range of measures the Government is bringing forward to support young people, including expanded funding for youth trailblazers, and a major investigation spearheaded by Alan Milburn into the barriers preventing the young from accessing work.

The £2.5 billion funding is expected to deliver up to 500,000 opportunities, comprising 295,000 training and work experience opportunities, 200,000 jobs and apprenticeships, 90,000 Jobs Guarantee places, and 60,000 hiring incentives.

Sector Reaction

Praful Nargund, DWP Secretary of State’s Skills Adviser said:

“Too many young people for too long have felt the drawbridge drawn up just when they need opportunity the most. That’s why we’re pivoting apprenticeships to young people and backing those employers who are stepping up to provide those opportunities. We’re building a system where young people are supported to shape their futures and help our economy succeed.”

Jonathan Townsend, Chief Executive of youth charity The King’s Trust said:

“With rising numbers of young people out of work, the expansion of the Youth Guarantee has come at a pivotal moment. Investing in young people, developing their confidence and skills for work will help to build secure and fulfilling futures. This is essential not only for them, but for the UK’s economic success. At The King’s Trust, we witness extraordinary potential in young people every day and stand ready to ensure these opportunities reach those who need it most.”

Stephen Evans, Chief Executive of the Learning and Work Institute, said:

“Helping the nearly one million young people who are not in education, employment or training is an urgent priority given the long-term damage being NEET can do to your career prospects. We are pleased to see the Government take up our call for an expanded wage subsidy programme for young people. The Government is right to extend help like the Job Guarantee to those aged 22–24, as this group is more likely to be NEET than the 18–21 year olds the policy was previously focused on. There is still lots of work to be done, including proactively engaging the one in two NEET young people outside the benefits system and helping employers to give young people the first steps on their careers. If we all work together so every young person is able to make the most of their talents, we will all benefit.”

Tina McKenzie MBE, Policy Chair of the Federation of Small Businesses, said:

“This is a game-changer to tackle youth unemployment and inactivity, which FSB has campaigned about as levels remain stubbornly high after the pandemic. Creating good opportunities for young people is absolutely crucial – for individuals themselves, for small businesses and for local economies and people. The new incentives announced today are a clear and decisive step forward – helping small firms to hire those on Universal Credit and to create apprenticeships.

“It’s the right choice to prioritise public funding to back small employers in particular to provide apprenticeships for young people. The UK can’t afford a lost generation amid rising employment costs, therefore we’re pleased the Government has listened carefully on this and stepped up with this pro-jobs, pro-opportunities package.”

John Foster, Chief Policy & Campaigns Director of the Confederation of British Industry, said:

“There is a strong moral and economic imperative for business and government to work together to tackle the rising number of people not in employment, education or training. Financial incentives to create extra opportunities for young people are a welcome step in supporting employers as they navigate the ongoing cost pressures shaping recruitment decisions.”

John Boumphrey, UK Country Manager at Amazon, said:

“Amazon welcomes the expansion to the Youth Guarantee and increased investment in youth employment – this enhanced support will help more people who face barriers to work. We’re also pleased to see the focus on apprenticeships and SMEs, and look forward to continuing our partnership with DWP to provide opportunities for young people across the UK.”

Sharon Doherty, Chief People and Places Officer of Lloyds Banking Group, said:

“We welcome today’s announcement and the government’s continued focus on youth employment and skills. Supporting young people into work requires partnership between government, employers and education providers. At Lloyds Banking Group, we’ve long supported apprenticeships, early career routes and building essential skills in young people to enable them to develop successful careers, and we look forward to continuing to engage as these proposals are taken forward.”

Brian Dow, Chief Executive of Mental Health UK, said:

“Many young people want to experience the positive impact on their mental health that secure employment provides, but have faced significant challenges finding work. Through our work with young people, we have also found that many feel they do not have the right skills or training to enter employment. We warmly welcome this announcement, which will support young people to be ready for work and help organisations large and small to capitalise on the skills, talents and enthusiasm that young people have to offer.”

Dr Joe Marshall, Chief Executive of NCUB, said: 

“This is an important signal that the Government recognises the scale of the challenge facing young people as they enter the labour market. Expanding apprenticeships and creating more entry-level-job opportunities is essential to ensuring the next generation can access meaningful work and develop the skills our economy needs.” 

“However, unlocking opportunity for young people requires more than funding alone. Universities, colleges and employers must work together to ensure that education pathways, skills provision and labour market needs are properly aligned. When these partnerships work well, they can create clear routes from education into high-quality careers.”  

“If we are serious about unlocking opportunity for young people and tackling skills shortages, we must ensure that universities, colleges and employers are fully integrated into the design and delivery of UK’s skills system.” 

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

“I welcome any new investment in supporting young people who are not in education, employment or training (NEET), and these measures will help.

“However, funding decisions made in the last few weeks mean the government is failing to invest in colleges who could do so much more to actually prevent young people from becoming NEET in the first place.

“Colleges are currently teaching 32,000 unfunded 16 to 19-year-olds and the promised real terms funding increase for next academic year has resulted in a 0.5% rate rise. Both of those will make it likely that colleges will turn away thousands of young people in September, because they cannot recruit lecturers on current pay levels and do not have any certainty that they will be funded for every learner they recruit.

“This picture is just as bad for 18 to 24-year-olds. The adult skills budget which supports this age group is less than half what it was in 2010 in real terms. Colleges are already using it to help adults of all ages with vital skills, and there simply is no more available to support more 18 to 24-year-olds with the skills they need to secure good jobs.

“We desperately need an overarching strategy for NEET beyond the youth and jobs guarantee, as a part of a comprehensive, coordinated education and training offer for 14 to 24-year-olds, with clear pathways and no dead ends as they move into the adult funding space. There is also a need for an employer engagement strategy to both direct and support employers to meet apprenticeship demand.

“Ultimately, colleges could help tens of thousands more NEET young people if they were given full funding for every student they enrol. It is not much to ask for: simply fund every NEET young person who enrols in a college to study the skills the labour market is crying out for. Doing that will support economic growth and better chances for young people. Failing to do so, will see NEET numbers continue to increase.”

Adam Herbert, CEO of Go Live Data, said:

“The success of initiatives like this will depend on how well businesses and education providers actually connect. Many employers want to support apprenticeships and early career hiring, but they often struggle to engage with colleges or reach the right talent at the right time.

“Strengthening relationships between education and industry is essential if we’re serious about closing the skills gap and helping young people move from learning into meaningful careers.”

Ann Watson, CEO of Enginuity said:

“Enginuity welcomes this significant investment in youth employment and the Government’s continued commitment to the Youth Guarantee.

“For sectors such as engineering and manufacturing, strengthening pathways into technical careers is particularly important. Employers across our industries are facing persistent skills shortages at the same time as the UK transitions to new technologies and ways of working, including greater use of digital tools, automation and AI. Supporting more young people into apprenticeships and entry-level roles will be vital to building the skilled workforce needed to drive productivity, innovation and growth.

“Measures that support employers to recruit and train young people, particularly SMEs, will play a critical role in making these ambitions a reality. Nearly 90% of engineering and manufacturing employers are small and medium-sized businesses and practical incentives can help give them the confidence to invest in the next generation of talent.

“Alongside employer support, it will also be important to ensure the wider skills system works effectively for both businesses and young people. Simplifying access to training, maintaining the quality of apprenticeships and ensuring that reforms to the Growth and Skills Levy work for smaller employers will all be key to unlocking the full potential of these reforms.

“Through The Policy Centre for Supply Chain and SMEs, Enginuity looks forward to continuing to work with government and industry partners to ensure these initiatives translate into meaningful opportunities for young people, while helping businesses access the skills they need to succeed.”

Ben Rowland, Chief Executive of AELP, said:

“It is a good thing that Government is now spending to open up opportunities for young people, and it’s great to see initiatives that have been in gestation for too long finally see the light of day, such as Foundation Apprenticeships for Hospitality and Retail. Short-term subsidies and incentives, while welcome as an emergency measure, are not the basis for a sustainable and effective system.

“Government is dismantling the current system with the defunding of a number of cherished employer-led programmes, such as the Team Leader and Management apprenticeships, but has not yet shown what their vision for the replacement system is.

“We need urgently to establish what that vision is, and it must be one that doesn’t just put people into entry-level jobs, but lifts them, via skills, into a better job, leaving the entry-level job for the next person. To make this happen, Government must increase apprenticeship funding bands to ensure they rise with inflation, and must establish extra funding for providers to work with SMEs.”

Jenny Pelling, Director of Skills and Strategy at Kaplan UK

“Yesterday’s announcement of employer incentives is a positive response to the twin challenges of youth unemployment and rising business costs – particularly for SMEs. But for these measures to make a real dent in the UK’s skills gap, we need to ensure that accessibility doesn’t come at the cost of breadth. It’s important that large employers aren’t left behind in the process.

“The focus on 18–24 year olds and modular ‘Apprenticeship Units’ in areas like AI offers welcome agility. But we must be careful not to hollow out the progression pathways that drive long-term productivity – including leadership and management development.

“The government’s approach needs to be a ‘both/and’: using new incentives to ignite the entry-level pipeline, while continuing to invest in keeping the UK’s existing workforce technologically fluent. The goal isn’t just to get young people into jobs – it’s to help them, and their employers, stay competitive in an AI-driven economy.

“High-quality apprenticeships remain one of the most effective ways to give young people a meaningful start in work, combining real experience with skills employers actually need. The key now is ensuring quality remains high and that opportunities exist across the sectors where the UK most needs talent – including data and technology.”

Xiaowei Xu, a Senior Research Economist at IFS and an author of the briefing, said: 

“Yesterday’s announcement expands support for hiring of young people on Universal Credit. In particular, there is a good case for additional support for those unemployed for 6–18 months, who can be reached before their skills and confidence are eroded by long spells out of work, though it remains to be seen how much they will increase employment in the long term .

The newly announced policies will benefit only a small share of nearly 1 million young people who are currently not in employment, education or training (NEET). In particular, they do not target over 300,000 young people on Universal Credit who are not required to search for work, mostly due to health conditions. This group has increased substantially in the last few years. Stemming its rise will be important for making progress on youth employment.”